Now that you have filed your 2016 taxes, it is time to start looking to the future as it is never too early to start planning the next tax year. While Nevada is known for being one of the most business-friendly tax states in the country, as a business owner you’ll still need to prep for local, state, and federal taxations… especially with this most recent political environment.
Planning for Nevada State Taxes
Nevada is considered remarkably tax-friendly thanks to having no corporate tax, no personal tax, and a lack of many other burdensome state taxes. There are, however, two primary business taxes that business owners need to plan for: the Modified Business Tax, which is based on employee gross wages, and the 2015-approved Commerce Tax, which taxes the gross receipts of companies earning a minimum of $4 million in revenue for the taxable year.
Business owners ought to especially take notice of the latter Commerce Tax as representatives of the Nevada Taxpayers Association suggest there might be some changes to it this year. The organization plans to propose Nevada Legislature move the reporting year from the current fiscal year (July to June) to a calendar year to ease business calculations and reporting. They additionally want to protest a standing provision requiring companies to include the Social Security number of the responsible party.
The 2015 Commerce Tax was put in place with the goal of funding education, for which it has been especially successful. There are no current plans in the Legislature to increase it or any other business taxes, nor to put any other tax-oriented burdens on businesses this year.
Planning for Federal Taxes
Historically, the United States has seen major federal tax reforms every 30 years, with the last major overhaul being President Reagan’s Tax Reform Act of 1986. As such, it seems we are in for a federal tax refresh. And most experts following the new regime changes appear to agree that President Trump and the Republican Congress are going to make major tax changes that will most likely include major tax decreases for businesses and business owners.
While running for President, Trump’s platform was about reducing corporate income tax from current rates of 35 percent to 15 percent, and the complete elimination of the corporate alternative minimum tax. While getting the rate down to 15 percent might not be achievable, experts believe rates will likely go as low as 20 percent, still a significant cut. Self-employed individuals who organize themselves as an S-Corporation can likewise benefit from these potential tax breaks.
Best Bet? Sit Tight and Be Optimistic
While it is too soon to say for certain what cuts Congress will make, most people are generally optimistic. 2017 is shaping up to be a year full of positive federal tax changes and stasis on Nevada’s already business-friendly environment. Contact us to learn more and to stay up-to-date.