Tax Extender Bill Expected to Pass Congress
Wednesday, December 16, 2015

With only two weeks left in the 2015 calendar year, Congressional leaders have unveiled a wide-ranging deal on tax extenders, with several key provisions being made permanent. The bill, The Protecting Americans from Tax Hikes Act of 2015 (PATH Act) has been placed in front of Congress, and is expected to pass and be signed by the President before the end of the week.

While the bill is an extender package that will reinstate 52 provisions retroactively to January 1st, it is much different than those we have seen passed by Congress in the last several years. The PATH Act will add some much needed permanency to the Tax Code, and will not expire again on December 31st, as the last several tax packages have. Below is a list of important tax breaks that have been either made permanent, or have been extended for a set period of time.
Permanent Provisions
Business Provisions Made Permanent:

Section 179 Deduction: The Act has officially made permanent the Section 179 provision. Businesses will be able to immediately deduct up to $500,000 of the cost of qualifying asset acquisitions (with a phase-out beginning at $2 million). Computer software and qualified leasehold, retail and restaurant improvements will continue to be eligible for the Section 179 deduction as well. The Act is also indexing the Section 179 deduction for inflation for future years, with the amounts being announced each year.

15 Year Depreciation: Qualified leasehold, restaurant, and retail buildings and improvements will permanently be eligible to depreciate their property over 15 years, as opposed to the 39
 year recovery life.

R&D Credit: Businesses with less than $50 million in gross receipts will be able to use the research & development credit and offset alternative minimum tax.
Temporary Provisions

Provision Extended Through December 31, 2019:

Bonus Depreciation: The 50% immediate expensing of new asset acquisitions will be continued until December 31, 2017, before reducing to 40% in 2018 and 30% in 2019, and then will disappear altogether.

Provisions Extended Through December 31, 2016:

With the exception of those listed above, the majority of the remaining 52 provisions were extended for two years. 

Exclusion of Cancellation of Debt on Principal Residence: For two additional years, taxpayers will be eligible to exclude up to $2 million of what would normally be "cancellation of indebtedness" income due to foreclosure or a short sale of their principal residence.
  
Tuition Deduction: A maximum above-the-line deduction of $4,000 will be permitted for tuition costs for higher education.
  
Energy Incentives: The $500 credit for purchase of non-business energy-efficient property and the $2,000 credit available to the manufacturers of energy-efficient homes will also be available for two additional years.

As mentioned before, all of these provisions will be made retroactive to January 1, 2015 should this pass through Congress (which it is expected to do). If you have any questions regarding the above provisions, or other provisions that were not mentioned here, please do not hesitate to give us a call.

Thank you,