What are the key tax benefits for small businesses in 2024?.

In 2024, small businesses can benefit from several tax advantages that can help reduce their tax burden and improve profitability. Key benefits include:

Key Facts

• Section 179 Deduction: Small businesses can deduct the full purchase price of qualifying equipment and software, with a limit of $1,160,000 for the year.
• Qualified Business Income Deduction: Eligible businesses may deduct up to 20% of their qualified business income, providing significant tax savings.
• Research and Development (R&D) Tax Credit: Encourages innovation by allowing small businesses to claim credits for certain research expenses.
• Employee Retention Credit: Although primarily for 2020 and 2021, some businesses may still qualify for credits based on prior employment levels.

Examples or Use Cases

• A tech startup that invests in new software can utilize the Section 179 deduction to lower its taxable income.
• A small manufacturing company conducting R&D can claim the R&D tax credit for expenses related to product development.

FAQs

• What is the Section 179 deduction limit for 2024? The limit is set at $1,160,000.
• Can all small businesses claim the Qualified Business Income deduction? No, there are income thresholds and eligibility criteria.