Bipartisan Budget Act of 2018 Prolongs Tax Breaks

The Bipartisan Budget Act of 2018, enacted on February 9, contains a number of tax breaks for both individuals and businesses. The Act retroactively extended through 2017 over 30 “Extender Provisions,” reinstating for 2017 tax credits and deductions that had expired on December 31, 2016.

INDIVIDUAL EXTENDER PROVISIONS

The Act extended the following individual provisions for one year, through 2017:

• Exclusion for discharge of indebtedness on a principal residence
• Treatment of mortgage insurance premiums as deductible qualified residence interest
• Deduction for qualified tuition and related expenses

BUSINESS EXTENDER PROVISIONS

The Act extended the following business provisions for one year, through 2017 (except as noted below):

• Indian employment tax credit
• Railroad track maintenance credit
• Mine rescue team training credit
• 3-year depreciation for race horses two years old or younger
• 7-year recovery period for motorsports entertainment complexes
• Accelerated depreciation for business property on an Indian reservation
• Election to expense advanced mine safety equipment
• Expensing rules for certain film, television, and live theatrical productions
• Deduction allowable with respect to income attributable to domestic production activities in Puerto Rico
• The alternative 23.8% maximum tax rate for qualified timber gains of C corporations
• Empowerment Zone tax incentives
• American Samoa economic development credit
• Temporary increase in limit on cover over of rum excise tax revenues (from $10.50 to $13.25 per proof gallon) to Puerto Rico and the Virgin Islands, extended for five years through 2021.  

ENERGY EXTENDER PROVISIONS

The Act extended the following energy provisions for one year, through 2017 (except as noted below):

• Credit for certain nonbusiness energy property
• Credit for residential energy-efficient property, i.e., qualified solar electric and solar water heating property, extended through 2021
• Qualified fuel cell motor vehicle credit
• Alternative fuel vehicle refueling property credit
• Credit for two-wheeled plug-in electric vehicles
• Second generation biofuel producer credit
• Income tax credits for biodiesel fuel, biodiesel used to produce a qualified mixture, small agri-biodiesel producers, renewable diesel fuel and renewable diesel used to produce a qualified mixture
• Credit for production of Indian coal
• Beginning-of-construction date for non-wind renewable power facilities eligible to claim the electricity production credit or investment credit in lieu of the production credit
• Credit for construction of new energy-efficient homes
• Extension and phase out of energy investment credits through 2021
  
• Special depreciation allowance for second generation biofuel plant property
• Energy efficient commercial buildings deduction
• Extension of special rule for sales or dispositions to implement Federal Energy Regulatory Commission (“FERC”) or State electric restructuring policy for qualified electric utilities
• Extension of excise tax credits and outlay payments for alternative fuel, and excise tax credits for alternative fuel mixture
• Extension of Oil Spill Liability Trust Fund financing rate

Other non-extender energy provisions in the Budget Act include modification of the credit for production from advanced nuclear power facilities and the enhancement of the carbon dioxide sequestration credit.

The Act also included additional tax relief to victims of the California wildfires and Hurricanes Harvey, Irma, and Maria.

If you have questions regarding these extended tax provisions, please contact your Yeo & Yeo tax professional or local Yeo & Yeo office.