Each year the IRS updates a half dozen numbers that small business
finance professionals use for both compliance and wealth building
reasons.  Here’s a quick review…

Income tax brackets, personal …….. varies

As one CPA so succinctly stated for us: you want to be at the top
of the lowest possible tax bracket.
Recent posts on tax planning can be found here and here.

Income tax brackets, corporate….varies

In addition to the rule above for individual tax brackets, closely held
C Corporations offer the opportunity to “play the brackets” i.e. balance
taxable income between the corporation and its shareholders individually
to achieve the lowest possible overall effective tax rate.

Section 179……………….$112,000

Opportunity to accelerate depreciation and reduce taxable income in
the current year.

Business mileage rate…………..$0.485

Maximum (but not mandatory) tax deduction for business miles driven,
non-company-owned vehicles.

Retirement plan limits………..varies

Ability to tax shelter from $4K to $45K with maximum compensation
considered @ $225,000.

Social security wage base…$97,500

When your W-2 exceeds this, the 6.2% Social Security payroll tax drops
off for both employer and employee, leaving only Medicare
(1.45% with no wage base limit). Income tax withholding continues, though.

Also important are your state rates, which might differ from federal
with respect to income tax brackets, section 179 treatment, payroll
and sales taxes.

[tags]Small business finance, 2007 mileage rates, retirement plan limits,
tax planning, section 179 depreciation[/tags]