Contributor to the writing: Key Business Tax Changes for 2021

Every year brings changes to federal tax codes and 2022 is no exception. Here is a checklist of key changes to help you comply and minimize your tax liability.

Standard kilometer rates: In 2022, the rate for business miles flown is 58.5 cents per mile, up 2.5 cents from the 2021 rate.

Article 179 being charged: In 2022, the deduction of expenses under Section 179 increases to a maximum deduction of $1.08 million on the first $2.7 million of qualifying equipment put into service during the year current tax. This amount is indexed to inflation for tax years after 2018. The deduction has been enhanced under the Tax Cuts and Jobs Act to include improvements to qualified non-residential real estate such as roofs, fire protection, alarm systems and security systems, as well as heating, ventilation, and air conditioning systems.

It should also be noted that the costs associated with the purchase of any sport utility vehicle, treated as an expense under section 179, cannot exceed $27,000.

Bonus amortization: Businesses are allowed to immediately deduct 100% of the cost of eligible property brought into service after September 27, 2017 and before January 1, 2023, after which it will be gradually deducted over a four-year period: 80% in 2023. 60% in 2024, 40% in 2025, 20% in 2026 and 0% in 2027 and subsequent years.

Deduction for eligible business income: Eligible taxpayers can deduct up to 20% of certain business income from eligible domestic companies, as well as certain dividends. To qualify for the deduction, the business income must not exceed a certain dollar amount.

In 2022, these thresholds are $170,050 for single filers and heads of families and $340,100 for married taxpayers filing joint returns.

Research and Development Tax Credit: Starting in 2018, businesses with gross receipts of less than $50 million can use this credit to offset alternative minimum tax. Some start-up businesses that may not be subject to income tax will also be able to offset payroll taxes with the credit.

Work Opportunity Tax Credit: Extended to 2025, in accordance with the Consolidated Appropriations Act of 2021, the Work Opportunity Tax Credit is available to employers who hire the long-term unemployed (unemployed for 27 weeks or more) and is generally equal to 40% of the first $6,000 of salary paid to a new hire.

Employee health insurance expenses: For tax years beginning in 2022, the dollar amount of the average salary is $28,700 ($27,800 in 2021). This amount is used to limit the small employer health insurance credit and to determine who is an eligible small employer for credit purposes.

Business meals and entertainment expenses: Taxpayers who incur food and beverage expenses associated with the operation of a trade or business may deduct 100% (50% for tax years 2018-2020) of such expenses for tax years 2021 and 2022 taxation, pursuant to the Consolidated Appropriations Act of 2021, as so long as the meal is provided by a restaurant.

Transportation benefits provided by the employer: If you offer transportation benefits to your employees in 2022, the maximum monthly limit for transportation in a commuter road vehicle plus any public transit pass is $280. The monthly eligible parking limit is $280.

(This column is for informational purposes only and should not be taken as advice. This checklist outlines important tax changes for 2022, but more are likely to occur. Taxes are complex and mistakes can be costly, and consideration should be given to seeking professional advice on tax matters. .)

Norm Grill, CPA, is Managing Partner of Grill & Partners LLC, chartered public accountants and consultants to private companies and high net worth individuals, with offices in Fairfield and Darien.