What’s in the Latest Tax Extender Package, And What’s Not

Published by Michael Novogradac on Wednesday, August 1, 2012 - 12:00am

Senate Finance Committee Chairman Max Baucus, D-Mont., and Ranking Member Orrin Hatch, R-Utah, announced that tomorrow, August 2, the committee will markup legislation to extend a number of tax provisions that have expired or will expire at the end of this year.

So what’s in the current package? Among other things:

  • A one-year patch for the alternative minimum tax, or AMT, that will prevent the AMT from hitting 27 million taxpayers in 2012
  • A two-year extension (through December 31, 2013) of the special rule excluding the basic housing allowance from the determination of income for members of the military, for low-income housing tax credit properties located near a qualified military installation
  • A two-year extension of the new markets tax credit, through 2013, permitting up to $3.5 billion in qualified equity investments for each of calendar years 2012 and 2013. The proposal would also extend for two years, through 2018, the carryover period for unused new markets tax credits
  • A two-year extension of the present law provisions for qualified leasehold improvement property, qualified restaurant property, and qualified retail improvement property under Section 168 for property placed in service on or before December 31, 2013

In their announcement, Sens. Baucus and Hatch noted that the extenders package had been “streamlined” and would allow almost 25 percent of the current tax provisions to expire.

So what’s not included? Based on the Joint Committee on Taxation’s description of the “Chairman’s Mark of the Family and Business Tax Cut Certainty Act of 2012,” it does not include:

  • An extension of the 9 percent floor for the low-income housing tax credit (LIHTC)
  • An extension of the renewable energy production tax credit (PTC)
  • An extension of the Section 1603 renewable energy cash grant

This does not necessarily mean these provisions won’t ultimately be extended, but the cost of each provision will play a major role in which provisions are – or are not – included in a tax extenders package. See how the costs of the current package of provisions break down in the Joint Committee on Taxation’s Tax Estimate of The Family and Business Tax Cut Certainty Act of 2012.