President Signs Tax Extenders Bill

As of this afternoon, both houses of Congress have passed and the President has signed a tax bill which retroactively extends many of the tax provisions that expired as of January 1, 2015.
Some of the more significant business extenders, all of which have been renewed retroactive to January 1, 2015 include:

  • The research and development credit has been made permanent and is now allowable against AMT for eligible small businesses.  For 2016 forward, qualifying taxpayers can claim up to $250,000 of the credit against their FICA tax liability.
  • The section 179 deduction has been made permanent at $500,000, with a $2 million phase-out threshold, both of which are indexed to inflation.
  • Bonus depreciation has been renewed at the 50% rate for 2015 through 2017 at which point it drops to 40% for 2018, 30% for 2019, and then expires.
  • The 15 year life for qualified leasehold improvement, qualified restaurant, and qualified retail improvement property have all been made permanent.
  • The reduction in the S Corporation “built in gain” period to 5 years has been made permanent.
  • The Work Opportunity Tax Credit has been extended through 2019.
  • Many energy related deductions and credits (business and personal) have been extended through 2016.

In addition, the bill delays the Cadillac tax on high cost health care plans for two years until 2020 and suspends the tax on medical devices for 2016 and 2017.
The following individual tax provisions have been extended retroactively to January 1, 2015:

  • The above the line deduction for up to $250 of qualified expenses for teachers has been made permanent.
  • The American Opportunity Tax Credit and tuition deduction for higher education expenses have been made permanent.
  • The sales tax deduction has been made permanent.
  • The ability of individuals over age 70 ½ to directly transfer up to $100,000 from their IRA to a qualified charity without including the amount in income has been made permanent.
  • Exclusion from income of the gain on disposition of certain small business stock has been made permanent.
  • Removal of the requirement to reduce the basis of S corporation stock by the appreciation attributable to charitable gifts of property has been made permanent.
  • The Child Tax Credit has been permanently extended at up to $1,000 per child.

There is much more to this tax bill but these are the highlights.  Happy Holidays!