Dear Jason – July 2021
I own a C Corporation and hear in the news that the tax rates for C Corps may increase to 28%. Is there anything that I can do?
It is becoming more costly for smaller “Mom-and-Pop” businesses to file as a C Corporation. Prior to 2018, C Corps had a gradual tax and if they had taxable income of under $50,000, C Corps were taxed at 15%. Starting in 2018, C Corps moved to a flat tax rate of 21%. There are some new proposals to increase the tax rate on C Corps to 28% (this has not passed as of the writing of this article). If you own a C Corporation, then you will likely save some money through tax planning. One option may be to have your C Corp elect to file as an S Corp. You should consult with a CPA before doing so, both to verify that it is beneficial, and to also be aware of the additional requirements unique to S Corps.