secure plus financial
How Rising Inflation may lead to Higher tax bills
Taxes you pay may go up this year because of inflation. And if you’re a business owner, it could mean even higher taxes! Taxes have been rising over the past year and it’s possible you’ll pay more in taxes than before. But there are ways to manage your taxes wisely, making sure they still work for you. If your taxes are increasing, don’t panic; reach out for help from one of our experts today! We offer a tax consulting session at no cost.
Continuous Increase in Prices of diesel, goods, and services
Inflation is a process of continuous increase in the general price level of goods and services; it’s usually measured as the annual percent change in a cost-of-living index, but can also be measured by changes in individual prices or even changes in taxes.
What may cause inflation?
There are a variety of different reasons that may cause inflation, such as devaluation of currency, taxes, or demand for certain goods. Inflation may also be a sign that the economy is struggling or has been stagnant for too long. Other reason include:
- Tax Hikes
- Increment in the money supply
- Increases in government spending
The Rise of Inflation in 2021
The rise of inflation has been steady over the past year, with the Consumer Price Index (CPI) currently at 6.2% for all items. This means that if your income stays constant, you need to spend 6.2% more money every year just to maintain your standard of living. That’s why it’s so important for business owners to have some kind of inflation protection through tax and business planning.
Your Tax Burden Increases with Inflation
Taxes haven’t increased as quickly as inflation, but now it’s possible to pay more in taxes than you used to; this is because the IRS calculates taxes based on income and inflation.
Those who earn less money may not be susceptible to these changes; however, for business owners like yourself, it might raise your taxes.
What's a helpful solution for business owners to overcome inflation?
When you manage your taxes wisely, taxes pay for themselves; It’s important to stay ahead by making sure you’re getting all the deductions and credits possible.
Stay ahead with a Tax Planning Strategy
Taxing is on the rise and it’s important to stay ahead of your taxes. There are many ways you can cut your taxes: by managing them wisely and getting all deductions possible through a smart tax management. If you’re experiencing tax increases this year or would like help to reduce taxes, contact our team today!
Need help lowering your 2021 tax payments?
We are here to assist your company during this tough economic time. Let’s work together to help you lower or eliminate your taxes so that you can increase the cash flow of your business.