are you updated on 2018laws as a business leader??
Just as death and taxes are certainties, so are annual changes to laws and regulations governing businesses. This year is no exception. Most of the changes to the 2018 laws governing businesses occurred at the state level, but there were some significant changes that also occurred on the federal level.
Federal Law Changes
One of the biggest 2018 tax year changes is the corporate tax rate. Most businesses and business owners will benefit from the Tax Cuts and Job Act (TCJA). It reduces the corporate rate to a flat 21% for all businesses and personal services corporations (PSC). Previously, corporations paid graduated income rates on taxable income (15% from $0-50,000, 25% from $50,001-75,000, 34% from $75,001-10,000,000, and 35% on income exceeding $10 million). PSCs paid a flat rate of 35%.
There have also been changes to the net taxable income from pass-through business entities. This includes sole proprietorships, partnerships, S corporations and LLCs that are treated as sole proprietorships or as partnerships for tax purposes. There is now a new deduction based on a non-corporate owners qualified business income, which generally equals 20%. However, some restrictions may apply at higher income levels.
While TCJA appears to be a boon for most businesses, there are significant reductions on certain deductions, such as for state and local taxes, mortgage debt, and some miscellaneous expenses.
The TCJA is the largest revamping of the federal tax code since 1986.
New State Business Laws
With the changes to federal tax laws, states are likely to update their tax structures. Keep an eye out for potential changes in your states tax system.
One of the most impactful changes on the state level is minimum wage. Even though the federal minimum wage rate of $7.25 per hour has remained unchanged since 2009, 18 states increased their minimum wage effective Jan. 1, 2018. The smallest increase was $.04 by Alaska, making the new hourly minimum wage $9.84. Employees in Maine received the highest raise, from $9.00 to $10.00 per hour. If you want the biggest bang for your hour of work, consider moving to the state of Washington where the minimum wage is the U.S. high of $11.50 per hour (after a $.50 increase in 2018).
Salary History? Dont Ask
Some states and local governments most notably California, Oregon, Delaware, San Francisco, Philadelphia and New York City now prohibit employers from asking job applicants about their previous salary history. Puerto Rico has also passed this law. Employers that violate this law can face potential discrimination charges. However, employees can voluntarily share this information, and employers can ask a job candidate regarding his or her salary expectations.
Be Aware of These State Law Changes
Various states have passed new laws regarding paid leave, employee verification, overtime, cybersecurity/privacy, and retirement plans.
For example, more than 40 states and local jurisdictions have updated their paid sick leave laws as it applies to private employees. Paid leave laws can be very complex, but family leave laws tend to be even more challenging. The latter can include guidelines related to employer coverage, employee eligibility, employee/employer notice requirements, record-keeping, and penalties. Many states and local governments also impose employee payroll deductions and employer taxes, which means coordination is needed with other leave laws such as the federal Family and Medical Leave Act.
Stay Current on Local, State and Federal Laws
As laws governing businesses are ever-changing, its recommended that employers, business owners and human resources compliance officers continually pay close attention to local, state and federal regulatory news and websites.
DOWNLOAD new laws business leaders should know in 2018
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*The information presented in this article does not constitute legal advice and is not intended to create an attorney-client relationship. The information presented in this article is not tax advice and you should consult a CPA or other qualified accounting and tax professional to discuss your specific circumstances.