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Latest Tax News for Small Business
Right now in Washington, D.C., federal policy proposals are positioning some small businesses, family-owned businesses, and farmers for an even greater tax burden.
The latest plans include:
A new death tax for Family-owned businesses.
A long-standing part of the tax code known as the stepped-up basis would be repealed in Washington’s latest spending plan. Without it, the IRS will calculate the value of something that’s inherited – like a building or farmland – very differently. A study published in April 2021 by the Family Business Estate Tax Coalition (FBETC), found this change would lead to 800,000 fewer jobs in 10 years and an additional 100,000 fewer jobs each year thereafter. With the proposed repeal of the stepped-up basis, family members who inherit something when a family business partner dies, such as a building or farmland, would need to pay capital gains taxes on it. Additionally, the Administration’s proposal would nearly double this capital gains tax rate to 43.4%. These two changes have the power to prevent family-owned businesses from adding jobs and further investing in their employees as they plan for expected tax bills. Not only that, surviving family members may be forced to close or sell their family’s business to cover the larger tax bill.
Tax rate increases.
And for some of the smallest: a nearly doubling of their 2017 rate.
Small businesses organized as C corporations would see their tax rate increase to 28%. For the smallest C corporations, those making less than $50,000 in taxable income per year, the new rate would be an especially dramatic increase – nearly doubling the rate they paid just a few years ago. Still other businesses – those organized as pass-through businesses – may see tax increases when business earnings are become taxed at a higher rate. America’s small businesses are the third-largest economy in the world and absorbing a dramatic tax increase would mean less to reinvest in growth, jobs, hiring, training, and benefits for employees.
Take Action:
Please ask your members of Congress not to let the latest plans in Washington break the fragile small business recovery.
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