On December 18th, the President signed the PATH Act into law, extending certain tax breaks and making others permanent.  Here is a summary of some of the provisions of the PATH Act:

  • The American Opportunity Tax Credit that allows a tax credit of up to $2,500 per year for undergraduate tuition was made permanent.
  • Permanently extends the provision allowing business owners who do not own their commercial real estate to write off their leasehold improvements over 15 years (versus 39 years without this provision), and to also write off the full cost of improvements in one year.
  • Permanently extended the Section 179 deduction at $500k. This allows small businesses to fully write off the first $500k of equipment purchased and put into business use during the year.
  • Extends Bonus Depreciation through 2019 in connection with new assets purchased by a business.  This allows taxpayers to write-off half the cost of eligible assets in the first year, even if the Section 179 deduction was not claimed. Purchases of used property are not eligible.
  • Permanently extends the reduced “built-in gains” period for C-Corporations that elect S-Status.  Previously, corporations were at risk for this tax for ten years.
  • Extends through 2016 the credit for certain energy efficient improvements made to your primary residence, including doors, windows, and insulation, plus energy efficient heating systems, air conditioning, hot water heaters, and other eligible property.  The credit is limited to 10% of the cost, with a lifetime max of up to $500 per household.  More info is available at:www.energystar.gov.

A list of all the changes included in the PATH Act is available in this Ways and Means Committee report.

!-- Global site tag (gtag.js) - Google Analytics --