2022 Income Tax Planning
Written By Donovan Thiessen, CPA
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axpayers and their tax advisors have faced a myriad of law changes since the Trump administration passed the 2017 tax reform. Many of the law changes that went into effect on January 1, 2018, will sunset after 2025. Suppose the laws are not extended or changed. In that case, Corporations’ maximum tax rate will increase from 21% to 35%, and the 20% qualified business income deduction available to other business income will expire. Many other tax provisions will sunset and revert to the laws in effect before 2018. This means in 2026, your Raiders and Vegas Golden Knights season tickets will once again be 50% tax-deductible if you purchase the tickets by your business and utilize them for business purposes. This article will inform you of a few other popular tax breaks and tax planning opportunities that you should consider before year-end.
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For those of you still on the fence regarding the purchase of solar panels, the tax credit will decrease from 26% to 23% after 2022. To qualify for 2022, the panels must be installed and operational before December 31, 2022. The credit works for solar-powered water heaters and home battery storage. The system must be purchased, not leased. If your system cost is $20,000, you may qualify for a tax credit of $20,000 x 26% = $5,200. If you otherwise have an income tax liability of $10,000, this credit will reduce it by $5,200. If you don’t use all of your credit in 2022, it will be carried forward to 2023. Business owners have been utilizing bonus depreciation on new and used business assets, such as vehicles, office equipment, and other assets with a useful life of 20 years or less. In 2022 you can still take 100% bonus depreciation
