Congress has unveiled what is cited as the “Protecting Americans from Tax Hikes Act of 2015” which not only includes 2 year extensions of some tax incentives but also a long awaited permanent status for others. If you would like to read all 233 page, click here.
If you just want a snapshot – here are the items that we got excited about!
R&D Tax Credit:
A significant highlight of this legislation involves the R&D tax credit. In addition to making the R&D credit a permanent federal tax incentive for the first time, the legislation includes significant enhancements to the credit beginning in 2016. First, companies with less than $50 million in gross receipts will be able to use R&D credits to reduce Alternative Minimum Tax (AMT). In addition, start-up companies (companies with less than $5 million of gross receipts per year) will be able to use the credit to offset payroll taxes (up to $250,000 per year) for up to five years. Both of these provisions will be very meaningful to many business owners of companies that qualify for the credit going forward.
179D has been extended for 2 years from December 31, 2014 through December 31, 2016. The qualifying standards are increased from ASHRAE 2001 to ASHRAE 2007 for properties placed in service after December 31, 2015. Private owners and CPAs are eligible for up to $1.80/sq. ft. for the installation of energy-saving lighting, HVAC, and Building Envelopment systems in new or existing buildings. For the design of public buildings, the benefit can be allocated to the designer by the federal, state, or local government.
45L Residential Energy Efficient Tax Credit:
Section 45L Tax Credit for Energy Efficient Homes and Multi-Family Properties has been extended for 2 years through December 31, 2016 and provides developers a $2,000 tax credit per unit for exceeding energy standards by 50%.
50% Bonus Depreciation:
This special “bonus depreciation” allowance is available to all businesses and applies to most types of tangible personal property and computer software acquired and placed in service in 2014. It allows taxpayers to deduct 50 percent of the cost of qualifying property in addition to the regular depreciation allowance that is normally available.
Section §179 Expensing
Section §179 allows businesses to expense their capital investments rather than depreciating them over time. Under the provision, the expensing limitation amounts of $500,000 and $2,000,000 will be made permanent.
Qualified Leaseholds, Restaurant, and Retail Property – 15 Year Recovery Period:
The 15-year recovery period for qualified leasehold improvement property, qualified restaurant property and qualified retail improvement property with provisions to extend two additional years. If the special 15-year recovery period did not apply to these types of property, they would be depreciated over 39 years.