01/05/2024
Here is a short summary of 2024 tax changes affecting small businesses:
The tax law saw few major changes affecting small business owners in 2024. However, there are small tweaks to be aware of. One of the most notable changes is the employee retention tax credit, which was extended through 2024 but reduced from a maximum credit rate of 70% to 40% of up to $6,000 in qualifying wages per employee per quarter.
Additionally, the Section 179 deduction threshold increased from $1,080,000 to $1,100,000, allowing businesses to fully deduct more asset purchases like equipment and software. The phase out threshold rises from $2,160,000 to $2,200,000 as well.
A couple online tax incentives also became permanent. Small businesses can now claim the tax exemption for frictionless – meaning auto-populated – state sales tax collection on online transactions. The IRS also made permanent the deductibility of expenses related to website and software development.
While not specifically targeting small businesses, changes to individual taxes could impact small business owners who file their business income on their personal tax return. For example, the top income tax rate dropped 1% to 37% and standard deductions continue creeping upward due to inflation adjustments.
That summarizes the key 2024 tax changes affecting small business owners and individuals filing business income on their personal tax returns. Let me know if you have any questions contact us. www.marksandsmart.com