Tax cut, bonuses for workers? Many businesses not sure yet
NEW YORK (AP) — Small business owners may want to give bonuses and raises to their staffers now that there’s a new tax law, but many don’t know if they’ll have any wealth to share.
It’s easier for big companies like Walmart and Home Depot to award bonuses because they already know their top tax rate is dropping to 21 percent from 35 percent. Millions of small business owners have far less certainty.
The law gives a break to owners of sole proprietorships, partnerships and small businesses known as S corporations. But while they can deduct 20 percent of their business income, the size of the deduction declines when an individual owner’s taxable income reaches $157,500.
And the IRS still needs to issue regulations on how these owners’ business income is calculated.