On December 17th, 2015, Congress passed a $622 billion tax cut bill.
For the past several years we have been left hanging until the end of the year to learn whether certain provisions which expired the previous year would be extended retroactively. Finally many of the most impactful ones have been made permanent.
These include the annual expensing limit for qualifying property, like equipment, which was set to revert in 2015 from $500,000 to $25,000. Yes, that’s right, $25,000 is a far cry from $500,000. And now that we have some certainty on this front, it should have a positive effect on the economy.
Face it, if you don’t know until December 17th that you could write off up to $500,000 in equipment costs, it’s highly unlikely that you could order a $500,000 machine on December 18th, receive it, install it, and have it up and running by December 31st. So this is a huge win for businesses.
Other provisions that have been made permanent are:
- Enhanced Child Tax Credit
- Enhanced American Opportunity Tax Credit
- Enhanced Earned Income Tax Credit
- Above-the-line deduction for teachers who buy school supplies
- Charitable deduction of contributions of real property for conservation purposes
- Research & Development Tax Credit
“Today, the House took a pivotal step towards rewriting our broken tax code by ending Washington’s days of extending tax policies one year at a time,” said House Speaker Paul Ryan, R-Wis., in a statement. “This package of permanent extenders will shield families from a tax hike and provide businesses with greater economic certainty to grow and prosper, which means higher wages and more full-time jobs for American workers.”
Merry Christmas indeed!