What’s a tax break for car racing doing in the budget deal?
WASHINGTON (AP) — Congress passed a $1.5 trillion tax cut package just two months ago. Turns out it wasn’t enough.
Wedged into the new mammoth Senate spending deal is a pack of tax breaks for homeowners and electric car owners — as well as goodies for motor speedways. There’s also tax relief for people and businesses affected by the California wildfires and the hurricanes that devastated Texas, Florida, Puerto Rico and the U.S. Virgin Islands. Owners of racehorses will get a break, too.
The new tax benefits didn’t make it into the Republican-backed tax overhaul enacted in December, which had to land under a $1.5 trillion limit in order to pass the Senate with a simple majority of 51 votes. Now, with fresh bipartisan legislation allowing the shattering of tight caps on defense and domestic programs, lawmakers have found room for dozens more tax breaks.
The provisions for the disaster-struck areas and the extensions of benefits for homeowners and energy savers are popular with lawmakers from both parties and may have helped sweeten the deal for Democrats, all of whom rejected the GOP tax plan. Most of the proposed tax breaks are not new, but extend expired provisions through the end of this year.
Among the proposed extensions of tax benefits for homeowners: the deduction for mortgage insurance premiums and the exclusion from income of some forgiven debts on mortgages. The deduction for qualified tuition and related expenses for higher education also is extended, subject to certain caps.
Tax credits are extended for investments homeowners make to improve energy efficiency, such as solar panels, windows, skylights, water heaters and heat pumps. The $1,000 to $2,000 credit for building or selling new energy-efficient homes is extended. The $4,000 to $40,000 credit for purchases of new hydrogen fuel-cell vehicles is extended, as is the credit for 10 percent of the amount paid for new two-wheeled plug-in electric cars. Electric car charging stations also benefit.
The tax law that kicked in Jan. 1 already provides a credit of up to $7,500 for purchases of larger plug-in electric cars such as the Tesla Model 3 and Chevrolet Bolt. And it offers tax support for wind and solar energy — while also boosting oil and gas production.
Other extensions: the 20 percent credit that employers can claim for wages and health care expenses related to employing certain members of an Indian tribe; the credit for railroad track maintenance; special rules for expensing in qualified film and television productions; and benefits for business activities in so-called empowerment zones.
The roar of NASCAR racing, a perennial favorite among both parties, can be heard in the extension of tax rules for so-called motorsports entertainment complexes. The shortened, seven-year period for writing down the value of the asset would be extended. Lawmakers have promoted racing, with its correlated food vending and other facilities, as a job creator. Sen. Debbie Stabenow, D-Mich., has been one of the active proponents of the tax allowance.
A big winner, at least for this year: International Speedway Corp., which owns and operates 13 motorsports facilities around the country, including Daytona International Speedway, Darlington Raceway and Talladega Superspeedway.
The owners of racehorses get an extension of the three-year period for writing down that asset.
The new agreement to fund the government for two years adds nearly $90 billion in overdue disaster aid for Texas, Florida and Puerto Rico. That includes tax relief: allowing for hardship withdrawals from retirement plans, deductions for property losses and other benefits.
Puerto Rico, whose leaders criticized the Republican tax writers for giving them short shrift in the tax overhaul, does benefit from a provision in the new legislation. All low-income communities on the island would be treated as opportunity zones, eligible for tax benefits.