It is hard to believe, but the Tax Cuts and Jobs Act passed by Congress in December left out many key expiring tax provisions, the so-called “extenders.” Instead, Congress included the extenders in H.R. 1892, the Bipartisan Budget Act of 2018. The Act retroactively extends through 2017 over 30 expiring tax provisions. Yes, that means they have already expired again but will be available for use on 2017 tax returns. Included are popular tax breaks such as the deduction for mortgage insurance premiums, the tuition deduction, and the election to expense the costs of film and TV production.
Here’s a list of the major individual and business provisions included in the Budget Act:
Individual Provisions
● Deduction for mortgage insurance premiums.
● Exclusion for discharged home mortgage debt.
● Higher education tuition deduction.
Business Provisions
● Election to expense film, TV, and live theater production costs.
● Lower tax rate for a corporation’s timber gains.
● Seven-year depreciation for motorsports entertainment complexes.
● Three-year depreciation of race horses.
● Empowerment zone tax incentives.
● Domestic production deduction for activities in Puerto Rico.
Energy Incentives
● Credit for new energy-efficient home construction.
● Deduction for energy efficient building envelope components, such as windows, doors, roofs, and insulation, and for energy efficient lighting systems, and HVAC systems.
● 10 percent credit for nonbusiness energy property.
● Credit for residential energy property for fuel cell property, small wind energy property, geothermal heat pump property, solar electric property, and solar water heating property (extended through 2021).
● Credit for fuel cell motor vehicles.
● 30 percent credit for the cost of alternative (non-hydrogen) fuel vehicle refueling property.
● Credit for each gallon of second-generation biofuel produced and credits for biodiesel and renewable diesel producers.
● Credits for facilities producing energy from certain renewable resources.
● Credits for fiber-optic solar lighting systems, geothermal heat pumps, small wind energy, and combined heat and power properties and the credit for fuel cell and micro-turbine plant property (extended through 2021).
● Depreciation allowance equal to 50 percent of the adjusted basis of qualified second-generation biofuel plant property.
It is hard to understand why Congress did not decide the fate of these popular tax breaks once and for all. This latest “kick the can” maneuver means that we will continue to be faced with yearly, last-minute tax bills.