Tell Legislators Not to Increase Taxes on Small Businesses
In the 2017 federal tax-reform bill, small-business owners who operate S Corps or LLCs, meaning that they file their tax returns as individuals and incorporate business income into their overall income, received a 20% deduction on their first $315,000 on joint income. That break represented savings of tens of thousands of dollars for many businesses.
De-coupling such a break from federal law would mean that the state, which typically allows businesses and individuals to pay state taxes based on the income they reported to the federal government, would have to add that 20% pass-through back onto the income for which they are taxed by Colorado. That in turn would produce higher tax revenues for the state by requiring higher payments from business owners.
Many of the smallest businesses in Colorado have been hammered hardest by restrictions under which they were closed for the better part of two months or forced to operate with limitations. Restaurants, for example, had to close their dining rooms and could only serve food to-go from March 17 until May 27.
If this legislation is passed small businesses, including REALTORS®, would pay higher taxes for the next six years.
