New Tax Legislation - the Path Act
Congress passed and President Obama signed legislation on December 18, 2015 extending a number of expired tax provisions. The legislation benefits businesses as well as individuals. Some key items are highlighted below.
Section 179 is now permanent
• For 2015, Section 179 expensing limit is $500,000 with a $2 million overall limit.
• The $500,000 and $2 million limits are indexed for inflation beginning in 2016.
• Heating and air conditioning units placed in service in tax years after 2015 are eligible for expensing.
• The $250,000 expense limitation on qualifying real property is removed under this provision beginning in 2016.
• Expensing for computer software and treatment of qualified retail improvement property, restaurant property and leasehold improvement property as 15 year property is also permanently extended.
Bonus Depreciation Extension with a phase out
• 50% bonus depreciation is extended for property placed in service during 2015-2017
• Modification to 40% in 2018 and 30% in 2019
Research & Development Credit is now permanent
• Alternative simplified credit rate increases to 20%
• In 2016, businesses with $50 million or less in gross receipts may claim the credit against alternative minimum tax liability
Tax-free distributions from individual retirement plans for charitable purposes
• Permanent extension for individuals who are at least 70 ½ years of age to exclude from gross income qualified charity contributions from their individual retirement accounts (IRAs) (capped at $100,000 per taxpayer in any single tax year).
Work Opportunity tax credit extension
• The work opportunity tax credit is extended through 2019.
• In 2016, the credit is also modified for employers who hire qualified individuals who have been unemployed for 27 or more weeks and increases the credit to 40 percent of the first $6,000 earned for these long-term unemployed individuals.
Sales and Local General Sales Tax Deduction extension
• Permanent extension of the ability to claim an itemized deduction for state and local general sales taxes in the place of an itemized deduction for state and local income taxes.
What does all this mean for you?
Contact Creations Tax Service & Consulting if you have questions on this summary or want to understand how the PATH Act legislation may impact you or your business
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