On December 18, the Senate passed the Protecting Americans from Tax Hikes Act of 2015 (“PATH Act”), which the House had passed on December 17. Many popular tax breaks had expired on 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. This article provides a quick rundown of some of the key breaks that have been extended or made permanent that may benefit individual and business taxpayers.
Instead of extending breaks for just a year or two, which had been Congress’s 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. While the PATH Act does extend bonus depreciation through 2019, it gradually reduces its benefits. And it extends some breaks only through 2016.
Here 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 credit
• Reduction in S corporation recognition period for built-in gains tax
• Transit benefit parity
• Deduction for charitable contributions of food inventory
• Special rule for contributions of capital gains real property made for conservation purposes
• IRA distributions to charity
• Deduction of certain expenses for 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
What’s coming next?
Stay tuned to receive a more detailed analysis of the PATH Act over the next two weeks.