On December 18, 2015, Congress passed the 2016 Federal Budget which included many provisions and President Obama has signed it into law.
This bill, Protecting Americans from Tax Hikes Act of 2015 (the PATH Act) PERMANENTLY extends the Section 179 deduction and phase-out amounts in effect from 2010 to 2014 ($500,000 and $2 million, respectively). The Section 179 deduction is reduced dollar for dollar by the cost of qualified property placed in service during the tax year over the phase-out amount. Starting in 2016, both the $500,000 deduction and $2 million phase-out amount will be indexed for inflation. The bill also states that air conditioning and heating units placed in service after December 31, 2014 will now qualify for the Section 179 deduction.
Here is a list of key provisions:
Made permanent:
• Enhanced Child Tax Credit
• Enhanced American Opportunity Tax Credit
• Enhanced Earned Income Tax Credit
• Above-the-line educator deduction
• Sales tax deduction
• Enhanced mass transit and parking pass benefits
• IRA-to-charity — California automatically conforms
• R&D credit
• IRC §179 — enhanced
• Enhanced exclusion of gain on sale of small business stock
• Built-in gains holding period
Extended through 2016:
• Qualified tuition deduction
• Nonbusiness Energy Property Credit
• COD principal residence exclusion
• Mortgage insurance premium deductible as interest
Extended through 2019:
• Bonus depreciation — phases out
• First year bonus depreciation on automobiles — enhanced
• Work Opportunity Tax Credit
As always, if you have any questions, please call us, Bressler & Company, at 559.924.1225.
