Another tax year usually means another last-minute deal by Congress to extend dozens of expired tax breaks affecting millions of Americans, but not this year. Contrary to prior years, Congress passed a tax package in 2015 that provides clarity for taxpayers doing their 2016 taxes. Several tax breaks provide more than just temporary relief to individuals and the middle class.
The Protecting Americans from Tax Hikes Act of 2015 (PATH Act) includes 52 tax breaks worth $622 billion over the next decade. While Congress usually extends these tax provisions for only one year and then procrastinates until next December to temporarily extend them again, nearly two dozen of the tax breaks were made permanent and many others were extended for two or five years. It’s a rare feat of bipartisanship that will benefit taxpayers across the country this year and beyond.
Let’s take a look at the five biggest tax breaks for individuals and the middle class included in the PATH Act, based on a report from Dixon Hughes Goodman. Remember, the tax deadline is April 18, 2017.
5. Teachers’ Classroom Expense Deduction
This extension is relatively small in the overall economic picture, but it affects millions of teachers. The teachers’ classroom expense deduction allows primary and secondary education professionals (grades K-12, including school administrators and assistants) to deduct above-the-line qualified expenses. You can deduct up to $250 ($500 if married filing joint and both spouses are educators, but not more than $250 each) of any unreimbursed expenses you paid or incurred for books, supplies, computer equipment (including related software and services), other equipment, and supplementary materials that you used in the classroom.
The PATH Act makes this extender permanent. It also modifies the deduction by indexing the $250 ceiling to inflation beginning in 2016, and allows teachers to deduct “professional development expenses.”
In order to qualify, you need to work at least 900 hours a school year in a school that provides elementary or secondary education as determined under state law. For courses in health and physical education, expenses for supplies are qualified expenses only if they are related to athletics.