How Tax Law Changes Could Affect Your Business Tax Return in 2024
As a business owner, it's crucial to stay informed about tax law changes. These changes impact your bottom line, deductions you can claim, and your overall tax strategy for the year. While the tax landscape can shift from year to year, here are some key areas likely to see changes that could affect your business tax return in 2024:
1. Expiration of TCJA Provisions
The Tax Cuts and Jobs Act (TCJA) of 2017 included several provisions that benefit businesses, but some are set to expire. Key considerations:
Bonus Depreciation: Currently, businesses can deduct a significant percentage of the cost of new equipment in the first year. This percentage is scheduled to decrease in the coming years and may impact your equipment investment decisions.
Section 179 Expensing: This deduction allows businesses to expense the full cost of qualifying equipment up to a certain limit. Watch for possible updates or changes to this limit within tax legislation.
Business Interest Deduction Limitations: The TCJA imposed stricter limitations on business interest expense deductions. Legislation may ease these restrictions or adjust the rules, impacting how your business handles debt financing.
2. Potential Tax Rate Adjustments
Tax brackets and rates are subject to fluctuation. Businesses need to be alert to potential adjustments to corporate and individual tax rates. These changes could impact your taxable income and the total tax liability of your business.
3. Research & Development (R&D) Tax Credit
The R&D tax credit is a valuable incentive for businesses that invest in innovation. Changes in how the credit is calculated or applied could either enhance or restrict its benefit for your business. Stay tuned to potential legislation surrounding these credits.
4. Retirement Plan Contribution Rules
Retirement plans are a great way to attract talent and save for the future. Possible adjustments to contribution limits or new incentives for employer-based plans could impact your tax strategy and the benefits you give employees.
5. Evolving State and Local Tax Laws
While federal taxes often get the spotlight, don't neglect state and local tax codes. Changes in sales tax rates, nexus rules (especially for online businesses), and local property taxes also deserve your attention.
What to Do
Stay Informed: Subscribe to IRS updates, tax newsletters, and work with a tax professional to keep up-to-date on new laws and evolving interpretations.
Plan Ahead: Don't wait until year-end for tax planning. Proactive adjustments throughout the year, based on potential changes, help to minimize surprises and maximize deductions.
Consult a Tax Advisor: Callison CPA can assess how potential changes will affect your unique business, recommend proactive steps, and save you from costly mistakes.
By being proactive and informed, you can navigate the ever-changing tax landscape and optimize your business's tax situation for continued growth. To learn more or to schedule a consultation about your 2024 business tax returns, contact us today.