Tax breaks for individuals that were once classified as “temporary” are starting to become more permanent. These tax breaks, which are also called “tax extenders,” are special-interest credits included in appropriations bills with specific expiration dates, after which the perk theoretically disappears.
Many Americans have been able to take advantage of these temporary tax breaks; and it looks as though many of them are going to become permanent.
According to the TimesFreePress, it is increasingly common for Congress to incorporate blanket continuances into its 11th-hour scramble to fund the government. Within the panoply of budget gimmicks, this one is a beaut, since the “temporary” nature of tax extenders precludes the Congressional Budget Office from including them in its long-term deficit projections.
Dozens of temporary giveaways are scheduled to expire at year-end unless renewed by Congress. Most of these provisions have already expired at least once, but were retroactively restored during previous budget showdowns. The business research & development credit, for example, first appeared in 1981 and has been extended 15 times. Sort of like a 30-year mortgage renewed every two years.
The reasons for these tax credits being extended varies; building the economy, relieving people during tax time, and allowing for more flexible tax write-offs, etc.
You may be familiar with some of these, but here are the top 10 individual tax breaks right now:
- Exclusion of employer contributions for medical insurance premiums and medical care.
- Deductibility of mortgage interest on owner-occupied homes.
- Step-up basis of capital gains at death.
- 401(k) plans.
- Exclusion of net imputed rental income.
- Deductibility of nonbusiness state and local taxes other than on owner-occupied homes.
- Employer pension plans.
- Deductibility of charitable contributions, other than education and health.
- Capital gains exclusion on home sales.
- Accelerated depreciation of machinery and equipment.
Article Sources: TimesFreePress | USA Money News