New Tax Law Should Have Positive Impact on Capital Equipment Market

Recently we had the most radical tax plan change since 1986 . There has been a lot of media Coverage focusing on the potential impact on our national debt and how it favors the wealthy at the expense of the middle class and poor. One thing can;t be debated, however, is it it will free Up capital to potential re-invest for the small business owner . Here are the key changes that will impact individual taxpayers / business owners Lower individual income tax brackets across the board : Many businesses in the pallet industry are taxed as sole proprietorships , partnerships, or S Corporations . This means business is passed through to the owners , who pay taxes based upon individual income tax rates. Starting in 2018 , HR 1 lowers individual income taxes Across the board. Graduated rates that apply to ordinary income are 10%, 12% ( down from 15% ), 22% ( down from 25%) , 24% ( down from 28%) 32% ( down from 33% ) 35 and 37% ( down from 39,6) . HR 1 leaves the maximum tax rates on net capital gains and qualified dividends the same as before. Significant reduction in Corporate tax rate Permanently lowers the maximum corporate tax rate from 35 to 21% beginning in 2018. Transformation of corporate tax rate from graduated system to flat rate for all income levels , Lowers tax rates for pass-through business income- 2018 to 20125 individuals receiving Income from a a pass through business - including sole proprietorship , S Corp or partnership- take a new Section 199A Deduction These owners can generally deduct 20% of qualified business income defined as net amount of Income , gain, deduction and loss attributable to a domestic trade or business , from their taxable income . 1099A deduction is generally limited to 50% of w-2 wages paid . Wage limitation applie s only to individuals with taxable income greater than $ 315,000 or $ 157500 for individuals . Section 179 - Beginning in 2018 an increase in Section 179 - same year write up goes to $ 1 million ( $ 500k more than before ) with a $ 2.5 million threshold raised from 2.03 million . Bonus Depreciation - HR allows 100% bonus depreciation ( up from 50% ) for five years for qualifying personal property acquired or placed into service after September 27th, 2017. Additional 5 year depreciation is then reduced until fully eliminated in 2017 . Significantly HR applies bonus depreciation to used property , not just new property