Small Business Tax Changes for 2015

Social Security Maximum, Business Mileage, Depreciation and Deductions

Here are the small business payroll tax and other business tax changes in effect for 2015 business taxes that you need to know about. Included in this list are changes to the Social Security maximum, IRS standard mileage rates, and new additional Medicare taxes that affect self-employed individuals.


These tax changes are for 2015 taxes, reported in 2016.

IRS Standard Mileage Rate for 2015

business mileage standard mileage rate
James F. Dean/Photolibrary/Getty Images

The IRS standard mileage rate has changed for 2015. Here are the rates:

  • 57.5 cents per mile for business miles
  • 23  cents per mile for medical or moving purposes
  • 14 cents per mile driven in service of charitable organizations

These rates are in effect for the entire year for businesses taking the standard mileage deduction.

Businesses may decide to deduct mileage using either the standard mileage rate or actual expenses. If you drive less than 50% for business, you probably want to use the standard rate, but if you drive over 50% for business, adding actual expenses might be better. Read more about the standard mileage rate vs. actual miles. More

Increased Social Security Maximum Tax in 2015

The tax rate for Social Security remains the same but the maximum deduction has been increased for 2015, to $118,500. This maximum affects employees and it also affects small business owners who must pay self-employment tax.

If a business owner also has income from employment, employment income is considered first, then earnings from self-employment. Read more about how the Social Security maximum works for income from employment and self-employment. More

Additional Medicare Taxes

Beginning with tax year 2013 and continuing through 2015, an additional Medicare tax rate of 0.9% is applied to combined employment income and self-employment income above these levels:

  • Married filing jointly - $250,000
  • Married filing separately - $125,000
  • Single - $200,000
  • Head of household (with qualifying person) - $200,000
  • Qualifying widow(er) with dependent child - $200,000

This additional tax must be withheld from employee pay above $200,000. For self-employed business owners, this additional Medicare tax is included in self-employment tax calculations.

In addition, also beginning with the 2013 tax year, a net investment income tax of 3.8% on investment income is imposed on higher income individuals, including business owners. More

Section 179 Deduction Limit Cut to $25,000

Businesses can expense the entire cost of equipment in the year of purchase under Section 179, rather than spreading out the cost over multiple years using regular depreciation. For 2015 businesses can expense up to $25,000 (down from $500,000 in 2013).

Qualified leasehold improvements, qualified restaurant and retail improvements can be depreciated over 15 years if the asset is placed in service during 2013. For 2015, these assets will be depreciated over 39 years.


Continue Reading...