As we kick off another tax season, it’s important for businesses and individuals to stay informed about the latest changes in tax laws and regulations that may impact their bottom line. Whether you’re a small business owner, self-employed professional, or operate within a specific industry like real estate, healthcare, or retail, new tax reforms and updates could provide opportunities for savings—or new challenges to navigate. Here’s a summary of a key tax change that could affect you:
Tax Changes for Real Estate Investors
For real estate professionals and investors, several recent tax reforms have the potential to impact your strategy. The Tax Cuts and Jobs Act (TCJA) continues to provide tax benefits for those in real estate, such as the ability to write off property depreciation more quickly through bonus depreciation.
Additionally, new regulations related to Opportunity Zones can provide significant tax incentives for investors who put their capital gains into qualified projects in designated Opportunity Zones. If you are looking to invest or redevelop in underserved areas, this may be a great chance to lower your tax liability.
However, it’s also important to stay updated on changes regarding like-kind exchanges (Section 1031 exchanges) for real estate, which now only apply to real property (i.e., land and buildings) rather than personal property like equipment or vehicles. If your real estate investments involve multiple asset types, be sure to consult with your tax advisor.
New Tax Breaks for Small Businesses
The latest tax reform includes new provisions designed to help small businesses. Specifically, businesses may qualify for expanded deductions under the Section 199A Qualified Business Income Deduction. This allows eligible small businesses to deduct up to 20% of their qualified business income (QBI), which can significantly lower taxable income for pass-through entities like sole proprietors, partnerships, and S corporations.
In addition, businesses that invest in new equipment or property may benefit from expanded bonus depreciation—enabling immediate expensing of certain capital assets.
Retail Industry: Sales Tax Changes for E-Commerce
For retail businesses, especially those involved in e-commerce, changes in sales tax collection rules are one of the most significant updates. Following the South Dakota v. Wayfair, Inc. decision, states can now require online retailers to collect sales tax even if they don’t have a physical presence in the state. This has created a new set of compliance obligations for retailers selling across state lines.
Retailers should ensure they understand the economic nexus thresholds for each state where they do business, as failing to comply can lead to hefty penalties. Many states have updated their rules to simplify the sales tax collection process for online businesses, so it’s a good idea to invest in automation tools that help track these rules.
