The Protecting Americans from Tax Hikes Act of 2015 was signed by President Obama on December 18, 2015. It made permanent 22 of the annually expiring tax provisions relating to individuals and businesses. The Act also extended many provisions through 2016 and four through 2019.
Permanent individual provisions include:
- Above the line deduction for up to $250 of educator expenses for eligible elementary and secondary school teachers, making the amount indexed to inflation;
- Child Tax Credit of up to $1,000 per child with income threshold at $3,000 for the refundable portion;
- Enhanced Earned Income Tax Credit (EITC) for those with 3 or more children;
- American Opportunity tax credit on 1st four years of post-secondary education;
- Itemized deduction of state and local SALES tax in lieu of state and local INCOME taxes;
- Tax-free charitable donation up to $100,000 from an IRA for taxpayers 70½ or older; and,
- Monthly exclusion for employer-provided transit/vanpool benefits up to $250, making it the same amount as employer-provided parking.
Permanent business provisions include:
- Increased dollar limit to $500,000 for §179 expensing, subject to a gradual reduction once capital expenditures exceed $2 million (these amounts are indexed for inflation while removing the qualified real property expense limit);
- Eligibility for expensing on HVAC’s placed in service after 2015;
- 15-year straight line cost recovery period for qualified leasehold improvements, qualified restaurant property, and qualified retail improvements;
- Research Credit and Employer Wage Credit for employees called to active military duty and available to any size employer;
- Enhanced charitable deduction for business owners for contributions of wholesome food inventory;
- Five year S-Corp recognition period for built-in-gains tax; and,
- 100% gain exclusion on the disposition of qualified small business stock.
Provisions extended through 2016 include:
- Indian Employment Credit and Differential Wage Payment Credit;
- Empowerment Zone Tax Incentives for businesses and individuals residing in an eligible zone;
- Itemized deduction for mortgage insurance premiums paid or accrued in connection with the acquisition of a qualified residence;
- Cancellation of debt income exclusion on qualified principal residence up to limitation amount for filing status;
- Above-the-line deduction for qualified tuition and related expenses for higher education (up to $4,000); and,
- Credit up to $500 for nonbusiness energy property.
Provisions extended for 4 years through 2019 include:
- $3.5 billion of New Markets Tax Credits for each year through 2019;
- Work Opportunity Tax Credit and increased credit to 40% of the 1st $6,000 of wages of a qualified hired employee;
- Bonus depreciation on property placed in service (50% through 2017, 40% in 2018, and 30% for 2019); and,
Look-through treatment for payments of dividends, interest, rents, and royalties between related controlled foreign corporations.