Unless otherwise noted, these changes apply to all businesses. The IRS page on business changes in the new tax law is found here.
For non-corporate taxpayers, a new Qualified Business Income Deduction begins. This is big benefit for virtually all small businesses. Iowa phase-in begins in 2019.
There are major changes to depreciation and trades of business assets on this page.
Net Operating Loss (NOL) rules are changing for losses incurred after 12/31/17. For such losses:
- The NOL deduction is limited to 80% of taxable income (computed without regard to the NOL deduction)
- Net operating losses may not be carried back, but may be carried forward indefinitely
- Notwithstanding #2 above, a farming loss may be carried back 2 years (or elect not to carry back).
Other than corporations, taxpayers are subject to a loss limit from trade or business activities of $250,000 ($500,000 for married filing joint). The limitation is applied at the partner or shareholder level for owners of passthrough entities. This replaces the former farm loss limitation, and applies to all trades or businesses.
Other changes from prior tax law include:
- The Domestic Production Activity Deduction is repealed (Iowa is keeping it for 2018 only).
- A limit on interest expense deductions for taxpayers with gross income in excess of $25 million.
- Most deductions for business entertainment expenses are repealed.
- Business meals are still allowed (50% of the expense is deductible). The 50% limitation is expanded to include meals provided on an employer’s premises for the convenience of the employer (formerly 100% deductible).
- A tax credit is provided to employers for providing paid leave under the Family and Medical Leave Act.