On December 18th, right before shutting down for the holidays, Congress has passed 50 major changes for the upcoming tax filing season. Some of the tax extenders will be quite important, while others may go by without much notice. We’re taking a look at the notable changes.
Permanent Tax Extenders
Some of the previously enacted temporary provisions, have been made permanent:
- State and local sales tax deduction, an alternative to claiming state tax withholdings on the Schedule A, Itemized deductions, is now a permanent line item. It benefits not only people in states with no income tax, but also taxpayers whose state tax withholdings are not large, or certain AMT taxpayers.
- The now permanent teacher’s expenses deduction of $250 is being enhanced to include professional development expenses, in addition to classroom supplies. But teachers will have to wait one more year before they can begin using this deduction for continuing education, as the enhancement is not effective until 2016.
- IRC Section 179 was made permanent, with an expanded definition of what property qualifies. This will affect many taxpayers, especially small business owners. Limits on expensing tangible depreciable property have been raised dramatically, and offer a good year-end tax planning strategy.
- 15-year cost recovery on qualified leasehold improvements is now permanent, and could mean big savings to small business owners.