Tax extenders renewed; some permanently

January 8, 2016

In December, Congress extended tax breaks known as "extenders" retroactively to the beginning of 2015. In addition, the new law makes some of the rules effective through December 31, 2016, some effective through 2019, and some effective permanently. Other provisions change existing tax rules that were not part of the extenders.

Here are highlights.

  • The break permitting individuals age 70½ and over to make a qualified distribution of up to $100,000 from an IRA to a charity is now permanent.
  • For 2015 and 2016, depending on adjusted gross income, eligible students may be able to claim a tuition and fees above-the-line deduction for qualified higher education expenses.
  • Educators can take a now-permanent above-the-line deduction of up to $250 for classroom supplies purchased with their own funds.
  • The optional itemized deduction for state and local sales taxes in lieu of deducting state and local income taxes is now permanent.
  • The maximum Section 179 deduction for qualified business property, including off-the-shelf software, is permanently set at $500,000 (subject to a taxable income limitation). For 2015, the deduction is phased out above a $2 million threshold.
  • The 50% additional first-year depreciation deduction, known as "bonus depreciation," is generally extended through 2019 for qualified business property. The deduction may be claimed in conjunction with Section 179.

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