Fully invest in your business this year with new tax strategies
by Jake Burke
The Holidays got off to a great start at the end of 2015 when Congress passed the Tax Extenders Bill. In past year, the Tax Extenders Bill only provided tax incentives for the current year. For example, last year’s bill was passed in December 2014, but was effective only for 2014. As a result, it was extremely difficult for business owners to budget properly because they did not know until December if tax incentives would be in effect. The 2015 Tax Extenders Bill makes many of the tax incentives permanent, or at least extends the incentives further into the future.
Why does this matter? This new predictability in the tax code provides a real incentive for business owners like you to invest in their businesses.
Speaker of the house Paul Ryan explained it best when he said:
“I cannot tell you how many times I have visited with small businesses and farmers who tell me, ‘Give me some certainty in the tax code, and I can go create jobs.’ We are finally delivering on one of those tax policies we’ve been trying to—for years—to get certainty in the tax code so we can create more jobs,” he said. “I think this is one of the biggest steps toward a re-write of our tax code that we’ve made in many years. And it will help us start a pro-growth, bold tax reform agenda in 2016.”
The Tax Extenders Bill contains many tax incentives business owners have become familiar with over the past several years as well as some new ones. Below is a list of some of the tax incentives included in the 2015 Tax Extenders Bill:
- Section 179 permanently extends the small business expensing limitation of $500,000 and phase-out at $2,000,000, which has been in effect from 2010 to 2014.
- Bonus Depreciation is extended for property acquired and placed in service during 2015 through 2019. The bonus percentage is 50 percent for property placed in service during 2015, 2016 and 2017, but phased down to 40 percent in 2018 and 30 percent in 2019.
- Extension of Property Eligible for Bonus: Beginning in 2016, bonus depreciation can now be taken on qualified improvement property, like leasehold improvements, regardless of whether the improvements are subject to a lease or if the improvements are made less than three years after the date the building was first placed in service.
- 15-Year Recovery Period for Qualified Leasehold, Restaurant, and Retail Property was made permanent.
- Medical Device Tax suspends the 2.3 percent excise tax on medical devices through 2017.
- “Cadillac Tax” on high-priced health insurance delays the tax for two years.
- Charitable Distributions from IRAs permanently extends the ability of individuals at least 70 ½ years of age to exclude from gross income qualified charitable distributions from IRA of up to $100,000 per taxpayer.
The 2015 Tax Extenders Bill has given all business owners some new predictability in the tax code and has given you the opportunity to hone your tax strategies. At Burke & Schindler, our tax and business strategy experts can assist you in implementing a refined budget to take advantage of these tax incentives for your business this year and into the future.