During this year’s lame duck Congress has a very lengthy list of “must pass” bills on its agenda, including extending crucial tax provisions that expired at the end of 2013. Among these expired tax provisions are key incentives for wind, solar, efficiency investments, and renewable fuels. Passage of this bill now is essential to allow filers to claim the tax benefit on this year’s tax filings. But right now, tax extender legislation is on the rocks.
Historically, such bills to continue job-producing tax incentives have had a broad base of political support, and yet, the corners of a basic tax extenders deal fell apart last week, after President Obama threatened to veto a bill that was agreed to in principle by House Republicans and Senate Majority Leader Reid. The White House issued this veto threat because several middle class-oriented tax breaks would not have been made permanent, but several business-focused tax cuts would have been. For their part, Republicans have dug in their heels on all matters, including tax policy, in response to President Obama’s executive actions on immigration.
It is now becoming more likely that any tax extenders package that Congress considers before end of the year will be short term in nature. This week, the House of Representatives passed a bill that renews these tax provisions for just one year, meaning that Congress will need to re-visit the issue in 2015. The one-year deal will do little for wind development, as there is not sufficient time left in the year for projects to reach the “commence construction” threshold to qualify for the production tax credit (PTC). Also missing in a one-year extension in existing tax credits is a change in qualification for the investment tax credit (ITC) from “in service” to “commence construction,” like the PTC, which would enable the continued development of large solar installations – a change that has bipartisan support.
That said, it is crucial for advanced energy tax credits to stay alive, pending more fundamental tax reform. AEE has issued an action alert urging members of Congress to pass a meaningful version of tax extender legislation. Click the button below to make your voices heard.