The recent tax overhaul made significant tax rule changes, and you may be wondering whether this means your business will pay more or less under these new rules. The short answer is that it depends. Tax changes, most of which go into effect in 2018, could reduce your taxes, increase them, or have a negligible impact.
If you have a C corporation
If your business is set up as a regular corporation (C corporation), the top corporate tax rate drops from 35 percent to 21 percent starting Jan. 1, 2018. What’s more, this rate is a flat tax; there is no graduated rate schedule.
If you own a pass-through entity
If your business is a sole proprietorship, partnership, limited liability company, or S corporation (a pass-through entity), business items pass through to you and are taxed on your personal tax return. Under the new law, there is no special tax rate on pass-through income. The tax brackets for individuals have been lowered, with the top one declining from 39.6 percent to 37 percent.