Key Highlights of the Coronavirus Aid, Relief and Economic Security Act (CARES Act)

Washington Capital building at dusk.Individual Legislation:

  • Certain withdrawals from retirement plans (up to $100,000) will not be subject to the 10% early distribution penalty
  • Increase of maximum loan from qualified plans to $100,000 (up from $50,000 – check with your plan administrator)
  • Temporary waiver of 2020 required minimum distribution from defined contribution plans and IRAs
  • Increased limits for some types of 2020 charitable contributions ($300 “above the line” deduction for taxpayers using the standard deduction, and deduction up to 100% of adjusted gross income for taxpayers itemizing deductions) – not all contributions will qualify
  • Changes to utilization of net operating losses to remove the 80% limitation and allow for a 5 year carryback
  • Temporary removal of the business loss limitation (and modification to the limitation when it is restored in 2021)
  • Increase in business interest limitation for 2019 and 2020 from 30% to 50%

Other:

  • Long awaited “glitch” fix from the 2017 Tax Cuts and Jobs Act, which will now allow Qualified Improvement Property to qualify as 15 year property and subject to bonus depreciation (this change is for any type of return, and this change takes effect as if it had been part of the original 2017 Tax Cuts and Jobs Act). Before this fix, it was 39-year property and no bonus.