Legislation & regulations

President Obama signs PATH Act of 2015

In mid-December 2015, President Obama signed the PATH (Protecting Americans from Tax Hikes) Act of 2015. PATH was part of the $1.15 trillion omnibus spending package to fund the federal government through October 2016. These appropriations include tax provisions that extend 50 tax credits for businesses and individuals.

The act makes more than 20 tax relief provisions permanent, including those from 11 different bills marked up by the Ways and Means Committee in 2015, such as Section 179 expensing ($500,000 and $2 million limits with no limitation on real estate), the 15-year depreciation for leaseholds and improvements and research and development tax credits.

Under PATH’s R&D tax credits, businesses with less than $50 million in gross receipts can claim the credit against their Alternative Minimum Tax (AMT) or take the credit against their payroll taxes (capped at up to $250,000 per year) for up to five years.

Tax provisions that were extended for five years are bonus depreciation (50 percent for property put in service from 2015-17, 40 percent for property put in service in 2018 and 30 percent for property put in service in 2019) the New Markets Tax Credit and the Work Opportunity Tax Credit.

The bonus depreciation provision allows taxpayers to accelerate use of AMT credits instead of bonus depreciation for property placed in service during 2015. For the 2016 tax year, the provision increases the amount of unused AMT credits that may be claimed instead of bonus depreciation.