This is the 7th article in a series of 8 which looks at some of the tax law changes that took effect on January 1st , 2018. Nearly every taxpayer will be effected one way or another by these tax law changes and, whether you believe this is tax reform or tax deform, you should have some understanding of how the laws have changed and how they’ll effect you.
In this article, I’m looking at a few of the tax law changes effecting businesses of all sizes. And one of the most disappointing changes, in my opinion, is the elimination of the domestic production activities deduction for businesses.
Referred to as DPAD in the tax world, this deduction was available to certain businesses with income generated from qualifying activities. Property that was manufactured, produced, grown, or extracted within the US, construction activities performed in the US as well as certain engineering or architectural services qualified for the deduction. This one will be felt and missed by many of my small business clients who previously qualified for this deduction.
Another popular business deduction that was cut is the entertainment expense. I’m pretty sure this one is not going to be a widely supported repeal. Business related meals are still deductible and subject to the 50% limitation and now includes business meals provided by an employer on the premises for employees which was previously 100% deductible. But, beginning in 2026 this too will be disallowed all together. If you think this sounds a little stingy, I think you’re in good company.
If this information has been helpful and you want to learn more, check back here for more articles covering the new tax laws. You can also visit my website at actservices-inc.com.
