The PATH Act, if approved by the House, Senate, and President Obama, will make existing tax breaks permanent. Announced just this year, the bill is over 200 pages long. We’ve done the work of reading it, so you won’t have to. Below is a short summary of some of the tax breaks that would most affect businesses and individuals.
Teachers who make out-of-pocket purchases for their classrooms will have another opportunity to receive a tax deduction with the PATH act. This is an above-the-line deduction, meaning it’s available directly on 1040 and 1040A forms and doesn’t require the filer to itemize deductions. Additionally, this $250 tax break now will now factor in inflation.
Commuters who use public mass transportation will be rewarded with employer fringe benefits. The amount of money spent on paying for rail and bus travel will remain roughly on par with the parking benefits workers who drive to work every day receive.
For Small Businesses
The R&D (research and development) tax credit will be immensely beneficial to small businesses at the forefront of developing new technologies. Originally included as part of the ERTA act of 1981 (Economic Recovery Tax Act), this tax credit offers substantial savings to businesses—in 2005, 6.6 billion was claimed. The PATH Act will allow businesses to claim R&D credit against their alternative minimum tax, and also allow businesses to take R&D credit against payroll tax.
This allows businesses previously ineligible for the credit due to their AMT limitations to now make use of it. This aspect of the PATH act was successfully tested in what is known as the “ATM turnoff” in 2010, which resulted in significant tax savings for small businesses.
Closely related to the AMT turnoff of 2010, is the Start-Up Act, the latest iteration of which would allow some key changes to the current immigration system, including the creation of a new entrepreneur visa that would enable up to 75,000 foreign nationals to start a new business in the United States and attempt to grow it. For this to take place, the start-up would have to meet certain investment and hiring standards within the first three years, with the intent that the entrepreneur can in due course apply for a permanent visa. The Act would also eliminate caps on the number of work visas that can be granted to individuals from each country.
These new acts and laws are relieving a substantial amount of tax pressure off entrepreneurs, small business owners, and workers, and introduce the incentives they need to help the United States stay competitive in the STEM field and new and developing technologies.
For Families & Individuals
The PATH Act also contains incentives for families and individuals, students, charitable giving, real estate investment, energy production and conservation, and more. Read here to find out more.
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