Tax “Extenders” Renewed in Late December Legislation

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In mid-December 2015, Congress renewed the extenders that expired last year.

But this time, the extender renewal went further than making the breaks retroactive to the beginning of 2015. Some of the rules are now effective through December 31, 2016, some are effective through 2019, and some are effective permanently. Other provisions made changes to existing tax rules that were not part of the extenders.

Are you wondering what federal breaks are once again available for your 2015 personal and business income tax returns? Here’s an overview of selected provisions from the new law, Protecting Americans from Tax Hikes Act of 2015.

  • Bonus depreciation. You can expense 50% of the cost of new property you bought and began to use in 2015. The deduction was extended through 2019.
  • Section 179. The immediate expensing limit for new and used property purchased and placed in service during 2015 is $500,000. Your total Section 179 deduction is limited when you purchase $2,000,000 or more of assets during the year. The new thresholds are now permanent and will be indexed for inflation.
  • Charitable contributions from IRAs. When you’re age 70½ or older, you can make a tax-free distribution to a charity from your IRA. This break was reinstated for 2015 and is now permanent.
  • State and local sales tax deduction. If you itemize, you can claim a deduction for these taxes instead of state and local income taxes on your 2015 return. This deduction is now permanent.
  • Qualified tuition expenses. The new law reinstated the above-the-line deduction of up to $4,000 for higher education expenses for yourself or other family members. You can claim this in 2015 and 2016.
  • Teacher classroom expenses. The deduction for up to $250 of out-of-pocket eligible educator expenses is available for your 2015 return. It’s now permanent and will be indexed for inflation beginning with 2016 tax returns.

Please contact us for details about other tax breaks that will apply to your 2015 tax return.

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