President Trump and the Republican Congress has a tax bill for you. It’s been widely discussed in the media and many analysts have been very vocal about its overall effects on individuals and the economy. But politics aside, just how will your business be affected by the bill? Short answer is, it depends on the business.


The biggest benefits are coming to pass-through entities. These compose a majority of U.S. businesses and are non-corporate entities like sole proprietorships, partnerships, S-corporations, and others that don’t derive income from dividends or have shareholders. Mostly we’re talking about business that are operated by an individual, or individual partners.


Before now, pass-through businesses were taxed at the individual level. The Republican tax plan is aiming to be kinder to businesses, and they’ve deemed that the individual tax rate is still too high at this point. So, to split the difference, the new tax bill would allow pass-through businesses to automatically deduct up to 20% of their earned income, thus saving a significant portion of their overall tax bill.


There are limits and trade-offs, of course. To qualify for the deduction, individuals must have an income of $157,500 or less. Married couples are able to deduct the full 20% with income less than or equal to $315,000. Certain professional services are also excluded from claiming this deduction. This part of the bill also includes a “capital element” that may exempt wealthy property owners from the cap. Businesses over the cap can meet the criteria for the deduction in a Twister-esque mathematical contortion. In fact, one of the biggest complaints of the bill is that it appears poised to benefit booming real estate businesses a great deal, as opposed to everyday American workers.


So what are some other trade-offs? Well, most of the itemized deductions that businesses and individuals claim on their taxes no longer qualify. Things like business expenses, mortgage deductions, and property taxes are all done away with. The standard deduction has been doubled for individuals, but it may not cover all the extra expenses going forward. In particular, health insurance costs are estimated to rise considerably now that the individual mandate has been scrapped.


If you’re an individual operating a pass-through business, then you’re likely to see at least some tax relief going forward. Just make sure to budget in advance for the deductions the bill has removed. If you live in an expensive area, make sure you keep an extra savings account for property taxes. If your business involves a lot of out-of-pocket purchases, make sure they’ll be covered by the standard deduction. If you have a high premium, shop around for health insurance on the marketplace to find a better plan. And, mostly importantly, if you find that you can’t manage on your own, then look into booking the services of a professional to maximize your financial security.