Tax reform is still working its way through Congress, but its final form has become more clear as both the House and Senate have released the full text of their bills. Here are the most important changes that will impact small businesses.
Changing Tax Brackets
Both corporate and individual tax rates will change under the new plan. For corporations and LLCs taxed as corporations, the maximum tax rate will drop from 35 percent to 20 percent.
Individual income tax rates, which are imposed on sole proprietorship and partnership income, would drop from a maximum 39.6 percent to 35 percent under the House plan. The remaining brackets will also be consolidated into fewer tiers and shifted. This will result in lower taxes for many individuals, but those at the top of a bracket may see their marginal rate increase.