Capitol Hill stayed busy before the holidays as Congress reached a deal to renew the majority of expiring tax provisions including the Section 179D Energy Efficient Commercial Buildings deduction. This is terrific news as commercial building owners as well as architects, engineers and contractors who implement energy efficient enhancements to government-owned buildings into service before December 31, 2020 can qualify for a significant tax deduction under 179D.
While many provisions were left on the cutting floor based on political lines, 179D was included in the extenders package due to overwhelming bipartisan support. This bodes well for companies that are making government buildings more energy efficient as this bipartisan support is a strong indicator that Section 179D could be made permanent next year.
“The seamless extension of Section 179D has an obvious benefit to the nation. By making government buildings more efficient, architecture, engineering and contracting firms are reducing the cost to run these properties and consequently reducing the cost to taxpayers and freeing up funds for the government to spend on higher priorities. These companies should be rewarded for their work and that is exactly what 179D does,” said Former Congressman Rick Lazio.
Other extender highlights include the addition and extension of the following tax provisions:
- SECURE Act – The SECURE Act was added which makes commonsense reforms to retirement planning. The act received broad bipartisan support but it was unclear if it would be passed in time.
- Extension of Work Opportunity Tax Credit (WOTC)
- Extension of the Biodiesel Credit to 2022
- Extension of the Short-line Railroad Credit to 2023
- Extension of provisions related to beer, wine and distiller spirits
- Extension of Deduction of Qualified Tuition and Related Expenses
- Extension of Reduction in Medical Expense Deduction Floor
- Extension of New Market Tax Credits
- Extension of Look-Through Rule for Controlled Foreign Corporations
There were also certain provisions that were cut or left out because a deal could not be reached. There were three big tax provisions that were cut permanently from the Affordable Care Act (ACA): the excise tax on medical devices; the tax on high-end health insurance; and the Health Insurance Tax. There was also no deal made on technical corrections or on the expansion of refundable credits.
For the other provisions, the extenders bill makes for a seamless transition in that the package essentially serves as a date change with most provisions being extended to December 31, 2020 save for certain credits such as the Biodiesel Credit and the Short-line Railroad Credit. To read the full text of the extender you can read the full bill language here.
While there is some turmoil in Washington, Congress was able to come together and extend several powerful tax incentives. For more information you can read more details on the bill from Dean Zerbe’s latest article in Forbes.