New Tax Breaks for Small Businesses 2023: What You Need to Know

Small businesses are the backbone of the American economy. They create jobs, drive innovation, and contribute to local communities. However, small businesses often face unique challenges, such as limited resources and complex tax codes.


The good news is that the IRS has announced a number of new tax breaks for small businesses in 2023. These tax breaks can help small businesses save money and invest in their growth.



In this blog post, we will discuss the new tax breaks for small businesses in 2023 and how they may apply to your business. We will also provide tips for taking advantage of these tax breaks.


New Tax Breaks for Small Businesses in 2023:


Here is a summary of the new tax breaks for small businesses in 2023:


  • Qualified Business Income Deduction: This deduction allows small business owners to deduct up to 20% of their qualified business income from their taxable income. Qualified business income includes income from sole proprietorships, partnerships, S corporations, and limited liability companies.
  • Pass-Through Business Tax Rate Reduction: The Tax Cuts and Jobs Act of 2017 reduced the tax rate for pass-through businesses from 39.6% to 20%. This reduction is still in effect in 2023.
  • Employee Retention Tax Credit: This credit provides employers with a tax credit for up to 50% of wages paid to employees during the COVID-19 pandemic. The credit is available through December 31, 2023.
  • Work Opportunity Tax Credit (WOTC): This credit provides employers with a tax credit for hiring individuals from certain target groups, such as veterans, long-term unemployed individuals, and ex-felons. The credit is available through December 31, 2023.


How to Take Advantage of the New Tax Breaks:


There are a few things you can do to take advantage of the new tax breaks for small businesses:


  • Review your business expenses: Make sure you are deducting all of the qualified business expenses that you are entitled to deduct. This includes expenses such as rent, utilities, office supplies, and travel expenses.
  • Choose the right business structure: The type of business structure you choose can affect your taxes. For example, pass-through businesses are eligible for the Qualified Business Income Deduction and the Pass-Through Business Tax Rate Reduction.
  • Keep good records: It is important to keep good records of your business income and expenses. This will help you to take advantage of the tax breaks that you are eligible for.


Tax Preparation Services:


If you are not sure how to take advantage of the new tax breaks for small businesses, you may want to consider hiring a tax professional. A tax professional can help you to review your business expenses, choose the right business structure, and keep good records. You can outsource tax preparation services here.


Conclusion:


The new tax breaks for small businesses in 2023 can help small businesses save money and invest in their growth. By reviewing your business expenses, choosing the right business structure, and keeping good records, you can take advantage of these tax breaks.

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