United States

Possible tax reform benefit for partnerships, entrepreneurs

A look at the math behind a new deduction that can lower taxes


Entrepreneurs and growth-minded middle market businesses could see a substantial bottom-line impact from the pass-through tax provisions in the Tax Cuts and Jobs Act of 2017. In this video series, Patti Burquest and Don Susswein, principals in RSM’s Washington National Tax office, unpack the potential tax savings from the pass-through provisions in the tax reform package.

Watch part one for an overview on how the new regulations can cut a business owner’s entire income tax bill by 20 percent or more, depending on the circumstances. While some rules kick in as a taxpayer’s income levels rise, the new law tries to treat all entrepreneurs the same and recognizes the value of risk-taking and investment.

Part two continues the discussion, with a focus on scenarios based on business’ size, structure (e.g., partnership, sole proprietor), the owners’ incomes, their investments in tangible assets and labor, and the interplay of the pass-through deduction and varying tax rates.

The pass-through treatments reflect the overarching economic policy of this tax reform—to reduce the relative income tax burden on business income, as compared to the taxes imposed on wages and salaries or portfolio income.


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