Key Business Tax ChangesBy
The Protecting Americans from Tax Hikes (PATH) Act of 2015, passed by Congress in December and signed by President Obama, includes at least two significant business tax provisions. First, the $500,000 ceiling for expensing has been restored starting in 2016. It had been $25,000 in 2015. As a bonus, Congress made the $500,000 and $2 million amounts indexed for inflation going forward, which had not been the case in the past.
The second major move affects bonus depreciation rules. The current 50% rate will be reduced to 40% in 2018 and to 30% in 2019. On the positive side, additional first-year depreciation will be allowed for qualified improvement property without regard to whether the improvements are property that’s subject to a lease. Also, the provision modifies and extends the election to increase the alternative minimum tax (AMT) credit limitation in lieu of bonus depreciation for five years to property placed in service before January 1, 2020.