The recently passed tax law changes will affect both individuals and businesses in 2014.

Individuals will see a drop in their personal tax rates to 5.8% in 2014 and 5.75% in 2015. The new tax system will be a flat tax whereas the current system uses a graduated rate between 6% and 7.75%. In addition, the standard deduction will be increased to $15,000 for married filing joint taxpayers and $7,500 for single taxpayers. Taxpayers will still be able to itemize certain deductions but mortgage interest and property taxes will now be capped at $20,000. Other changes that may affect individuals include the elimination of the $4,000 deduction on government retirement income and $2,000 private retirement income. However, social security income will not be taxed differently.

On the corporate side, the tax rates are being reduced to 6% in 2014 and 5% in 2015 from the current rate of 6.9%. These rates could drop to 4% in 2016 and 3% in 2017 if certain revenue growth targets are met. The new law also extended tax credits for research and development as well as some other credits that were scheduled to expire.

The individual and corporate taxes changes above are just a few of the changes that will occur next year. Fortunately, you have the rest of 2013 to consult with your tax advisor and make a plan to make the most of these changes.

 


About Blackman & Sloop CPAs, P.A.:

Blackman & Sloop is a full-service CPA firm headquartered in Chapel Hill, North Carolina and is actively involved in auditing, taxation, management consulting, financial planning, and related services. The firm directs a large part of its services toward providing management with advice on budgeting, forecasts, projections, financing decisions, financial analysis, and tax developments. The firm also performs review and compilation services and prepares not-for-profit, corporate, individual, estate, retirement plan, and trust tax returns as well as technology consulting services regarding installation and training on QuickBooks. Blackman & Sloop provides services in Raleigh, Durham, Chapel Hill, RTP, Hillsborough, Pittsboro, Charlotte, and the rest of North Carolina. To find out more please visit http://www.blackmansloop.com

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