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The December 2015 PATH Act: Already Making Tax Day Easier for American Families and Businesses

April 11, 2016

Each December, families, workers, and job creators waited with uncertainty as Congress debated over which temporary tax provisions to extend for another year and which ones to let expire. That uncertainty ended in December 2015 when the bipartisan, bicameral Protecting Americans from Tax Hikes (PATH) Act was signed into law, giving permanent tax relief to families and local businesses. As “Tax Day” approaches, here are five ways the PATH Act helps Americans keep more of their hard-earned money and helps the economy grow.

1. The PATH Act helps more Americans plan for the future
The law expands, modernizes, and strengthens a tax-free college savings plan, known as a 529 plan, to help more families save for college. It also streamlines retirement savings by helping people combine multiple retirement plans into one, easy-to-manage account.

2. The PATH Act encourages local businesses to invest and innovate
The law supports the growth of businesses – and our economy – by increasing the amount of new equipment, products, and renovations that can be expensed immediately rather than over several years. The law also makes permanent the research and development tax credit that companies use to develop new and better products.

3. The PATH Act reduces the tax burden for more Americans
The law makes permanent the state and local sales tax deduction, which allows residents in states with sales tax but no state income tax – like Texas, Florida, Nevada, and Washington – to deduct sales tax on their federal tax returns each year.

4. The PATH Act makes commuting to work more affordable
The law strengthens a tax-free transit benefit for Americans who commute using public transportation, and ensures those benefits are equal to parking benefits into the future.

5. The PATH Act helps more people in need
The law makes it easier for retired individuals to make direct contributions from their Individual Retirement Account (IRA) to charities of their choice. Additionally, it expands and makes permanent the tax deduction for farmers, restaurants, and grocery stores that donate extra food to charities in their communities.

Ways and Means Republicans are building on the success of the PATH Act by developing a 21st century tax code built for growth – the growth of families’ paychecks, the growth of local businesses, and the growth of America’s economy. Click here for more information on our efforts to create a fairer, simpler, and flatter tax code.