In the wake of Congress’s substantial remodeling of the country’s tax code, the Society of American Florists brought in experts to help its members wade through the changes.
President and General Counsel of the Small Business Legislative Council Paula Calimafde along with Strategic Policy Director Jessica Summers recently hosted an SAF webinar discussing key provisions. Overall, the pair said, the bill reflects many positive changes for small businesses, with a few exceptions, but Calimafde said that it is still too early to tell how much these modifications will impact the future.
“This bill makes massive changes to the tax code. It’s going to take months, if not years, to be able to fully understand all the provisions and to be able to take advantage of some of these provisions,” Calimafde said.
The most significant positive impact of this bill was the change to the corporate tax rate, which was reduced to 21 percent. This new rate, Calimafde said, is intended to be permanent for planning purposes. Other provisions throughout the bill will likely not be permanent, and will sunset in 2025.
Another “win” from the SBLC’s perspective involved the retainment of the “step-up in basis.” A “tough one” to get through to Congress, the step-up in basis is critically important for small business owners, the pair said. When explaining what this basis means for property owners, Calimafde gave the example of her elderly family member who purchased a house in Brooklyn for $7,000 decades ago, and the property is now worth $750,000. Without the implementation of a “step-up,” when her daughter inherits the property, she would have to pay capital gains taxes on the difference between the two numbers. With the step up, the daughter would not have to carry the burden of these high capital gains taxes. Moving forward, business owners can look forward to saving money through this benefit, she advised.
Other changes to the state and local tax deduction will affect individuals living in states with notoriously high tax rates, such as California, New York, and New Jersey. These could have adverse effects, said Calimafde and Summers. The aggregate possible deduction amount is now capped at $10,000. This means that individuals will have to decide where to apply their deductions if their taxes exceed the $10,000 cap. For instance, they may only be able to take $5,000 from state and local, and $5,000 from property taxes. Business owners and individuals operating in states with high taxes may be greatly affected by this provision. This change will likely sunset in 2025.
Looking forward, Calimafde said that now is the time to start discussing planning opportunities with your accountants. Although many provisions are in favor of small businesses, it’s hard to say where the future is headed, and as these are just a few of many examples of the changes, follow up with your specialists for more information.
Look for more guidance on the new law and how changes could affect industry businesses in the February issue of Floral Management.