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Summary of Business Tax Law Changes 2010-2017

Updated for Tax Year 2017


OVERVIEW

Learn how federal tax law changes could impact your small business returns this year, and in the future. Here is a summary of all business tax law changes between 2010 - 2017.


Many of the breaks in recent tax relief bills are designed to be phased in over a number of years. To help you determine how these tax laws might affect your long-term plans, we'll explain the changes that come into effect through 2017. With more tax law changes enacted by Congress at the end of 2010, check TurboTax regularly for updates.Select a year to see what tax changes will affect that year's returns.

Starting in 2010

Payroll Tax Credit

For 2009 and 2010, Congress gave workers a credit of 6.2% of their earned income, capped at $400 for single filers and $800 for joint filers. For single filers, it starts phasing out at $75,000 of Adjusted Gross Income and dries up at $95,000. The phaseout zone for couples is $150,000 to $190,000. While employees get the credit in advance via lower income tax withholding in each paycheck, self-employeds can reduce their quarterly estimated payments to get an advance benefit from the credit. The exact amount of the payroll tax credit for the year will be calculated on the filers’ tax returns

Self-Employment Tax Contribution Base Unchanged

The maximum amount of self-employment income subject to Social Security taxes remains at $106,800 in 2010, unchanged from 2009. The self-employment tax rate remains 15.3%.

Social Security Tax Contribution Base Unchanged

The maximum amount of wages subject to Social Security tax remains at $106,800. The tax rate remains 7.65% on employers and employees.

Business Standard Mileage Rate Drops

The standard business mileage rate is 50 cents per mile, down 5 cents per mile from the allowance that applied for business driving in 2009. Remember that you can deduct the cost of parking and tolls in addition to the mileage allowance.

Tax-Free Parking for Employees

Companies can pay for $230 a month of parking tax-free for employees, unchanged from 2009. The cap on tax-free transit passes is now $230 a month as well, the same as for parking.

Bonus First-Year Depreciation

The first-year depreciation bonus that businesses can take on new assets put in use was increased to 100% from 50% for qualified investments made after September 8, 2010, through the end of 2011. In other words, they can write off the entire cost of the asset up front. Smaller firms can first claim expensing and then use the 100% bonus. If you buy used assets, no 100% write-off is allowed.

Assets depreciated over 20 years or less are eligible, including machinery, equipment, land improvements and farm buildings, even leasehold improvements made to the interior of commercial realty. But this special write-off is not available for other buildings. Autos and light trucks also benefit if they are used for business. The maximum first-year write-off for them remains at $11,060. However, this is only for vehicles that are put in service during 2010.

Carrybacks of Net Operating Losses

Businesses with average annual gross receipts can carry back net operating losses from the 2008 and 2009 tax years for a maximum of five tax years. The carryback period is usually two years.

Estimated Tax Relief for Owners of Small Businesses

If an individual’s Adjusted Gross Income for 2009 was less than $500,000, and more than half of gross income was from a business with fewer than 500 workers, the owner’s estimated income taxes for 2010 estimated payments can be based on the lesser of 90% of tax liability for 2010 or 100% of the liability for 2009. The usual estimated tax benchmarks of 100% or 110% of tax liability do not apply.

Wind Energy Credit

The $4,000 annual ceiling on a business tax credit for wind energy turbines was repealed. The credit is for 30% of the cost of wind energy turbines of 100 kilowatts or less.

Higher Section 179 Expense Deduction

The maximum amount of equipment placed in service in 2010 that businesses can expense was raised to $500,000 by the Small Business Jobs Act of 2010, an increase of $250,000 over the maximum for 2009.  The annual investment limit was raised to $2 million for 2010.  Thus, you won't begin to lose the benefit of expensing until you place more than $2 million of assets in service in 2010.

Domestic Production Activities Deduction

Starting in 2010, this deduction increases to 9% of qualifying business net income from domestic production activities. This deduction applies to businesses engaged in construction, engineering or architectural services; film production; or the lease, rental or sale of equipment manufactured in the United States. However, the rate remains at 6% for oil and gas companies.

The R & D Tax Credit

The credit for increasing spending on research and development was extended through the end of 2011.

Limits on Deducting Farm Losses

Beginning in 2010, the amount of farm losses you can enter to offset nonfarm income is capped at the greater of $300,000 or your net farm income over the past five years. But this limit will apply only if you get federal farm payments or Commodity Credit Corporation (CCC) loans. You can take suspended losses in later years. The caps will also apply to partners and S firm owners.

Starting in 2011

Self-Employment Tax Reduced

The self-employment tax rate is reduced to 10.4% from 15.3% for 2011 and 2012.

Social Security Tax Reduced for Employees

The maximum amount of wages subject to Social Security tax remains at $106,800. However, the tax rate on employees for 2011 is reduced to 4.2% from 6.2% while the tax rate on employers remains at 6.2%.

Payroll Tax Credit

The credit of 6.2% of earned income, capped at $400 for single filers and $800 for joint filers, no longer applies.

Increased Section 179 Expense Deduction

The maximum amount of newly-purchased assets that a business is allowed to expense remains at $500,000 through 2014. The annual investment limit  through 2014 remains at  $2 million.

Starting in 2012

Social Security Tax Reduced for Employees

The maximum amount of wages subject to Social Security tax increases to $110,100 in 2012. The tax rate on employees for 2012 remains temporarily reduced to 4.2% from 6.2% while the tax rate on employers remains at 6.2%.

Withholding on Government Contracts

Starting in 2012, amounts paid out under government contracts will be subject to 3% tax withholding. This will affect contracts with the federal government, state governments and any municipality that pays out $100 million or more on contracts a year. Interest and payments for real estate are exempted.

Reduced Section 179 Expense Deduction

The maximum amount of newly-purchased assets that a business is allowed to expense is reduced to $139,000 for 2012. The annual investment limit is reduced to $560,000 for 2012.

Starting in 2013

Self-Employment Tax Contribution Base Increases

The maximum amount of self-employment income subject to Social Security taxes increases to $113,700 in 2013, up from $110,100 in 2012. The self-employment tax rate goes back to 15.3%.

Social Security Tax Contribution Base Increases

The maximum amount of wages subject to Social Security tax increases to $113,700 in 2013, up from $110,100 in 2012. The tax rate goes back to 7.65% on employers and employees.

Business Standard Mileage Rate Increases

The standard business mileage rate is 56.5 cents per mile, up 1 cent per mile from the allowance that applied for business driving in 2012. Remember that you can deduct the cost of parking and tolls in addition to the mileage allowance.

Tax-Free Parking for Employees

Companies can pay for $245 a month of parking tax-free for employees. The cap on tax-free transit passes is also $245 a month as well, the same as for parking.

Incomes Taxes Will Go Up For Some in 2013

Business owners may be subject to the tax rate increase that now applies to those making more than $400,000 (single) or $450,000 (married filing jointly). The new federal rate is 39.6 percent.

Medicare Taxes Will Go Up For Some in 2013

Starting in 2013 employers must withhold an additional .9% in Medicare tax from the checks of employees earning more than $200,000 per year.

Easier Home Office Deduction Option

Claiming a deduction for an office in the home became easier in 2013. A simplified method of deducting $5 per square foot—up to a maximum of 300 square feet or $1,500—is offered by the IRS instead of the older method of using actual expenses based on the percentage of square feet of the house used for the business.

Starting in 2014

Social Security Tax Contribution Base Increases

The maximum amount of wages subject to Social Security tax increases to $117,000 in 2014, up from $113,700 in 2013.

Business Standard Mileage Rate Decreases

The standard business mileage rate is 56 cents per mile, down 0.5 cent per mile from the allowance that applied for business driving in 2013. Remember that you can deduct the cost of parking and tolls in addition to the mileage allowance.

Starting in 2015

Social Security Tax Contribution Base Increases

The maximum amount of wages subject to Social Security tax increases to $118,500 in 2015, up from $117,000 in 2014.

Business Standard Mileage Rate Increases

The standard business mileage rate is 57.5 cents per mile, up 1.5 cent per mile from the allowance that applied for business driving in 2014. Remember that you can deduct the cost of parking and tolls in addition to the mileage allowance.

Tax-Free Parking for Employees

Companies can pay for $250 a month of parking tax-free for employees. The cap on tax-free transit passes is also $250 a month as well, the same as for parking.

Section 179 Expense Deduction

The maximum amount of newly-purchased assets that a business is allowed to expense is made permanent at $500,000 for 2015 and beyond. The annual investment limit is reduced to $2,000,000 for 2015 and beyond.

Bonus Depreciation Extended through 2019 With Phase-Out

Bonus depreciation of 50% is available for 2015 through 2017. This reduces to 40% in 2018 and 30% in 2019.

Starting in 2016

Social Security Tax Contribution Base Increases

The maximum amount of wages subject to Social Security tax stays at $118,500 in 2016, with no change from 2015.

Business Standard Mileage Rate Increases

The standard business mileage rate is 54 cents per mile, down from 57.5 cent per mile that applied for business driving in 2015. Remember that you can deduct the cost of parking and tolls in addition to the mileage allowance.

Tax-Free Parking for Employees

Companies can pay for $255 a month of parking, transit, and commuter highway vehicles tax-free for employees. This is up from $250 for 2015.

Starting in 2017

Solar Heating Credit

The 30% tax credit for businesses on the cost of solar heating units and fuel cells falls to 10% for those that are placed in service after 2016.

Social Security Tax Contribution Base Increases

The maximum amount of wages subject to Social Security tax inccreases to $127,200 in 2017.

Business Standard Mileage Rate Increases

The standard business mileage rate is 53.5 cents per mile, down from 54 cents per mile that applied for business driving in 2017. Remember that you can deduct the cost of parking and tolls in addition to the mileage allowance.

Tax-Free Parking for Employees

Companies can pay for $255 a month of parking, transit, and commuter highway vehicles tax-free for employees.

Health Care Flexible Spending Accounts

Employees can contribute up to $2,600 to Qualified Health Care Spending Accounts in 2017.

Accelerated Due Dates for Informational Returns (W-2s, 1099s, etc.)

Beginning in 2017, Forms W-2, W-3 and 1099-MISC must be filed by January 31st of the following year to which they apply. There is no longer an extension of time to file for electronically filed returns.

Partnerships and S-Corporations Filing Deadlines

Both Partnerships and S-Corporations must file their returns by the 15th day of the third month after the end of their tax year. For calendar year tax filers this is now March 15th.

C Corporations Filing Deadlines

C Corporations must file their returns by the 15th day of the forth month after the end of their tax year. For calendar year tax filers this is now April 15th. However, C Corporations with fiscal years ending on June 30th, the filing deadline continues to be the 15th day of the third month after the end of their tax year.

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The above article is intended to provide generalized financial information designed to educate a broad segment of the public; it does not give personalized tax, investment, legal, or other business and professional advice. Before taking any action, you should always seek the assistance of a professional who knows your particular situation for advice on taxes, your investments, the law, or any other business and professional matters that affect you and/or your business.


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