During the administration change after every presidential election, most business owners want to know about the new tax law changes that will impact them. As a doctor who owns a practice, it is very important for you to have a discussion with your CPA to make sure you’re planning well, and planning with any possible changes in mind.
While nothing is a sure bet until Congress convenes and passes the proposed tax changes, you can be almost certain that you will see the following changes under this new administration.
- The top individual income tax rate for taxable incomes above $400,000 will change from 37% to 39.6%.
- Congress will pass a 12.4% old age, survivors, and disability insurance (Social Security) payroll tax on income earned above $400,000, to be evenly split between employers and employees.
- There will be caps on the tax benefit of itemized deductions to 28% of value for those earning more than $400,000. This means that taxpayers earning above that income threshold with tax rates higher than 28% will face limited itemized deductions.
- The Child and Dependent Care Tax Credit (CDCTC) will expand from a maximum of $3,000 in qualified expenses to $8,000 ($16,000 for multiple dependents) and the maximum reimbursement rate will increase from 35% to 50%.
- The corporate income tax rate will increase from 21% to 28%.
It is never too late to pick up the phone and contact others to find out what they’re hearing and reading. While nothing is final until the new laws are passed, personal tax planning is essential for all dental practice owners to avoid an end-of-the-year tax surprise!
For more information, visit Pro-Fi 20/20.
