Tax Law Changes

What provisions have expired?

• The temporary 100% deduction for food or beverages from restaurants ended December 31, 2022.

What temporary provisions are still in effect?

• Exclusion from gross income is available for student loan forgiveness after 2020 and before 2026 for most forgiven student loans. See Publication 970 for details.
• Exclusion from gross income of canceled qualified principal residence indebtedness (through 2025).
• An employer may contribute up to $5,250 annually toward an employee’s student loans, and such payment is excluded from the employee’s income through 2025. The $5,250 cap applies to both the student loan repayment benefit as well as other educational assistance (e.g., tuition, fees, books) provided by the employer.
• For most years, only taxpayers and families whose household income for the year is between 100 percent and 400 percent of the FPL for their family size may be eligible for the PTC. Extended for 2023, taxpayers with household income of 100 percent or more of the FPL could be eligible for a PTC.

What provisions are new?

• Additional distributions to qualified public safety employees. The exception to the 10% additional tax for early distributions is expanded to include additional distributions made to qualified public safety employees after separation from service on or after December 30, 2022.
• Distributions to those employees separating from service on or after they reach age 50 or those employees with 25 years of service with the plan, whichever is earlier.
• Distributions to firefighters covered by private sector retirement plans; and
• Distributions to those employees who provide services as a corrections officer or as a forensic security employee providing for the care, custody, and control of forensic patients, who meet the age requirement above.
• Distributions to terminally ill individuals. The exception to the 10% additional tax for early distributions is expanded to apply to distributions made to terminally ill individuals on or after December 30, 2022.
• Required minimum distributions (RMDs). Individuals who reach age 72 after December 31, 2022, may delay receiving their RMDs until April 1 of the year following the year in which they turn 73.
• Energy efficient home improvement credit. This credit was previously named the nonbusiness energy property credit. Through December 31, 2022, it was a $500 lifetime credit. Beginning January 1, 2023, the amount of the credit is equal to 30% of the sum of amounts paid by the taxpayer for certain qualified expenditures, with an annual credit of generally up to $1,200. Electric or natural gas heat pump water heaters, electric or natural gas heat pumps, and biomass stoves and biomass boilers have a separate aggregate yearly credit limit. See the Miscellaneous Credits lesson for details.
• Repayment of qualified birth or adoption distributions. Individuals may repay qualified birth or adoptions distributions at any time during the 3-year period beginning on the day after the date on which such distribution was received. For distributions made on or before December 29, 2022, repayment must be made before January 1, 2026.
• Certain corrective distributions not subject to 10% early distribution tax. Beginning on December 29, 2022, the 10% additional tax on early distributions doesn’t apply to distributions of amounts contributed to an IRA in excess of the contributions limit which are withdrawn on or before the due date (including extensions) of the income tax return.
• Excise tax for distributions less than required minimum distribution amount reduced. The excise tax for distributions that are less the required minimum distribution amount is reduced to 25% beginning in 2023. There is a reduced excise tax rate of 10% for taxpayers meeting additional requirements.
• Public safety officer exclusion from gross income of up to $3,000 for insurance premiums no longer requires that the plan directly pay the insurance premiums.