On December 18, 2015, a new tax law was enacted to retroactively reinstate a number of tax provisions for 2015 and beyond that would have otherwise expired after 2014. Some of these provisions were made permanent, while others were extended for a few years. The enactment of this legislation should help businesses plan with greater certainty. Here is a summary of some key provisions and their updated expiration date, if any:
Extended Through 2016
• Up to $2 million exclusion from taxable income for forgiveness of debt on a primary residence.
• 10% tax credit for energy property on a primary residence or second home.
• 30% tax credit for solar energy expenditures has been extended through 2021.
Extended Through 2019
• Bonus depreciation on acquisition of new equipment – 50% through 2017, 40% for 2018, and 30% for 2019.
• $250 Page 1 Form 1040 deduction for K-12 teachers for unreimbursed supplies.
• $100,000 exclusion from taxable income for required minimum annual IRA distributions donated directly to charities by individuals age 70-1/2 or older.
• 20% tax credit for research and development expenditures.
• $500,000 maximum Section 179 deduction for equipment purchases, rather than $25,000.
• 15 year straight-line depreciable life for qualified leasehold improvements, restaurant property and retail improvements.
The research and development (R&D) tax credit is greatly underutilized. If your business performs any sort of scientific research, to enhance your current product line or develop new products, you probably qualify for the R&D credit. We had published a detailed tax tidbit in the January 2014 chamber newsletter about the R&D credit.
If you have any questions about these extended tax provisions, particularly the R&D tax credit, please contact us.