Top 5 Small Business Tax Changes: Part 3
520% pass through deduction: For the first time, the owners of many pass through entities such as S corps, partnerships and even sole proprietorships and LLCs can deduct 20% of net business income on their personal return. In effect, they are only taxed on 80% of their net business income. Notably, however, this deduction is phased out for most service businesses other than architects and engineers. Everyone else from photographers to plumbers to network markers are is covered. Moreover, the restrictions that apply to service businesses don’t apply if their taxable income is less than $157,00 for single people and $315,000 for married people.
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