Congress passed and the President signed the “Protecting Americans from Tax Hikes Act of 2015” (PATH Act). Many of the provisions in the new Act will affect most businesses and individuals in some fashion. We are delighted to share the news of the passage of this new Act as many of our clients will benefit by now having the ability to engage in more consistent and thoughtful tax planning opportunities going forward.
The Act revives over 50 tax provisions, making some permanent while others are extended for multiple years. Some that were made permanent include such provisions as the research credit, Code Sec. 179 expensing and the Child Tax Credit. The bill also includes over 60 other provisions on miscellaneous topics, including real estate investment trusts, tax administration and more.
Overall, the PATH Bill calls for making permanent over 20 tax-extender benefits, split 50-50 between business and individuals. In addition, the bill allows eligible “small businesses” ($50 million or less in gross receipts) to use the research credit to offset their AMT liability as well as against the employer’s payroll tax liability beginning in 2016.
A few of the other provisions made permanent:
State and local sales tax deduction;
Special 15 year cost recovery for qualified leasehold improvements and qualified restaurant and retail improvement property;
an enhanced Earned Income Tax Credt;
an enhanced Child Tax Credit;
a modified classroom expense deduction;
tax-free distributions of up to $100,000 from IRA’s for charitable purposes; and an enhanced American Opportunity Tax Credit.
Extended and modified for 2015 through 2019:
Bonus depreciation, at 50 percent through 2017 and phased down to 40 percent in 2018 and 30 percent in 2019;
the Work Opportunity Tax Credit, modified; and
the New Markets Tax Credit, with a $3.5 billion allocation.
Lastly, many of the provisions that were in the last extenders package (December 2014) are revived for two years (2015 through 2016). Most notably, these include; an extension and modification of the exclusion of mortgage debt discharge; an extension of the above-the-line deduction for qualified tuition and related expenses; and other miscellaneous incentives for energy production and conservation.
Please check our website at www.blueandco.com for a more comprehensive review of the PATH Act of 2015.
Many of these provisions will bring opportunities and possibly valuable tax savings to our clients. Please do not hesitate to contact your Blue & Co CPA/advisor with any questions, comments or concerns about the new PATH Act of 2015. We look forward to serving you.
