Senate approves Tax Extenders Bill
In December 2014, the Senate passed the Tax Increase Prevention Act. The bill, which extends the life of a number of tax breaks through 2014, passed the Senate by majority vote. The bill now goes to President Obama, who is expected to sign it into law.
The legislation puts back into effect for all of 2014 a group of tax breaks that expired at the end of last year.Among the highlights of the bill are the research and development (R&D) credit, first-year bonus depreciation, and the increased Sec. 179 expensing limits are all extended. The bill was combined with the Achieving a Better Life Experience Act, also known as the ABLE Act, to help those with disabilities and their caregivers to save and provide for education, housing, and medical expenses in the future.Various other tax incentives for individuals and businesses have been extended through the end of 2014.
Some of the Act’s highlights include:
Business Tax Extenders
• Bonus depreciation has been extended through 2014, allowing an additional first year deduction of 50 percent of the cost of qualified property.
• The Section 179 rules have been extended allowing for the expense of $500,000 on qualified property.
• The exclusion from capital gains tax of 100 percent of qualified small business stock sold by an individual.
• Reduction in S corporation recognition period for built-in gains tax to five years rather than 10 years.
• The Work Opportunity Tax Credit for hiring of military veterans and other qualified individuals
• The Research Tax Credit
• New Markets Tax Credit
Energy Tax Extenders
• Credit for nonbusiness energy efficiency property, extended one year.
• Biodiesel and renewable diesel credits are extended.
• The renewable electricity production credit. This includes the wind production tax credit.
• The above the line deduction for Energy efficient commercial buildings has been extended.
Individual Tax Rates
• All current individual marginal tax rates are retained (10, 15, 25, 28, 33 and 35 percent) including the recent increased top rate of 39.6 percent.
Personal Tax Changes
Among the 50 extenders and changes are restoration of teachers’ deductions for classroom supplies, sales tax deductions, qualified tuition expenses and mortgage insurance deductions.
We Are Here To Help
Passage of sweeping retroactive tax legislation complicates tax planning for businesses and individual taxpayers. Please call us if you have any questions about this legislation or other tax matters. There is still time to take action in 2014 if warranted.