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Senate Finance Committee Passes $85 Billion Tax Extenders Bill

4 min readBy: Andrew Lundeen

The Senate Finance Committee passed a tax extenders package that includes extensions of two years or longer on over 50 provisions totaling $85.3 billion.

The package contains provisions dealing with individuals and businesses, as well as many targeted at the renewable energy industry. Some of the largest include $15.4 billion for the research and development tax creditA tax credit is a provision that reduces a taxpayer’s final tax bill, dollar-for-dollar. A tax credit differs from deductions and exemptions, which reduce taxable income, rather than the taxpayer’s tax bill directly. , $13.35 billion for section 45 and 48 renewable energy, $10.4 billion for active financing, and $6.4 billion for the state and local general sales tax deductionA tax deduction is a provision that reduces taxable income. A standard deduction is a single deduction at a fixed amount. Itemized deductions are popular among higher-income taxpayers who often have significant deductible expenses, such as state and local taxes paid, mortgage interest, and charitable contributions. .

The originally proposed package – the Chairman’s Mark – was released on Tuesday and included a two year extension on 45 provisions totaling $67.4 billion.

The final bill passed by the committee contained multiple modifications and additions as well as three revenue raising provisions, extending almost all the provisions in current law for 2013. In total, these changes added an additional $17.9 billion to the bill.

We’ve written in the past that not all tax extenders are worth extending, and that still holds true. Ideally, the taxA tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities. code would be neutral and only include provisions that help mitigate the biases in the current tax code against saving and investment. This includes provisions that deal with cost recoveryCost recovery is the ability of businesses to recover (deduct) the costs of their investments. It plays an important role in defining a business’ tax base and can impact investment decisions. When businesses cannot fully deduct capital expenditures, they spend less on capital, which reduces worker’s productivity and wages. , such as the small business expensing provision and bonus depreciationBonus depreciation allows firms to deduct a larger portion of certain “short-lived” investments in new or improved technology, equipment, or buildings in the first year. Allowing businesses to write off more investments partially alleviates a bias in the tax code and incentivizes companies to invest more, which, in the long run, raises worker productivity, boosts wages, and creates more jobs. . These provisions help move us closer to correctly defined business income.

See the table below for a list of the provisions include in the bill passed by the Senate Finance Committee.

2014 Tax Extenders Proposed by Senate Finance Committee

Source: Expiring Provisions Improvement Reform and Efficiency (EXPIRE) Act

Note: Some provisions extended for two years; others extended permanently. See here for list.

Individual Provisions

In Millions

Deduction for expenses of elementary and secondary school teachers


Mortgage Debt Relief


Parity for employer-provided mass transit and parking benefits


Deduction for mortgage interest premiums


Deduction for state and local general sales taxes


Above-the-line deduction for higher education expenses


Tax-free distributions from individual retirement plan for charitable purposes


Special rules for contributions of capital gain real property made for conservation purposes




Business Provisions

Research and experimentation tax credit


4% Credit Rate Freeze for the Low-Income Housing Tax Credit Program


Treatment of military basic housing allowances under low-income housing credit


Indian employment tax credit


New Markets Tax Credit


Credit for railroad track maintenance


Mine rescue team training credit


Employer wage credit for activated military reservists


Work Opportunity Tax Credit


Qualified zone academy bonds (QZABs)


Three-year depreciation for racehorses


15-year straight-line cost recovery for qualified leasehold improvements, qualified restaurant buildings and improvements, and qualified retail improvements


Accelerated depreciation for business property on Indian reservation


Enhanced charitable deduction for contributions of food inventory


Bonus depreciation


Acceleration of AMT credits in lieu of bonus depreciation


Temporarily extend increase in the maximum amount and phase-out threshold under section 179


Election to expense advanced mine safety equipment


Deduction for domestic production activities in Puerto Rico


Modification of tax treatment of certain payments to controlling exempt organizations


Treatment of certain dividends of regulated investment companies (RIC's)


Definition of RICs as qualified investment entities under FIRPTA


Exceptions under subpart F for active financing income


Special rules for qualified small business stock


Basis adjustment to stock of S corporations making charitable contributions of property


Reduction in S corporation recognition period for built-in gains tax


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


American Samoa economic development credit


Multiemployer Pension Plan Funding Rules


7-year recovery period for motorsports entertainment complexes


Special rules for certain film and television productions


Look-through treatment




Energy Provisions

Plug-in Electric Motorcycles and Highway Vehicles


Credit for alternative fuel vehicle refueling property (including hydrogen property)


Cellulosic Biofuels Producer Tax Credit


Incentives for biodiesel and renewable diesel


Indian country coal production tax credit


Credit for construction of new energy efficient homes


Cellulosic Biofuels Bonus Depreciation


Incentives for alternative fuel and alternative fuel mixtures (including liquefied hydrogen)


Credit for fuel cell motor vehicles


Credit for nonbusiness energy property


Section 45 and 48 renewables


Energy efficient commercial buildings deduction




Revenue Raisers

Extend paid preparer EIC due diligence requirements to the child tax credit


Increase levy authority on payments to Medicare providers with delinquent tax debt


Exclusion from gross income of certain clean coal power grants






**Estimate pending or no revenue impact.

Update: This post was updated to reflect the fact that some provisions are extended for two years, while others are extended permanently.