The Tax Cuts and Jobs Act: Implications for Small Businesses

The Tax Cuts and Jobs Act includes two key changes that will affect small businesses: (1) the introduction of the 20 percent deduction on qualified business income and (2) the move toward a territorial system of taxation through the global intangible low-taxed income (GILTI), in which the profits of a foreign subsidiary of a U.S. company that meets certain conditions will not be subject to U.S. taxes.¹