S CORPORATION, LLC & SOLE PROPRIETOR

 

S Corporation, LLC & Sole Proprietor Rates

Most small businesses are classified as S corporations, LLCs or Sole Proprietors are required to file a federal corporate income tax return with the IRS every year.  Unlike C Corporations that have to file Quarterly, S Corporations, LLCs & Sole Proprietors are only required to file annually.

Another difference is that S Corporations, LLCs & Sole Proprietors file their taxes at the personal income tax rates rather than at the corporate tax rate.  The personal income tax rate is lower than the corporate tax rate.  This is a big advantage for small businesses.

 Pass Through entities (S corporation, Partnerships, or Sole Proprietor):  The 2017 Tax Cut and Jobs Act establishes a 23 percent deduction of qualified business income from certain pass-through businesses. Certain service industries are excluded.   Expires 1 January 2026.

See the IRS tax rates guidelines

See Personal Deductions
See Corporate Deductions


Standard Deduction
Single $12,000
Head of Household $18,000
Filing Jointly $24,000

Personal Tax Brackets: 

Personal tax brackets will range from 10% to 37.5%. 

 

 

Single Not Married

Tax Rate

Tax

10%

10% if less than $9,525

12%

$952.50 + 12% of excess over $9,525

22%

$4,453.50 + 22% of excess over $38,700

24%

$14,089.50 + 24% of excess over $82,500

32%

$32,089.50 + 32% of excess over $157,500

35%

$45,689.50 + 35% of excess over $200,000
37% $150,689.50 + 37% of excess over $500,000

 

Head of Household

Tax Rate

Tax

10%

10% if less than $13,600

12%

$1,360 + 12% of excess over $13,600

22%

$5,944 + 22% of excess over $51,800

24%

$12,698 + 24% of excess over $82,500

32%

$30,698 + 32% of excess over $157,000

35%

$44,298 + 35% of excess over $200,000
37% $149,298 + 37% of excess over $500,000

 

 

Married and Filing Jointly and as A Surviving Spouses

Tax Rate

Tax

10%

10% if less than $19,050

12%

$1,905 + 12% of excess over $19,050

22%

$8,907 + 22% of excess over $77,400

24%

$28,179 + 24% of excess over $165,000

32%

$64,179 + 32% of excess over $315,000

35%

$91,379 + 35% of excess over $400,000
37%  $161,379 + of excess over $600,000

 

Married and Filing Separately

Tax Rate

Tax

10%

 10% if less than $9,525

12%

   $952.50 + 12% of excess over $9,525

22%

   $4,453.50 + 22% of excess over $38,700

24%

  $14,089.50 + 24% of excess over $82,500

32%

 $32,089.50 + 32% of excess over $157,500

35%

$45,689.50  + 35% of excess over $200,000

37% $80,689.50 + 37% of excess over $300,000


Capital Investing

Full expensing is allowed for short-lived capital investment on equipment and machinery for five years.  Increases Section 179 expensing from $500,000 to $1,000,000.  [Increases the phaseout threshold from $2,000,000 to $2,500,000.  Reduces asset lives for residential and nonresidential real property to 25 years.]

 

Expensing

Temporary 100-percent expensing for property placed in service after September 27, 2017, and before January 1, 2023.  80 percent expensing for property placed in service  after December 31, 2022, and before January 1, 2024. 60 Percent for property placed in service after December 31, 2023, and be- fore January 1, 2025.