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A Dallas Business Law Attorney’s Perspective on the New Tax Law

Dallas business law attorney, Richard “Ric” Armstrong, talks about the sweeping new tax law and what Texas business owners can expect from it.

After much controversy and contention, the new GOP-led Tax Cuts and Jobs Act officially became law on December 22, 2017—meaning as of January 1, this country is now seeing the most sweeping set of changes to the tax laws in a generation.

As advertised, almost everyone will see some sort of change in the amount of taxes they pay (for better or worse). But the law will profoundly change the game for many business owners. What are the ramifications for your bottom line? Should you celebrate the Tax Cuts and Jobs Act, rue its passage or a little bit of both?

Let’s look at two of the biggest changes in the law as they affect Texas companies, so you know what to expect.

Larger Corporations Will Experience the Biggest Benefit

Perhaps the most far-reaching change to the tax code is a drastic cut in the corporate tax rate—from 35 percent down to 21 percent. This amounts to potentially millions of dollars in tax savings per year, depending on the size of your corporation. In addition, the Corporate Alternative Minimum Tax rate has been scrapped, adding up to potentially more savings. (More individuals will be spared the AMT, as well.)

“Pass-Through Businesses” Will See Tax Cuts, As Well

Smaller businesses and so-called “pass-through” businesses will also enjoy lower taxes. Pass-through businesses effectively include sole proprietorships, partnerships and smaller corporations in which income “passes through” the business to the owners, who report it as personal income. These businesses will now be able to deduct up to 20 percent off their earnings before calculating taxes.

Business News Daily explains in more detail: “This deduction is a broad and sweeping benefit to American small businesses. Tax deductions lower your business’s taxable income. Under this new plan, a business’s taxable income would be reduced by 20 percent. So, if your annual business income is $100,000 per year, the IRS would only tax you on $80,000 of it. The hope is that this deduction will provide small businesses with some financial breathing room – this will allow business owners to reinvest that saved money back into their businesses by buying new equipment, hiring new workers or expanding operations.”

Estate Tax Exemptions Have Been Doubled

This provision is essentially an individual tax issue, but since a person’s estate includes any businesses or business stakes he owns, this change will allow most business owners to preserve more of their wealth for their beneficiaries.
Of course, the actual tax law is far more complex than these two headlines can explain.

The smartest way to take advantage of these tax breaks is to consult a Dallas business law attorney to make sure your business structures are in order. Call Armstrong The Law Firm, P.C., today at 972-424-L-A-W-S (5297).

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Armstrong The Law Firm, P.C.
Plano Location
1400 Gables Ct #103
Plano, TX 75075

Fort Worth Location (By Appointment Only)
5601 Bridge Street, Ste. 300
Ft. Worth, Texas 76112

Phone: (972) 424-5297