On December 20, The Consolidated Appropriations Act of 2020 was signed into law by President Trump, avoiding a government shutdown that would have taken place on December 21, 2019. The appropriations act will fund the federal government until September 30, 2020.
This appropriations bill includes many tax law changes, extenders, retirement plan funding and distribution reform, and disaster relief. Here is an overview of key changes in the bill.
Extension of Expiring Provisions
This bill includes many extensions, which will extend certain provisions that have expired recently or will expire at the end of the year. Here are some key extensions:
Extended through the end of 2020
The legislation also provides tax relief for individuals and businesses in disaster areas from January 1, 2018 until 30 days decided following the enactment of the law. In Michigan there is only one incidence of this: A Major Disaster Declared by president Trump on August 2, 2018 for Storms, flooding, and landslides in the counties of Gogebic, Houghton, and Menominee that occurred on June 16 – 18, 2018.
The new spending package includes new provisions under the Setting Every Community Up for Retirement Enhancement (SECURE) Act.
This act introduces new provisions such as:
The SECURE act will also make it easier for small business owners to set up “safe harbor” retirement plans that are less expensive and easier to administer.
The new spending package permanently repeals three ACA taxes:
The bill also repeals the application of the estate and trust tax rate to the unearned income of children “Kiddie tax” and will start using the parent’s tax rate after 2019.
The law also increases the minimum age to purchase tobacco products to 21 to discourage vaping among teenagers.
For more information
The new spending package has many new provisions and repeals. Contact your tax advisor for more details or to determine how these new provisions affect you or your business.