The new federal tax overhaul is “chock full of excitement” for tax professionals, says Brandon Lagarde, a director in Postlethwaite & Netterville’s tax services group. As you would expect, he got a lot of calls late last year from clients wondering how the changes would affect them.
“There’s no simplification [of the tax system] in this bill,” Lagarde tells Business Report in one of two features in the current issue on the tax overhaul. “We feel pretty good about our jobs being secure.”
Lots of people will save money, at least in the short term, but the impact will vary depending on your personal finances.
“Not everyone’s taxes will go down,” Lagarde says. “Some will go up. You really need to look at your own situation to figure which way it is [for you].”
Depending on who you are, the new bill may have given or taken away, says Bill Campbell, a certified financial planner with Peters Wealth Advisors. While taxpayers will enjoy lower income tax rates, with the highest bracket falling from 39.6% to 37%, those benefits are offset by the loss of personal deductions and popular write-offs like mortgage interest in addition to state and local taxes, he says.
“There’s probably been such a rush [for Congress] to get something done, that I’m sure there will be some unintended consequences that pop up later on,” says Pete Bush, CEO of Horizon Financial Group.
Small businesses got some last-minute good news. The final version of the bill passed with a major tax break for “pass-through entities,” so named because the company’s revenue passes through to the owner, who is taxed at the appropriate individual rate. Partnerships, S corporations, and limited liability companies treated as partnerships for federal tax purposes will get a 20% deduction on qualified business income.
The House’s early version of the bill didn’t include much help for millions of small businesses, says Dawn Starns, who directs the Louisiana chapter of the National Federation of Independent Business.
“It was mostly geared toward corporations,” she says. “We put our foot down and said, ‘No, this is a non-starter for us.’”
Read more about the details of the tax bill and the breaks included for small businesses. Send your comments to editor@businessreport.com.
