Tax Extenders Legislation is Enacted

On December 18, 2015, President Barack Obama signed the Protecting Americans From Tax Hikes Act of 2015. The Act extends dozens of favorable tax benefits that expired at the end of 2014. Following are some of the key provisions included in the bill.

Permanent extension of the following –

• R&D tax credit, with AMT turn-off and start-up provisions for taxpayers with average gross receipts of under $50 million the past three years
• Earned income tax credit
• Child tax credit
• American Opportunity Tax Credit
• Section 179 expensing at the $500,000 level, with a $2,000,000 phase-out threshold – indexed for inflation starting in 2016
• Deduction of state and local sales taxes
• Up to $100,000 in qualified charitable distributions from an IRA without including the distribution in income for taxpayers over 70 ½
• Reduction of the S Corporation recognition period for built-in gains tax to five years
• Deduction for certain expenses of teachers up to $250, indexed for inflation beginning in 2016

5-year extension of the following –

• Work Opportunity Tax Credit
• Bonus depreciation (50% in 2015-2017; 40% in 2018; 30% in 2019)
• New Markets tax credit
• Some provisions for wind and solar, with phase-outs

2-year extension of the following – 

• 179D provisions
• Exclusion from income for discharge of qualified principal residence debt
• Deduction for mortgage insurance premiums
• Tuition deduction
• Certain energy-related credits 

The bill also delays for two years – 

• Imposition of the “Cadillac” healthcare tax
• Imposition of the 2.3% medical device excise tax

The above represent just a handful of the provisions that were part of the legislation. Please see an article in the Journal of Accountancy for a more detailed list.