Tax Extenders

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Publication September 10, 2015

Tax extenders are expected to move sometime between October and December.

The Senate tax-writing committee voted in July to extend more than 50 expiring tax benefits by two years. Its bill includes a two-year extension, through December 2016, of the deadline to start construction of new wind, geothermal, biomass, landfill gas, incremental hydroelectric and ocean energy projects to qualify for federal tax credits. Developers who start construction of projects in time would have the option to claim ten years of production tax credits on the electricity output or a 30% investment tax credit.

The committee disappointed solar companies by failing to extend a 30% investment tax credit for new solar projects. Solar companies had hoped the committee would turn a December 2016 deadline to complete solar projects into a deadline merely to start construction. Solar was not included because it was not considered germane to the bill. The bill deals only with tax benefits that have already expired or are expiring this year. Solar advocates will have another chance to amend the bill when it reaches the Senate floor.

The committee also voted to allow a 50% “depreciation bonus” on new equipment put in service by December 2016 or, in the case of transportation equipment and long-lived equipment like transmission lines, by December 2017.

No date has been set yet for the full Senate to take up the bill. Attention is focused for now on the Iran nuclear deal and on a funding measure to keep the US government operating past the end of the current fiscal year on September 30. Some Republicans want to use the funding measure as a vehicle to cut off funding for Planned Parenthood. Religious holidays and a visit by the Pope to Washington mean Congress will have very few work days in September.

Paul Ryan, the House tax committee chairman, said he hopes to have his committee take up the extenders in September. However, Ryan has also talked about combining the extenders and renewed funding for the highway trust fund, whose authorization runs out on October 29, with an international tax reform bill that most lobbyists consider a long shot this year for passage.

The House is not expected to extend any tax benefits for renewable energy.

The fate of any extenders for renewable energy will come down ultimately to a negotiation between the House and Senate, probably late in the year.

The staff of the Joint Committee on Taxation estimates that extending the construction-start deadline for wind, geothermal, biomass, landfill gas, incremental hydroelectric and ocean energy projects will cost the US Treasury $10.492 billion over 10 years, or roughly 12% of the net cost of the full extenders bill.


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