Many small businesses not sure yet

Small business owners may want to hand out bonuses and raises now that there's a new tax law, but many don't know if they'll have any wealth to share.

"We didn't base any raises or bonuses on the tax situation because, quite frankly, until it actually happens, no one's sure what's going to happen," says Rod Hughes, a vice president at Kimball Hughes Public Relations in Blue Bell, Penn. The company gave its seven full-time employees year-end bonuses last month.

It's easier for big companies like Walmart and Home Depot to award bonuses because they already know their top tax rate is dropping to 21% from 35% under the old law. Millions of small business owners have far less certainty.

The law provides for a break for the owners of sole proprietorships, partnerships and small businesses structured as what are called S corporations. But while they can deduct 20% of their business income, the size of the deduction declines when an individual owner's taxable income reaches $157,500. And the IRS still needs to issue regulations on how these owners' business income is calculated.

Read more...