Business owners gain a measure of certainty under ‘fiscal cliff’ deal

Local tax experts say the “fiscal cliff” agreement Congress approved Tuesday means business owners at least know today what their tax rates will be this year, which wouldn’t have been the case if negotiations had dragged into the new year, as many had feared. While the highest marginal tax rate was allowed to return to 39.6%, the threshold was set at $450,000 for joint filers rather than at $250,000, as had been discussed. “I would say that $450,000 is a lot better than $250,000 for small business,” says CPA Michael Choate. “That takes care of a tremendous amount of small business owners.” The agreement extends many tax provisions that had lapsed on Dec. 31 and revives others that had expired a year earlier. For example, the availability of 50% bonus depreciation for new equipment purchases was extended for a year. “I think people are happy to have some certainty,” says Ralph Stephens with the tax service group at Postlethwaite & Netterville. “I have clients tell me all the time: If I know what the rules are, I can live with them.” Keith Tillage of Tillage Construction, which does a lot of defense contracting work and recently opened a second office in Dallas, would have been hit hard by the defense cuts that were averted Tuesday. Tillage says he’s pleased with the deal that was struck, adding that he believes lawmakers have more work to do. —David Jacobs