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2016 Protecting Americans From Tax Hikes Act

January 31, 2016

 

 

2016 Protecting Americans From Tax Hikes Act

Congress again held off until the end of the year to pass tax legislation, but this time some of the provisions have been made "permanent" meaning they do not automatically expire.  This latest stack of tax laws is called the Protecting Americans from Tax Hikes Act of 2015 (the 2015 PATH Act). 

 

Changes impacting individuals include:

  • The $2,500 tax credit for post-secondary education is now permanent.

  • Rules to qualify for the refundable child credit and earned income tax credit have been modified.

  • The $250 deduction for teacher's classroom supplies has been made permanent.

  • The option to deduct sales tax instead of state and local income taxes has been made permanent.

  • The deduction for mortgage insurance premiums has been extended through 2016.

  • The exclusion from income of up to $2 million of discharge of principle residence indebtedness is extended through 2016 and includes a discharge pursuant to a binding contract entered into in 2016.

  • The ability for taxpayers 70 1/2 or older to make a tax-free distribution from an IRA to a charity of up to $100,000 and have it count toward their RMD has been made permanent.

  • Also made permanent are increased limits for contributions of appreciated real property for conservation purposes.

Changes impacting businesses include:

  • The Section 179 elective business expensing of up to $500,000 of equipment annually has been made permanent.

  • Also made permanent is the allowance to expense computer software and certain improvements to retail and restaurant property.

  • Air conditioning and heating units will become eligible for the Section 179 deduction after 2015.

  • 50%  bonus depreciation has been extended through 2019.

  • Changes and extensions were made to the credits for active military reservists and the work opportunity tax credits.

  • Research tax credits have been modified and made permanent.

The PATH Act postponed the 40% excise tax on high-end health insurance plans (Cadillac plans) until after 2019.

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