Congress recently passed legislation through the "Protecting Americans from Tax Hikes Act of 2015" to make many temporary tax incentives permanent. These incentives include:

  • The Work Opportunity Tax Credit
  • The enhanced Child Tax Credit
  • The above-the-line deduction for teachers who buy school supplies
  • The charitable deduction of contributions of real property for conservation purposes
  • The Research & Development Tax Credit
  • Section 179 expensing

For many individuals and businesses, having these incentives made permanent will make a big difference for their tax planning and bottom line for years to come.

The legislation passed both the House and the Senate and was signed into law by President Obama on Friday, December 18th.. Here are the highlights:

The Work Opportunity Tax Credit

The Work Opportunity Tax Credit is directed to benefit retailers. Under this now permanent provision, retailers get a tax credit for hiring some types of economically challenged individuals. This includes the welfare recipients, the disabled, and other economically challenged individuals.

The Research & Development Tax Credit

Though the greatest benefits of the Research & Development Tax Credit are mostly seen by larger companies experimenting with new technologies, many other medium and small businesses can benefit from the credit. Any business that is developing a new product through beta testing, compiling research data, or engineering new processes or software may qualify for the credit. Also companies that perform feasibility studies for a product, participate in technical meetings, or create a more efficient design for an existing product may also benefit. If your business is filing a patent, or conducting the research to file a patent, then that also qualifies.

In addition to being extended permanently, the credit can now be used to against alternative minimum tax liability or against employer payroll tax liability.

Section 179 Expensing Explained

Section 179 of the IRS tax code allows businesses to deduct the full purchase price of qualifying equipment, furnishings and/or software purchased or financed during the tax year, instead of depreciating over the life of the asset. This provision has been extended permanently with increased thresholds and phase-out amounts.

Want to Know More About How the Newly Permanent Incentives May Benefit You?

PDM can help to identify potential benefits from the new tax incentives along with your tax return. Together we can answer all of your questions about the new tax incentives and help you to maximize the benefits available to you and your business. Contact us at PDM. With our years of technical experience, advanced training, and cutting edge technology, we are your financial partner.