Congress approved major tax reform in the Tax Cuts and Jobs Act, signed into law on December 22, 2017. This legislation, which affects both individuals and businesses, is commonly referred to as TCJA or the 2017 tax reform legislation. This electronic publication covers many of the TCJA provisions that are important for small and medium-sized businesses, their owners and tax professionals to understand. Businesses affected by TCJA include corporations, S corporations, partnerships (including limited liability companies or LLCs) and sole proprietorships. Changes to deductions, depreciation, expensing, credits, fringe benefits and other items may affect your business tax liability and your bottom line.

It’s important to consider your business structure and accounting methods when applying tax reform to your situation. The official IRS.gov website includes a Tax Reform page that highlights what you need to know about the tax law changes. This page also provides links to news releases, publications, notices, legal guidance and other resources. There’s also a dedicated tax reform page for businesses. We update these resources regularly. Some provisions of TCJA that affect individual taxpayers can also affect business taxes. As a business owner or self-employed individual, you should review tax reform changes for individuals and determine how these provisions affect your business tax situation.

This publication is intended as a general overview of TCJA changes that may affect your business. For more information, refer to IRS and Treasury guidance such as regulations, revenue rulings, revenue procedures and similar guidance, as well as IRS tax forms, instructions and specialized publications.

Corporate Tax Provisions Corporate Tax Rate

The TCJA lowers the corporate tax rate to a flat 21 percent of taxable income for tax years beginning after December 31, 2017. Some corporations elect to use a fiscal year end and not a calendar year end for federal income tax reporting purposes. Due to a provision in TCJA, a corporation with a fiscal year that includes January 1, 2018 will pay federal income tax using a blended tax rate and not the flat 21 percent tax rate under TCJA that would generally apply to taxable years beginning after December 31, 2017.

View IRS Publication 5318 For Tax Year 2018 – PDF Download