Federal Spotlight: Congress reaches budget spending deal

December 17, 2015

Democrats and Republicans reached a $1.1 trillion omnibus spending deal this week. The deal funds the federal government through FY16, increases domestic and defense spending and includes a tax extender package (PATH--Protecting Americans from Tax Hikes) that would revive more than 50 temporary tax provisions that expired in 2014. The legislation will restore the provisions for all of 2015 and either make them permanent or extend them for several years, instead of relying on temporary extensions. According to the National Association of Manufacturers, the bill includes:

  • a permanent research and development (R&D) tax credit;
  • permanent enhanced expensing for smaller manufacturers, which provides annual write-offs of up to $500,000 for investments in equipment and machinery; and
  • a multi-year extension of bonus depreciation (50 percent first year expensing)

The deal also lifts the 40-year-old ban on crude oil exports from the U.S. It delays or suspends several Affordable Care Act taxes, including the medical-device tax and the “Cadillac tax” on high-end healthcare plans. It also includes a five-year extension through Dec. 31, 2019 for the Work Opportunity Tax Credit (WOTC). The agreement language adds long-term unemployed as qualifying for WOTC employer tax credit beginning after Dec. 31, 2015.