As part of broader legislation to fund the government through March 23, President Donald Trump signed into law February 9 new legislation that included the retroactive extension of more than 30 tax provisions that expired December 31, 2016. The total cost of these extensions is estimated to be $17.4 billion over 10 years. The Bipartisan Budget Act of 2018 (the Act) also includes a handful of provisions modifying certain aspects of the Tax Cuts and Jobs Act (TCJA) enacted late last year. Here’s a look at some of the more notable provisions included in the new law.
Tax Provisions Extended Through 2017
Energy Production & Conservation Incentives
Several energy-related provisions were extended with the Act, including the extension of the alternative fuels tax credit. This 50 cents-per-gallon credit is allowed for certain alternative fuels sold or used by the taxpayer. A common example of qualifying fuel would be propane used to power forklifts. The energy-efficient commercial buildings deduction under Internal Revenue Code (IRC) Section 179D also is extended. This provision allows a deduction with respect to depreciable property that’s installed as part of a plan designed to reduce the total annual energy and power costs of a building’s interior lighting systems, heating, cooling, ventilation or hot water systems.
Indian Employment Credit & Accelerated Depreciation
The Act extends the credit available to employers on qualified wages paid to enrolled members of an Indian tribe. The Act also extends the ability to use accelerated depreciation for business property predominately used on an Indian reservation.
Other Tax Provisions Included in the Act
Beyond the extenders listed above and in the table below, the Act also includes several other tax-related provisions. Pulled from the TCJA before its final passage, the caveat that the excise tax on net investment income of private colleges and universities only applies if the school has at least 500 tuition-paying students and more than 50 percent of the tuition-paying students are located in the U.S. was formally added to the law. The Act also provides an exception from the private foundation excess business holding tax for independently operated philanthropic business holdings.
A new tax form to be used by individuals 65 or older will be available for seniors to file starting with the 2019 tax year. The new Form 1040SR is yet to be developed but will be similar to the current Form 1040EZ.
While the extension of these expired tax provisions doesn’t come as a surprise, it’s important to review the list of included provisions and determine how the retroactive nature affects your tax situation. The inclusion of certain modifications to the TCJA also sheds light on the ever-growing need for more extensive technical corrections. Be sure to keep up with BKD’s Tax Reform Resource Center as we monitor future developments on the implementation of tax reform.