path act

Now that Congress has enacted the Protecting Americans from Tax Hikes (PATH) Act of 2016, small businesses can finally have some measure of certainty about tax rules for the foreseeable future. The new PATH Act law impacts taxes for 2015, as well as for 2016 and for more years to come.

Taxes for 2015

The favorable tax rules that had expired at the end of 2014 now apply to 2015. This means you can write off the cost of equipment you bought and placed in service in 2015 up to $500,000 if eligible. If you bought a new vehicle in 2015, you can take an additional $8,000 depreciation allowance due to the extension of bonus depreciation.

Permanent Changes

After years of expirations of tax rules followed by their extensions, many rules are now permanent. These include:

  • $500,000 first-year expensing (Sec. 179 deduction), which is indexed for inflation starting in 2016.
  • Research credit. A new rule allows small businesses to use the credit as an offset to their Social Security taxes rather

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Source: Small Business Trends