2015 Year-end Tax Relief

2015 Year-end Tax Relief

2015 Omnibus Budget / Protecting Americans from Tax Hikes Act of 2015 Bill Note: 2015 Income tax rates are unaffected Personal – Permanently extended

  • Election to include State and Local General Sales Taxes as an itemized deduction, in lieu of deducting state and local income taxes.
  • American Opportunity Tax Credit (AOTC) at an increased level of $2,500, with adjusted gross income (AGI) phase-out of $80,000 (single) and $160,000 (married filing jointly).
  • Child Tax Credit for up to $1,000 for qualifying dependents under age 17
  • Teachers’ Classroom Expense Deduction as a deduction from Adjusted Gross Income for elementary and secondary school teachers’ classroom expenses. It provides for indexing the $250 ceiling amount for inflation beginning in 2016.
  • Transit Benefits Parity for transit benefits that include van pool benefits, transit passes and qualified parking.
  • Charitable Distributions from IRAs allowing individuals age 70 1/2 and older to be to make tax-free distributions from individual retirement accounts (IRAs) to a qualified charitable organization. The treatment is capped at a maximum of $100,000 per taxpayer each year. Excess amounts can be included as itemized deductions.
  • Qualified Conservation Contributions of capital gain real property for conservation purposes subject to the 50% of taxable income contribution limitation.

 Personal – 2 Year extensions (though 2016)

  • Qualified Tuition/Related-Expense Deduction as an above-the-line deduction for qualified tuition and fees for post-secondary education.
  • Mortgage Debt Exclusion from income for cancellation of mortgage debt on a principal residence of up to $2 million ($1 million for a married taxpayer filing a separate return).
  • Mortgage Insurance Premium deductible as qualified residence interest subject to adjusted gross income (AGI) phaseout.

Business – Permanently extended

  • Code Section 179 expensing up to $500,000, including qualified real property, with a $2 million overall investment limit before phase out. Both amounts will be indexed for inflation beginning in 2016.
  • The research and development tax credit with the alternative simplified credit increased from 14% to 20%.
  • The 100% gain exclusion on qualified small business stock if held for more than five years by a non-corporate taxpayer.
  • The five-year recognition period for built-in gain following conversion from a C corporation to an S corporation is retained.
  • 15-year straight-line cost recovery for qualified leasehold improvements, restaurant property and retail improvements is retained.
  • Employer wage credit for employees who are active duty members of the uniformed services.
  • Treatment of certain dividends of regulated investment companies (RICs).
  • Charitable deductions for the contribution of food inventory.
  • Tax treatment of certain payments to controlling exempt organizations.
  • Basis adjustment in stock when an S corporation makes charitable contributions of property.
  • Minimum low-income housing tax credit for non-federally subsidized buildings.
  • Military housing allowance exclusion in determining a low-income tenant.
  • RIC qualified investment entity treatment under FIRPTA.

Business – 5 Year Extensions (through 2019)

  • The Act extends bonus deprecation with a phase down:
  • 2015 – 2017 at 50 percent
  • 2018 at 40 percent
  • 2019 at 30 percent
  • The Work Opportunity Tax Credit has been extended through 2019 and has been enhanced for employers who hire certain long-term unemployed individuals.
  • The Act has allocated $3.5 billion for a New Markets tax credit for each year 2015 through 2109.

Business – Two Year Extenders (through 2016)

  • Indian employment credit/accelerated depreciation
  • Railroad track maintenance credit
  • Empowerment zones incentives
  • Film/television expensing
  • Mine rescue team training credit
  • Election to expense mine safety equipment
  • Qualified Zone Academy Bonds
  • Three-year recovery period for certain race horses
  • Seven-year recovery period for motorsports entertainment complexes

Energy Extenders

  • Code Section 25C Credit for residential energy property has been extended through 2016, which includes adding insulation, energy efficient exterior windows, and energy efficient heating and air conditioning systems. The Act also allows a credit of up to 10 percent of qualified expenses, but is capped at $500.
  • The Production Tax Credit for wind energy has been extended through 2019, but is subject to the following phase-down from 80 to 40 percent for 2017 through 2019.
  • The Act extends the solar investment tax credit and the credit for qualified residential solar property, subject to phase-downs, terminating after 2021.
  • The Energy-Efficient Commercial Building deduction has been extended through 2016, and has updated the energy efficient standards.

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