On December 22, 2017, President Trump signed H.R. 1, formerly referred to as the Tax Cuts and Jobs Act of 2017, into law. It was the first major overhaul of the U.S. tax system in 30 years. The bill made so many changes that most people are still trying to decipher what it means for them and their business.
Here are a few points that are particularly notable for dentists and Northwest residents:
- The Domestic Production Activities Deduction, which was available to dentists engaged in CAD/CAM manufacturing, has been repealed.
- Businesses are eligible for a 12.5 percent tax credit on wages paid to people on family and medical leave if the company pays more than 50 percent of the person’s normal wages. The credit increases by .25 percent for each percentage point the payment exceeds 50 percent. This is a new benefit to businesses but is available in 2018 and 2019 only.
- There are additional benefits from accelerated depreciation and Section 179 expensing. For assets purchases after September 27, 2017, a practice can expense the entire purchase under Section 179 or the new 100 percent cost recovery provisions.
- Under 2017 tax law, individuals could claim their state and local income taxes as an itemized deduction. Under the new law they can only itemize those taxes up to $10,000. This change will affect Oregon residents in particular.
It is important that you talk to your tax advisor about how these changes might impact your tax liability in 2018 and beyond. For a primer on how H.R. 1 changes the taxation of pass-through businesses (and whether this legal structure might make sense for you), see the article on page 12.