The Tax Extenders in Detail

The Protecting Americans from Tax Hikes Act of 2015, which was passed by the House and the Senate at the end of last week and signed into law by President Obama on Friday, extends a number of important tax breaks, and makes many of them permanent.

According to a report from Top 100 Firm SingerLewak, the law makes the following deductions, credits and other tax provisions permanent:

  • The Research & Development credit;
  • Increased expensing limitations and treatment of certain real property as Section 179 property;
  • The exclusion of 100% of gain on certain small business stock;
  • Reduction in S corporation recognition period for built-in gains tax;
  • The enhanced Child Tax Credit;
  • The enhanced American Opportunity Tax Credit;
  • The enhanced Earned Income Tax Credit;
  • The deduction for certain expenses of elementary and secondary school teachers;
  • Parity for exclusion from income for employer-provided mass transit and parking benefits;
  • The deduction of state and local general sales taxes;
  • The special rule for contributions of capital gain real property made for conservation purposes;
  • Tax-free distributions from individual retirement plans for charitable purposes;
  • The charitable deduction for contributions of food inventory;
  • The tax treatment of certain payments to controlling exempt organizations;
  • Basis adjustment to stock of S corporations making charitable contributions of property;
  • The employer wage credit for employees who are active duty members of the uniformed services; 15-year straight-line cost recovery for qualified leasehold improvements, qualified restaurant buildings and improvements, and qualified retail improvements;
  • The treatment of certain dividends of regulated investment companies;
  • The Subpart F exception for active financing income;
  • The minimum low-income housing tax credit rates for non-federally subsidized buildings;
  • The military housing allowance exclusion for determining whether a tenant in certain counties is low-income; and,
  • Regulated investment company qualified investment entity treatment under the Foreign Investment in Real Property Tax Act.

The following provisions were extended and modified through 2019, according to SingerLewak:

  • Bonus depreciation, at 50 percent for 2015-2017 and phased down to 40 percent in 2018 and 30 percent in 2019;
  • The Work Opportunity Tax Credit, modified and enhanced for employers who hire long-term unemployed individuals (unemployed for 27 weeks or more) to 40 percent of the first $6,000 of wages;
  • The New Markets Tax Credit, providing $3.5-billion allocation each year through 2019, the carryover period for the credit has also been extended to 2024.

And the following are revived and extended through 2016:

  • Modification of the exclusion of mortgage debt discharge; 
  • Mortgage insurance premiums treated as qualified residence interest;
  • The above-the-line deduction for qualified tuition and related expenses; and,
  • Over a dozen incentives for energy production and conservation.
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