Bipartisan Budget Act of 2018 Extends Many Expired Tax Provisions Through 2017

The Bipartisan Budget Act of 2018 (The Act) was passed by the House and Senate in the early morning hours of February 9, 2018, and President Trump signed the bill later that day.

There were 32 tax “extenders” (constantly expiring tax breaks for businesses and individuals) that expired at the end of 2016. The Act extends them retroactively to 2017. (A list of the 32 provisions can be found on the Tax Foundation website). There are several provisions in The Act that impact both individuals and business entities for the 2017 tax year, although several are not applicable to most taxpayers.

Below is a summary of the more popular provisions that have been extended that could potentially affect you or your business:

Individual Changes

  • Mortgage insurance premiums – these are now deductible for the 2017 year. This deduction phases out for taxpayers with AGI of $100,000-$110,000.
  • Above-the-line deduction for qualified tuition and related expenses – extended for 2017. The deduction is capped at $4,000 and the AGI limitation is $65,000-$80,000 for single taxpayers and $130,000-$160,000 for joint filers.
  • Discharge of qualified principal resident indebtedness – extends through 2017 the exclusion from gross income of a discharge of qualified principal resident indebtedness.
  • Credit for Nonbusiness Energy Property – extends through 2017 the tax credit for nonbusiness energy property, such as exterior doors and windows, insulation, heaters, central air conditioners, and water heaters. The credit remains at 10% for a lifetime maximum credit of $500.
  • Credit for Residential Energy Property – extends the credit for qualified property placed in service prior to 2022 with a reduced credit in 2020 and 2021. This credit is for expenditures made for solar electric systems, solar water heaters, fuel cell property, geothermal heat pumps, and small wind energy property.
  • Credit for 2-wheeled plug-in electronic vehicles – the 10% credit for two-wheeled plug-in vehicles (capped at $2,500) was extended for 2017.
  • New tax form on the horizon Form 1040SR – is a simplified version of the 1040 specifically for senior citizens age 65 years or older. This new tax form will be available for 2020 tax filing season.

 

Business Changes

  • Section 179D/Energy Efficient Commercial Building Deduction – extended through 2017. This allows up to $1.80/sq. ft. of capitalized energy efficiency improvements to be expensed.
  • Energy-efficient new homes – credit is extended through the end of 2017. Up to $2,000 in credit per energy efficient home built by a residential homebuilder.
  • Alternative Fuels Excise Tax Credit – extended through 2017. This is a $.50 per gallon credit for use or sale of an alternative fuel, such as LNG, LP, and hydrogen as a motor vehicle fuel. Biodiesel and alcohol fuels are not alternative fuels for this credit.

As always, if there is any additional guidance or significant changes, we will keep you abreast as it is released.

About the Authors

Cindy H. Mitchell
Cindy H. Mitchell
CPA
Director, Taxation Services
Michael A. Hydell
Michael A. Hydell
CPA, MTax
Senior Manager, Taxation Services

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