What Are the Key Changes in Public Law 114-113?

In late 2015, Public Law 114-113, the Consolidated Appropriations Act, was signed into law. As an omnibus appropriations bill, it combined numerous smaller legislative items into one large package, providing approximately $1.1 trillion to fund the federal government for the 2016 fiscal year. This extensive act contained not only the 12 regular appropriations bills for federal departments but also included reforms in tax policy, national security, and healthcare.

Individual Tax Relief

The 2015 law made several tax relief provisions permanent. The enhanced American Opportunity Tax Credit (AOTC) allows a credit of up to $2,500 for qualified education expenses paid for an eligible student for the first four years of higher education. The AOTC’s permanency provides a reliable benefit for families financing college.

The law also permanently established the option for taxpayers to choose between deducting state and local income taxes or state and local sales taxes. However, the Tax Cuts and Jobs Act of 2017 (TCJA) placed a combined limit of $10,000 per household on the total state and local tax (SALT) deduction. This cap altered the benefit, particularly for taxpayers in high-tax states.

For educators, the legislation made permanent the ability to deduct unreimbursed classroom expenses. This deduction allows eligible teachers and other educators to reduce their adjusted gross income by up to $300 for out-of-pocket costs for supplies, regardless of whether they itemize.

Another change involved tax-free distributions from individual retirement accounts (IRAs) for charitable purposes. The law allows individuals aged 70½ and older to make direct transfers of up to $105,000 per year from their IRA to a qualified charity without the distribution counting as taxable income. This Qualified Charitable Distribution (QCD) offers a tax-efficient way to support charities and can also satisfy a taxpayer’s required minimum distribution (RMD) for the year.

The 2015 law also made the $1,000 Child Tax Credit permanent, though the TCJA later increased this amount and expanded eligibility, providing greater financial support to more families.

Key Business Tax Incentives

The legislation provided certainty to businesses by making several tax incentives permanent. A central feature was the permanent extension of the Research and Development (R&D) tax credit to encourage investment in innovation. The law also introduced a rule allowing eligible small businesses to apply the credit against their Alternative Minimum Tax (AMT) liability, while certain startups can use it to offset up to $250,000 in employer payroll taxes annually.

The law also brought permanence to enhanced Section 179 expensing, which allows businesses to deduct the full purchase price of qualifying equipment and software in the year it is placed in service. For 2025, the expensing limit is $1.29 million, with a phase-out threshold of $3.22 million. This allows businesses to immediately recover the cost of capital investments.

In addition to Section 179, the act addressed bonus depreciation. While the 2015 law extended it with a phase-down, the benefit is now phasing down again after a temporary increase. For 2025, businesses can claim 40% bonus depreciation on qualified new and used assets, providing a significant near-term cash flow benefit.

Finally, the law established a permanent 15-year straight-line cost recovery period for qualified improvement property, which includes improvements to leaseholds, restaurants, and retail spaces. By keeping the shorter 15-year recovery period instead of the standard 39 years, the law reduces the after-tax cost of renovating commercial spaces.

Changes to Retirement and Savings Plans

The act introduced targeted adjustments to retirement and savings plans. One of the changes involved Achieving a Better Life Experience (ABLE) accounts, which are tax-advantaged savings accounts for individuals with disabilities. The law removed the requirement that an ABLE account must be established in the beneficiary’s state of residence.

This modification allows individuals to choose from any state’s ABLE program, enabling them to select the one that best fits their needs based on factors like investment options and fees. Increased competition among state programs can lead to better services and lower costs.

The legislation also created a new opportunity for rollovers into SIMPLE IRAs. Previously, funds from other employer-sponsored retirement plans like 401(k)s could not be rolled into a SIMPLE IRA. The law now permits such rollovers, with the condition that the SIMPLE IRA must have been established for at least two years. This allows individuals to combine their retirement assets into a single account, which can make managing investments more straightforward.

Cybersecurity Information Sharing Framework

A portion of the legislation, the Cybersecurity Information Sharing Act of 2015 (CISA), created a new framework for cybersecurity. It encourages the voluntary sharing of information about cyber threats between private entities and the federal government. This public-private partnership model is designed to create a more unified and rapid response to sophisticated cyberattacks by ensuring threat indicators are disseminated quickly.

To encourage participation, CISA provides liability protections for companies that share cyber threat information in accordance with the act’s provisions. This legal safe harbor shields businesses from certain lawsuits that might arise from their monitoring of information systems or the sharing of threat data. By reducing legal risks, the law fosters a collaborative environment for reporting breaches.

The information sharing process established by the act is intended to be automated and occur in real-time. Private entities can share data with each other and with the Department of Homeland Security, which then disseminates it to other relevant federal agencies. The law includes requirements for the removal of personal information not directly related to a cybersecurity threat before sharing, aiming to balance security needs with privacy considerations.

Additional Legislative Components

The omnibus act included several other legislative measures. One was the permanent reauthorization of the James Zadroga 9/11 Health and Compensation Act. This act provides medical monitoring and financial aid to first responders, volunteers, and survivors suffering from illnesses related to the September 11th attacks.

The reauthorization extended the World Trade Center Health Program and the September 11th Victim Compensation Fund, providing long-term certainty for thousands of individuals. The health program covers medical treatment for conditions linked to toxic exposure at the attack sites, while the compensation fund provides financial support for losses suffered.

The legislation also enacted reforms to the Visa Waiver Program, which allows citizens of certain countries to travel to the United States for up to 90 days without a visa. The changes were implemented to enhance security screenings due to concerns about foreign fighters.

The new rules generally require individuals who have traveled to specific countries of concern, such as Iraq or Syria, since March 1, 2011, to obtain a visa before entering the U.S. These modifications were designed to strengthen national security by closing potential gaps in the program while maintaining visa-free travel with trusted partners.