Congress Wraps Up Year with Major Tax Package
December 22, 2015
As 2015 drew to a close, lawmakers approved a historic $680 billion tax-extender package which makes more than 20 tax cuts permanent and extends more than 50 temporary tax provisions that expired in 2014 for more than two years.
The measure, the Protecting Americans from Tax Hikes (PATH) Act includes several AFS tax priorities. For the metalcasting industry, the tax-extender package includes:
- A permanent research and development (R&D) tax credit.
- A permanent enhanced expensing for smaller manufacturers, which provides annual write-offs of up to $500,000 for investments in equipment and machinery (Section 179).
- A multi-year extension of bonus depreciation (50% first year expensing).
Beginning in 2016, businesses with less than $50 million in gross receipts will be free to use the R&D credit to offset alternative minimum tax. In regards to Section 179 deductions, in recent years, taxpayers have been entitled to immediately deduct up to $500,000 of the cost of qualifying asset acquisitions (with a phase-out beginning at $2 million). These thresholds were due to plummet to $25,000 and $200,000 respectively, beginning on January 1, 2015. The new deal retains Section 179 at the higher limits, while indexing them for inflation in future years.
For bonus depreciation, the 50% immediate expensing of asset acquisitions will be permitted at 50% for 2015, 2016 and 2017 before reducing to 40% in 2018 and 30% in 2019, when it will then disappear altogether.
In addition, the PATH Act also would suspend for 2016 and 2017 the current tax on medical devices enacted as part of the Affordable Care Act (ACA). Click here to view a copy of the PATH Act.