Obama Signs “Protecting Americans from Tax Hikes Act of 2015”

Courtesy of our friends and Strategic Partner, Cray Kaiser, Ltd., here is what you need to know about President Obama’s signing of “Protecting Americans from Tax Hikes Act of 2015”. The act will affect your tax planning for this year and also provide clarity as to what tax rules will apply in the future.

Business provisions in the law include:

  • Improved Section 179 deductions.  The new law makes permanent a $500,000 Section 179 expensing limitation ($2,000,000 maximum investment), indexed for inflation (before passage, the limitation was $25,000).
  • The popular 50% bonus depreciation provision has been reinstated for the 2015-2017 tax years.  In 2018, the allowable deduction is 40%; in 2019 the deduction falls to 30%.
  • The R&D tax credit is now permanent.  Additionally, taxpayers with gross receipts under $50 million can utilize the credit against their AMT.  Taxpayers with gross receipts under $5 million can utilize the credit against the employer’s payroll tax liability.
  • The basis provisions related to S corporations making charitable deductions has been permanently extended.
  • The five-year recognition period for built-in gains following conversion from a C corporation to an S corporation has been made permanent.

Individual provisions now made permanent in the law include:

  • Exclusion from income for IRA distributions made directly to a charity for those aged at least 70 ½ years old ($100,000 maximum).
  • The Enhanced Child Care Credit.
  • The American Opportunity Tax Credit.
  • Sales tax deduction in lieu of an income tax deduction.
  • $250 educator deduction.

If you have any questions regarding these changes or need assistance in your 2015 tax planning, please feel free to contact Cray, Kaiser Ltd.

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