However, much of SBH’s rural sales reps will be on the losing side of the new tax law. A typical SBH traveling sales rep might earn $60,000 per year, but could incur $20,000 in unreimbursed business travel expenses. Thus, this rep really only earns $40,000 per year.
Under the old tax code, the typical rural SBH sales rep could deduct the $20,000 of unreimbursed business travel expenses (stuff like 25,000 miles on their personal car and hotel and meals away from home) as a Miscellaneous Itemized Deduction on Schedule A via Form 2106 for Unreimbursed Employee Business Expenses. So, the SBH rep that really only netted $40,000 from their job, only paid taxes on the $40,000.
However, the new tax law completely eliminated all Miscellaneous Itemized Deductions on Schedule A. Now the SBH rep has to pay income taxes like they earned $60,000 even though they spent $20,000 to earn that paycheck. This will result in roughly $4,000-$5,000 in higher taxes for the SBH traveling sales rep.
So, under the old tax law, the SBH sales rep that makes $60,000 in W-2 wages had a real net pay of $40,000, less $4,000 federal tax, less $4,500 in payroll taxes might have had $31,500 in spendable income. Under the new tax law, that spendable income may fall 13-16% to around $28,000.
So, under the old tax law, the SBH sales rep that makes $60,000 in W-2 wages had a real net pay of $40,000, less $4,000 federal tax, less $4,500 in payroll taxes might have had $31,500 in spendable income. Under the new tax law, that spendable income may fall 13-16% to around $28,000.