Year-end package extends expiring tax breaks
The massive year-end package that lawmakers unveiled Monday addresses a host of expiring tax provisions, making some of them permanent.
Tax breaks that are made permanent include excise tax relief for alcohol producers that was originally included in the 2017 GOP tax-cut law. Making these tax reductions permanent was a key priority for alcohol industry groups and lawmakers on both sides of the aisle.
Another tax provision that is made permanent allows people to claim a deduction for medical expenses to the extent those expenses exceed 7.5 percent of their income, rather than 10 percent as was the case for people under 65 between 2013 and 2017.
Several other tax provisions are extended through 2025. They include the new markets tax credit that is aimed at incentivizing investment in low-income communities, the work opportunity tax credit designed to incentivize businesses to hire people from groups that have consistently faced barriers to employment, a tax break for the motorsports industry and a tax credit for employers who provide paid family and medical leave.
The bill also extends a number of tax breaks, including several relating to clean energy, through 2021. And it includes tax relief for individuals and businesses in areas affected by major disasters in 2020 that were not related to the coronavirus.
The package extends through 2021 a $300 charitable contribution deduction for people who don’t itemize. That provision was created by the CARES Act enacted in March. For 2021, the maximum deduction amount is increased to $600 for married couples who file joint tax returns.
Additionally, the bill extends the time period in which payroll taxes deferred under an order President Trump signed in August have to be recouped. Under IRS guidance, the deferred taxes had to be repaid by the end of April, and the bill extends that deadline to the end of 2021.