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.
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.