Fifty-five tax breaks expired last night, including transit, tuition and business deductions. Meanwhile Obamacare taxes take effect today. The expired tax benefits are called “extenders” on Capitol Hill because they must be renewed each year or they expire, according to the Tax Foundation. Congress left Washington for the holiday break without renewing them.
One of the most talked-about extenders to expire is the tax subsidy for riding mass transit, which dropped from about $245 a month to $130 a month. (The subsidy for parking remains $250.) Sen. Charles Schumer, D-N.Y., estimates that 700,000 New Yorkers claim the transit deduction. He tried unsuccessfully to get Senate approval to renew the deductions as a stand-alone item before the break.
Measures that are renewed in January could be made retroactive to today. Schumer said the transit subsidy is more difficult than other expired extenders to make retroactive. Other tax breaks that expired won’t be claimed until individuals and businesses file their 2014 tax return.
Here’s a summary from the Tax Foundation of some of the expiring provisions for individuals and businesses:
— The deduction for qualified tuition and related expenses.
— The ability to donate money from your IRA tax-free.
— The amount banks write off in mortgage loan forgiveness for people whose houses are under water no longer will be tax exempt.
— The tax credit for research and development.
— The amount of equipment small businesses can expense will be reduced (so-called 179 expensing).
— Big businesses will lose the 50 percent bonus expensing for capital investments.
The Tax Foundation said some of the expiring tax breaks most people won’t miss include special expensing for film and television production; multiple tax subsidies for renewable energy programs such as biodiesel, electric motorcycles and energy-efficient appliances; and a three-year write off for races horses younger than 2 years.
Meanwhile, several new taxes for the Affordable Care Act kick in, including:
— The charge for failing to sign up for Obamacare. In 2014, the tax is $95 or 2.5 percent of your income over a certain threshold. The tax goes up after 2014. The tax businesses was waived for one year.
— A new tax or “fee” for health insurance companies that will total $8 billion in 2014. This will be directly passed on to consumers.
— New tax credits, or subsidies, for people who are eligible for assistance with their insurance premiums.