Major tax relief included in COVID-19 stimulus act agreement

The Senate reached an agreement on the Coronavirus Aid, Relief, and Economic Security (CARES) Act stimulus bill last night, with a vote expected in the Senate today and a House vote today or tomorrow. It’s expected that the President will sign the bill. Key tax provisions include:

  • Tax credit rebates of up to $1,200 per individual and $500 per child that are phased out for taxpayers with AGI over $75,000 ($150,000 MJF and $112,500 HOH) and will be “rapidly advanced;”
  • The delay of employer payroll tax deposits for 2020 (50% due by December 31, 2021, and 50% due by December 31, 2022);
  • A refundable employer retention credit equal to 50% of qualified wages against quarterly employment taxes, to offset up to $10,000 of wages paid per employee in 2020;
  • The reinstatement of NOL carrybacks for the 2018–2020 taxable years, and repeal of the 80% taxable income limitation for the 2018–2020 taxable years;
  • A TCJA technical correction that classifies qualified improvement property as 15-year recovery period, allowing the bonus depreciation deduction to be claimed for such property retroactive as if it was included in the TCJA at the time of enactment;
  • Penalty-free withdrawals of tax retirement funds of up to $100,000 (income recognized over a three-year period);
  • A temporary waiver of RMD requirements in 2020;
  • The suspension of charitable contribution limits for 2020;
  • The deferral of excess business loss limitations until 2021;
  • An increase in the business interest deduction limitations from 30% to 50% of adjusted taxable income for the 2019 and 2020 taxable year;
  • An exclusion from income for employer-payments made on employee student loans paid before January 1, 2021;
  • The acceleration of the corporate credit for prior-year minimum tax liability, allowing 100% of the credit to be claimed in 2019 (2018 at the election of the taxpayer); and
    A COD exclusion of small business loans forgiven under the Act.

For more information and help regarding the Coronavirus Aid Relief please reach out to Tax Defense Partners today! We’re the nation’s leading experts in tax. Schedule a free consultation here.