DC Tax Flash: Bipartisan Agreement on Year-end Virus Relief Includes Major Tax Changes
The final text of legislation (H.R. 133) incorporating the year-end proposals agreed upon yesterday by party leaders and the Administration was released today. The 3,126-page Consolidated Appropriations Act, 2021 is expected to be considered in both chambers later this evening.
On tax policy, the legislation includes more than 60 proposals, including an expanded and extended Employee Retention Credit, allowing firms that take loans under the Paycheck Protection Programs to deduct certain expenses, and another round of direct payments to taxpayers of up to $600 per adult and dependent children. Also included are a set of multi-year extensions (and in some cases, permanency) for various temporary tax provisions that are scheduled to expire at the end of the month. Five-year extensions of the look-through rule for controlled foreign corporations and the Work Opportunity Tax Credit are included.
The text of the Consolidated Appropriations Act, 2021 is posted here. (The tax portion of the bill begins on page 2,403.)
The tax provisions included in the final bill are listed in the following excerpt from the bill's Table of Contents. A summary of these and other provisions is posted here.
TITLE I—EXTENSION OF CERTAIN EXPIRING PROVISIONS
Subtitle A—Certain Provisions Made Permanent
- Sec. 101. Reduction in medical expense deduction floor.
- Sec. 102. Energy efficient commercial buildings deduction.
- Sec. 103. Benefits provided to volunteer firefighters and emergency medical responders.
- Sec. 104. Transition from deduction for qualified tuition and related expense to increased income limitation on lifetime learning credit.
- Sec. 105. Railroad track maintenance credit.
- Sec. 106. Certain provisions related to beer, wine, and distilled spirits.
- Sec. 107. Refunds in lieu of reduced rates for certain craft beverages produced outside the United States.
- Sec. 108. Reduced rates not allowed for smuggled or illegally produced beer, wine, and spirits.
- Sec. 109. Minimum processing requirements for reduced distilled spirits rates.
- Sec. 110. Modification of single taxpayer rules.
Subtitle B—Certain Provisions Extended Through 2025
- Sec. 111. Look-thru rule for related controlled foreign corporations.
- Sec. 112. New markets tax credit.
- Sec. 113. Work opportunity credit.
- Sec. 114. Exclusion from gross income of discharge of qualified principal residence indebtedness.
- Sec. 115. 7-year recovery period for motorsports entertainment complexes.
- Sec. 116. Expensing rules for certain productions.
- Sec. 117. Oil spill liability trust fund rate.
- Sec. 118. Empowerment zone tax incentives.
- Sec. 119. Employer credit for paid family and medical leave.
- Sec. 120. Exclusion for certain employer payments of student loans.
- Sec. 121. Extension of carbon oxide sequestration credit.
Subtitle C—Extension of Certain Other Provisions
- Sec. 131. Credit for electricity produced from certain renewable resources.
- Sec. 132. Extension and phaseout of energy credit.
- Sec. 133. Treatment of mortgage insurance premiums as qualified residence interest.
- Sec. 134. Credit for health insurance costs of eligible individuals.
- Sec. 135. Indian employment credit.
- Sec. 136. Mine rescue team training credit.
- Sec. 137. Classification of certain race horses as 3-year property.
- Sec. 138. Accelerated depreciation for business property on Indian reservations.
- Sec. 139. American Samoa economic development credit.
- Sec. 140. Second generation biofuel producer credit.
- Sec. 141. Nonbusiness energy property.
- Sec. 142. Qualified fuel cell motor vehicles.
- Sec. 143. Alternative fuel refueling property credit.
- Sec. 144. 2-wheeled plug-in electric vehicle credit.
- Sec. 145. Production credit for Indian coal facilities.
- Sec. 146. Energy efficient homes credit.
- Sec. 147. Extension of excise tax credits relating to alternative fuels.
- Sec. 148. Extension of residential energy-efficient property credit and inclusion of biomass fuel property expenditures.
- Sec. 149. Black lung disability trust fund excise tax.
TITLE II—OTHER PROVISIONS
- Sec. 201. Minimum low-income housing tax credit rate.
- Sec. 202. Depreciation of certain residential rental property over 30-year period.
- Sec. 203. Waste energy recovery property eligible for energy credit.
- Sec. 204. Extension of energy credit for offshore wind facilities.
- Sec. 205. Minimum rate of interest for certain determinations related to life insurance contracts.
- Sec. 206. Clarifications and technical improvements to CARES Act employee retention credit.
- Sec. 207. Extension and modification of employee retention and rehiring tax credit.
- Sec. 208. Minimum age for distributions during working retirement.
- Sec. 209. Temporary rule preventing partial plan termination.
- Sec. 210. Temporary allowance of full deduction for business meals.
- Sec. 211. Temporary special rule for determination of earned income.
- Sec. 212. Certain charitable contributions deductible by non-itemizers.
- Sec. 213. Modification of limitations on charitable contributions.
- Sec. 214. Temporary special rules for health and dependent care flexible spending arrangements.
TITLE III—DISASTER TAX RELIEF
- Sec. 301. Definitions.
- Sec. 302. Special disaster-related rules for use of retirement funds.
- Sec. 303. Employee retention credit for employers affected by qualified disasters.
- Sec. 304. Other disaster-related tax relief provisions.
- Sec. 305. Low-income housing tax credit.
- Sec. 306. Treatment of certain possessions.
More information on the legislation is posted here.
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