Enhanced Expensing Made Permanent
- The $500,000 expensing limitation and $2 million phase-out amounts are retroactively extended and made permanent. (Code Sec. 179(b), as amended by Act Sec. 124(a))
Bonus First-Year Depreciation Extended Through 2019
New law. The Act extends bonus depreciation for qualified property acquired and placed in service during 2015 through 2019 (through 2020 for certain longer-lived and transportation property). Eligible taxpayers will be able to claim:
- (1) a 50% bonus depreciation allowance for qualified property placed in service in 2015 through 2017 ;
- (2) a 40% bonus depreciation allowance for qualified property placed in service in 2018; and
- (3) a 30% bonus depreciation allowance for qualified property placed in service in 2019. (Code Sec. 168(k), as amended by Act Sec. 143; Joint Committee Explanation)
- Under the luxury auto dollar limits of Code Sec. 280F, depreciation deductions (including Code Sec. 179 expensing) that can be claimed for passenger autos are subject to dollar limits that are annually adjusted for inflation. For passenger automobiles placed in service in 2015, the adjusted first-year limit is $3,160. For light trucks or vans, the adjusted first-year limit is $3,460. Light trucks or vans are passenger automobiles built on a truck chassis, including minivans and sport-utility vehicles (SUVs) built on a truck chassis that are subject to the Code Sec. 280F limits because they are rated at 6,000 points gross (loaded) vehicle weight or less.
- The applicable first-year depreciation limit is increased by $8,000 (not indexed for inflation) for any passenger automobile that is “qualified property” under the bonus depreciation rules of Code Sec. 168(k) and which isn’t subject to a taxpayer election to decline bonus depreciation.
Enhanced Child Tax Credit Made Permanent
New law. The Act makes the enhanced CTC permanent by setting the threshold dollar amount for purposes of computing the refundable credit at an unindexed $3,000.
Enhanced American Opportunity Tax Credit Made Permanent
The Hope Scholarship Credit is a credit of $1,800 (indexed for inflation) for various tuition and related expenses for the first two years of post-secondary education. It phases out for AGI starting at $48,000 (if single) and $96,000 (if married filing jointly), with indexing for inflation.
Under pre-Act law, through 2017, the American Opportunity Tax Credit (AOTC; essentially a modified version of the pre-existing Hope credit) increased the above credit to $2,500 for four years of post-secondary education, and increased the beginning of the phase-out amounts to $80,000 (single) and $160,000 (married filing jointly).
New law. The Act makes the AOTC permanent. (Code Sec. 25A(i) as amended by Act Sec. 102)
State and Local Sales Tax Deduction Made Permanent
New law. Effective for tax years beginning after 2014, the Act retroactively revives and makes permanent the option to claim an itemized deduction for State and local general sales taxes in lieu of an itemized deduction for State and local income taxes. (Code Sec. 164(b)(5)(I), as amended by Act Sec. 106) The taxpayer may either deduct the actual amount of sales tax paid in the tax year, or alternatively, deduct an amount prescribed by IRS.
Nontaxable IRA Transfers to Eligible Charities Made Permanent
Taxpayers who are age 70½ or older could, in tax years beginning before Jan. 1, 2015, make tax-free distributions to a charity from an Individual Retirement Account (IRA) of up to $100,000 per year. These distributions weren’t subject to the charitable contribution percentage limits since they were neither included in gross income nor claimed as a deduction on the taxpayer’s return.
New law. Effective for distributions made in tax years beginning after Dec. 31, 2014, the Act retroactively revives and permanently extends the ability of individuals at least 70½ years of age to exclude from gross income qualified charitable distributions from IRAs of up to $100,000 per year. (Code Sec. 408(d)(8)(F), as amended by Act Sec. 112)
Enhanced Earned Income Tax Credit Made Permanent
Exclusion for Discharged Home Mortgage Debt Retroactively Extended Through 2016
Mortgage Insurance Premiums as Deductible Qualified Residence Interest Retroactively Extended Through 2016
15-Year Writeoff for Qualified Leasehold and Retail Improvements and Restaurant Property Made Permanent
Above-the-Line Deduction for Higher Education Expenses Retroactively Extended Through 2016