2015 Extenders Legislation Does More Than Extend Tax Breaks– December 18, 2015

On December 18, the Senate passed the Protecting Americans from Tax Hikes Act of 2015 (the PATH Act), which the House had passed on December 17 and the president is expected to sign into law. Many popular tax breaks had expired December 31, 2014, so for them to be available for 2015 Congress had to pass legislation extending them. But the PATH Act does more than that.

Instead of extending breaks for just a year or two, which had been Congress’ modus operandi in recent years, the PATH Act makes many popular breaks permanent and extends others for several years. The PATH Act also enhances certain breaks and puts a moratorium on the Affordable Care Act’s controversial medical device excise tax.

It’s not all good news for taxpayers, however. For example, while the PATH Act extends bonus depreciation through 2019, it also gradually reduces its benefits. Some breaks are only extended through 2016.

Below is a quick rundown of some of the key breaks that have been extended or made permanent that may benefit you or your business.

Breaks Made Permanent

  • Enhanced Section 179 expensing election
  • Depreciation-related breaks for qualified leasehold-improvement, restaurant and retail-improvement property
  • Research and Development (R&D) credit
  • Reduction in S corporation recognition period for built-in gains tax
  • Transit benefit parity
  • Deduction for charitable contributions of food inventory
  • Specials rule for contributions of capital gain real property made for conservation purposes
  • IRA distributions to charity
  • Deduction for certain expenses of elementary and secondary school teachers
  • State and local sales tax deduction
  • Small business stock gains exclusion
  • Enhanced child credit
  • American Opportunity credit

Breaks Extended Through 2019

  • Bonus depreciation
  • Work Opportunity credit
  • New Markets credit

Breaks Extended Through 2016

  • Empowerment Zone tax incentives
  • Mortgage debt forgiveness exclusion
  • Deductibility of mortgage insurance premiums
  • Qualified tuition and related expenses deduction
  • Various energy-efficiency tax credits

Year-End Planning Opportunities Still Available

Many of the PATH Act’s provisions provide an opportunity for taxpayers to enjoy significant tax savings on their 2015 income tax returns — but quick action (before January 1, 2016) may be needed to take advantage of some of them. Check back soon for a more detailed analysis of the PATH Act's impact, from both a business and individual perspective. Our tax advisors also will be reaching out to clients regarding any additional opportunities. Feel free to contact a member of your service team if you have specific questions about what you need to do before year end to maximize your savings.

We want to hear from you! We encourage you to comment below on this blog post, share it on social media or contact Tracy Monroe at tmonroe@cohencpa.com or a member of your service team for further discussion.