More Good News! The Senate has passed the tax package, and President Obama has committed to signing the tax relief package into law. This legislation includes some policies extended for up to five years and includes permanent extensions of several popular tax policies for CLIENTS, OWNERS, and individual taxpayers. Some of the updates important to the NTC community include:
- A five-year extension of the Work Opportunity Tax Credit. The WOTC has helped move millions of people off public assistance and into jobs by giving businesses a financial incentive to hire and retain individuals who have typically faced challenges in finding and holding onto jobs. Included among WOTC-eligible groups are certain veterans, food-stamp recipients, and people referred by vocational rehabilitation programs. The tax package proposes extending the WOTC back to Jan. 1, 2015, through 2019, and expanding it to apply to certain long-term unemployed individuals.
- Permanent extension of the 15-year tax depreciation schedule. This includes new restaurant construction and improvements, qualified leasehold improvements, and qualified retail improvements. For years, Congress has been extending the fifteen-year depreciation schedule for restaurant construction and improvements for just a year or two at a time, allowing it to revert to 39.5 years in the interim. Making the fifteen-year schedule permanent gives restaurants certainty about the tax impact of their investments, and could help set off a wave of improvements and construction projects.
- Permanent extension of expanded Section 179 expensing. The bill would allow businesses to deduct $500,000 of the cost of financed purchases up to $2 million. These amounts would be indexed to keep pace with inflation. The deduction applies to most tangible property used in businesses. Currently, Section 179 limits businesses to a deduction of $25,000 against $200,000 in purchases.
- Permanent extension of the enhanced charitable deduction for food donation. This change ensures that non-corporate entities such as S corporations and LLCs can take advantage of an enhanced tax deduction when they donate food inventory to charities. The deduction helps restaurants offset costs associated with preserving, storing, and transporting food donations, and is aimed at helping reduce hunger in America.
- A five-year extension of bonus depreciation. The extension would allow businesses to take a 50 percent bonus depreciation for qualified property placed in service during 2015, 2016, and 2017, phased down to 40 percent in 2018, and 30 percent in 2019.