by Matthew Diment
Highlights of spending package’s tax law changes
The federal government spending package titled the Further Consolidated Appropriations Act, 2020 does more than just fund the government. It extends certain income tax provisions that had already expired or that were due to expire at the end of 2019. The agreement on the spending package also includes the Setting Every Community Up for Retirement Enhancement (SECURE) Act.
Let’s look at some of the highlights.
Here are some of the most widely relevant breaks that have been extended through 2020:
- The exclusion from gross income of discharge of qualified principal residence indebtedness,
- The treatment of mortgage insurance premiums as qualified residence interest for itemized deduction purposes,
- The reduction in the medical expense itemized deduction floor to 7.5% of adjusted gross income,
- The above-the-line deduction for qualified tuition and related expenses,
- Empowerment zone tax incentives,
- The New Markets credit,
- Biodiesel and renewable diesel credit,
- Nonbusiness energy property credit,
- Qualified fuel cell motor vehicles credit,
- Reduced excise tax for beer, wine, and spirits,
- The employer tax credit for paid family and medical leave, and
- The Work Opportunity credit.
Some of these extensions might open up year-end tax planning opportunities if you can act before December 31. And the extension of some breaks that had expired at the end of 2017 but that now have been retroactively revived means that some taxpayers should consider filing amended returns for 2018.
Oregon kicker rebate
The Oregon kicker rebate is back for 2019. If you filed an Oregon individual return in 2018 and there was tax due before credits but after credit for tax paid to another state, you will receive a kicker on your 2019 filed tax return. The kicker will be equal to 17.2% of your 2018 tax before credits, other than the credit for tax paid to another state.
This is just a brief overview of some of the most relevant provisions. Contact your tax advisor to learn more about these and other changes that may affect you.