For the first time in 31 years, Congress has acted on major tax reform with the passage of the Tax Cuts and Jobs Act. Among the bill’s changes to business taxes are the following key provisions: Corporate rate: Lowers the corporate income tax rate permanently to 21%, starting in 2018 — the largest reduction in the corporate rate in U.S. history. Pass-through businesses: Establishes a 20% deduction of qualified business income from certain pass-through businesses. (Specific service industries, such as health, law, and professional services, are excluded. However, joint filers with income below $315,000 and other filers with income below $157,500 can claim the deduction fully on income from service industries. This provision would expire December 31, 2025.) Capital investments: Allows full and immediate expensing of short-lived capital investments for five years. Increases the section 179 small business expensing cap from $500,000 to $1 million. Research and development: Retains tax incentives for research and development. Territorial system: Moves the United States to a territorial system of business taxation. The Tax Foundation models the effects of the act: “(T)he Tax Cuts and Jobs Act would increase the long-run size of the U.S. economy by 1.7%. The larger economy would result in 1.5% higher wages and a 4.8% larger capital stock. The plan would also result in 339,000 additional full-time equivalent jobs.” 12/19/2017