Tax Provisions that Expired in 2014 (“Tax
Extenders”)
Molly F. Sherlock
Coordinator of Division Research and Specialist
February 6, 2015
Congressional Research Service
7-5700
www.crs.gov
R43898
Tax Provisions that Expired in 2014 (“Tax Extenders”)
Summary
In the past, Congress has regularly acted to extend expired or expiring temporary tax provisions.
Collectively, these temporary tax provisions are often referred to as “tax extenders.” Fifty-two
temporary tax provisions expired at the end of 2014. The 114th Congress may choose to further
extend some or all of these provisions. This report provides a broad overview of the tax
extenders.
The Tax Increase Prevention Act of 2014 (P.L. 113-295), signed into law on December 19, 2014,
made tax provisions that had expired at the end of 2013 available to taxpayers for the 2014 tax
year. The law extended most (but not all) provisions that had expired at the end of 2013. Further,
most of the provisions in P.L. 113-295 had been included in previous “tax extender” packages.
Other legislation considered in the 113th Congress would have also extended expired tax
provisions. The Expiring Provisions Improvement Reform and Efficiency (EXPIRE) Act (S.
2260) would have extended expired tax provisions for two years. The Jobs for America Act (H.R.
4), which passed the House on September 18, 2014, would have permanently extended certain
expired tax provisions. Several expired charitable-related provisions would have been made
permanent as part of the America Gives More Act of 2014 (H.R. 4719), which passed the House
on July 17, 2014. Several of the proposals to permanently extend certain expired provisions in the
113th Congress have also been considered in the 114th Congress.
The President’s FY2016 budget identifies several expiring provisions that should be permanently
extended (and in some cases substantially modified), including the research and experimentation
(R&E) tax credit, enhanced expensing for small businesses, the renewable energy production tax
credit (PTC), and the new markets tax credit (NMTC). Several other expired provisions would be
temporarily extended. The President’s FY2016 budget also assumes that the American
Opportunity Tax Credit (AOTC), the earned income tax credit (EITC) expansions, and the child
tax credit (CTC) expansions, which were extended through 2017 as part of the American
Taxpayer Relief Act (ATRA), are made permanent.
There are several reasons why Congress may choose to enact tax provisions on a temporary basis.
Enacting provisions on a temporary basis provides legislators with an opportunity to evaluate the
effectiveness of tax policies prior to expiration or extension. Temporary tax provisions may also
be used to provide temporary economic stimulus or disaster relief. Congress may also choose to
enact tax provisions on a temporary rather than permanent basis due to budgetary considerations,
as the foregone revenue from a temporary provision will generally be less than if it was
permanent.
The provisions that expired at the end of 2014 are diverse in purpose, including provisions for
individuals, businesses, the charitable sector, and energy-related activities. Among the individual
provisions that expired are deductions for teachers’ out-of-pocket expenses, state and local sales
taxes, qualified tuition and related expenses, and mortgage insurance premiums. On the business
side, under current law, the research and development (R&D) tax credit, the work opportunity tax
credit (WOTC), the active financing exceptions under Subpart F, the new markets tax credit, and
increased expensing and bonus depreciation allowances will not be available for taxpayers after
2014. Expired charitable provisions include the enhanced deduction for contributions of food
inventory and provisions allowing for tax-free distributions from retirement accounts for
charitable purposes. The renewable energy production tax credit (PTC) expired at the end of
2014, along with a number of other incentives for energy efficiency and renewable and alternative
fuels.
Congressional Research Service
Tax Provisions that Expired in 2014 (“Tax Extenders”)
Contents
Introduction ...................................................................................................................................... 1
The Concept of “Tax Extenders” ..................................................................................................... 2
Evaluating Expiring Tax Provisions .......................................................................................... 2
Reasons for Temporary Tax Provisions ............................................................................... 2
Extenders as Tax Benefits ................................................................................................... 4
Tax Provisions that Expired in 2014 ................................................................................................ 5
Individual ................................................................................................................................... 6
Business ..................................................................................................................................... 6
Charitable ................................................................................................................................ 13
Energy ...................................................................................................................................... 13
The Cost of Extending Expired and Expiring Tax Provisions ....................................................... 14
Recent “Tax Extenders” Legislation and Proposals ....................................................................... 16
114th Congress .......................................................................................................................... 16
The President’s FY2016 Budget Proposal......................................................................... 16
113th Congress ......................................................................................................................... 17
Tax Provisions that Expired in 2013 that Were Not Extended .......................................... 20
Tables
Table 1. Tax Provisions that Expired at the End of 2014 ................................................................. 7
Table 2. The Cost of Extending Expired and Expiring Provisions ................................................ 15
Table 3. House Legislation to Permanently Extend Expired Tax Provisions ................................. 18
Contacts
Author Contact Information........................................................................................................... 20
Congressional Research Service
Tax Provisions that Expired in 2014 (“Tax Extenders”)
Introduction
There are dozens of temporary tax provisions in the Internal Revenue Code (IRC), many of which
expired at the end of 2014. Recent legislation extended certain expiring provisions. The American
Taxpayer Relief Act (ATRA; P.L. 112-240), signed into law on January 2, 2013, reduced tax
policy uncertainty by permanently extending most of the tax cuts first enacted in 2001 and 2003
and permanently indexing the alternative minimum tax (AMT) for inflation.1 ATRA, however, did
not eliminate uncertainty in the tax code. Under ATRA, a number of provisions that had been
allowed to expire at the end of 2011 or 2012 were temporarily extended through 2013.2 Most of
the provisions that expired at the end of 2013 were retroactively extended for one year, through
2014, in the Tax Increase Prevention Act of 2014 (P.L. 113-295).
Collectively, temporary tax provisions that are regularly extended by Congress rather than being
allowed to expire as scheduled are often referred to as “tax extenders.” Many of these “tax
extender” provisions have been temporarily extended multiple times. The research tax credit, for
example, has been extended 16 times since being enacted in 1981. Most of the temporary tax
provisions that expired at the end of 2014 were previously extended more than once.
The Tax Increase Prevention Act of 2014, passed late in the 113th Congress, extended expiring tax
provisions for one year, retroactively through 2014. Other legislation considered in the 113th
Congress proposed a two-year extension—the Expiring Provisions Improvement Reform and
Efficiency (EXPIRE) Act (S. 2260). Legislation was also considered that would have made
certain expiring provisions permanent—see, for example, the Jobs for America Act (H.R. 4) and
the America Gives More Act of 2014 (H.R. 4719). Tax reform legislation introduced in the 113th
Congress, the Tax Reform Act of 2014 (H.R. 1), proposed to make permanent certain provisions
that are currently part of the tax extenders, including the research and experimentation (R&D) tax
credit and increased expensing allowances for certain businesses allowed under Internal Revenue
Code (IRC) Section 179.3 The 114th Congress has also considered proposals that would make
certain expired provisions permanent.
The President’s FY2016 budget also proposes to permanently extend or modify certain expired
provisions and temporarily extend others.4 The President’s budget assumes that the American
opportunity tax credit (AOTC), the earned income tax credit (EITC) expansions, and the child tax
credit (CTC) expansions, which were extended through 2017 as part of ATRA, are made
permanent.
Temporary tax provisions that expired at the end of 2014 will not necessarily be unavailable to
taxpayers in 2015. In recent years, Congress has chosen to retroactively extend expired tax
1 For additional background, see CRS Report R42894, An Overview of the Tax Provisions in the American Taxpayer
Relief Act of 2012, by Margot L. Crandall-Hollick.
2 Provisions that had been allowed to expire at the end of 2011 were extended retroactively. In addition to the “tax
extenders” discussed in this report, several provisions first enacted as part of the American Recovery and Reinvestment
Act (ARRA; P.L. 111-5) were temporarily extended in ATRA.
3 For background on expiring provisions that would be made permanent in the Tax Reform Act of 2014, see U.S.
Congress, Joint Committee on Taxation, Description of Expiring Business-Related Tax Provisions Made Permanent or
Extended under the “Tax Reform Act of 2014,” a Discussion Draft of the Chairman of the House Committee on Ways
and Means to Reform the Internal Revenue Code, committee print, 113th Cong., April 4, 2014, JCX-35-14, available at
https://www.jct.gov/publications.html?func=startdown&id=4581.
4 For a complete description of the tax-related proposals in the President’s FY2016 budget, see Department of the
Treasury, General Explanations of the Administration’s Fiscal Year 2016 Revenue Proposals, February 2015,
http://www.treasury.gov/resource-center/tax-policy/Pages/general_explanation.aspx.
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Tax Provisions that Expired in 2014 (“Tax Extenders”)
provisions. The Tax Increase Prevention Act of 2014, signed into law on December 19, 2014,
made tax provisions that had expired at the end of 2013 available to taxpayers for the 2014 tax
year.
This report provides a broad overview of the tax extenders. Additional information on specific
extender provisions may be found in other CRS reports, including the following:
• CRS Report R43510, Selected Recently Expired Business Tax Provisions (“Tax
Extenders”), by Jane G. Gravelle, Donald J. Marples, and Molly F. Sherlock
• CRS Report R43688, Selected Recently Expired Individual Tax Provisions
(“Extenders”): In Brief, by Jane G. Gravelle
• CRS Report R43517, Recently Expired Charitable Tax Provisions (“Tax
Extenders”): In Brief, by Jane G. Gravelle and Molly F. Sherlock
• CRS Report R43541, Recently Expired Community Assistance-Related Tax
Provisions (“Tax Extenders”): In Brief, by Sean Lowry
• CRS Report R43449, Recently Expired Housing Related Tax Provisions (“Tax
Extenders”): In Brief, by Mark P. Keightley
The Concept of “Tax Extenders”
The tax code presently contains dozens of temporary tax provisions. In the past, legislation to
extend some set of these expiring provisions has been referred to by some as the “tax extender”
package. While there is no formal definition of a “tax extender,” the term has regularly been used
to refer to the package of expiring tax provisions temporarily extended by Congress. Oftentimes,
these expiring provisions are temporarily extended for a short period of time (e.g., one or two
years). Over time, as new temporary provisions have been routinely extended and hence added to
this package, the number of provisions that might be considered “tax extenders” has grown.5
Evaluating Expiring Tax Provisions
There are various reasons Congress may choose to enact temporary (as opposed to permanent) tax
provisions. Enacting provisions on a temporary basis, in theory, would provide Congress with an
opportunity to evaluate the effectiveness of specific provisions before providing further
extension. Temporary tax provisions may also be used to provide relief during times of economic
weakness or following a natural disaster. Congress may also choose to enact temporary provisions
for budgetary reasons. Examining the reason why a certain provision is temporary rather than
permanent may be part of evaluating whether a provision should be extended.
Reasons for Temporary Tax Provisions
There are several reasons why Congress may choose to enact tax provisions on a temporary basis.
Enacting provisions on a temporary basis may provide an opportunity to evaluate effectiveness
before expiration or extension. However, this rationale for enacting temporary tax provisions is
undermined if expiring provisions are regularly extended without systematic review, as is the case
5 For a history of the tax extenders, see U.S. Congress, Senate Committee on Rules and Administration, The Tax
Extenders: How Congressional Rules and Outside Interests Shape Policy, committee print, prepared by Congressional
Research Service, 113th Cong., 2nd sess., December 2014, S. Prt. 113-30, pp. 441-456, available at http://www.gpo.gov/
fdsys/pkg/CPRT-113SPRT89394/pdf/CPRT-113SPRT89394.pdf#page=453.
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Tax Provisions that Expired in 2014 (“Tax Extenders”)
in practice. In 2012 testimony before the Senate Committee on Finance, Dr. Rosanne Altshuler
noted that
an expiration date can be seen as a mechanism to force policymakers to consider the costs
and benefits of the special tax treatment and possible changes to increase the
effectiveness of the policy. This reasoning is compelling in theory, but has been an
absolute failure in practice as no real systematic review ever occurs. Instead of subjecting
each provision to careful analysis of whether its benefits outweigh its costs, the extenders
are traditionally considered and passed in their entirety as a package of unrelated
temporary tax benefits.6
While most expiring tax provisions have been extended in recent years, there have been some
exceptions. For example, tax incentives for alcohol fuels (e.g., ethanol), which can be traced back
to policies first enacted in 1978, were not extended beyond 2011. The Government Accountability
Office (GAO) had previously found that with the renewable fuel standard (RFS) mandate, tax
credits for ethanol were duplicative and did not increase consumption.7 Congress may choose not
to extend certain provisions if an evaluation determines that the benefits provided by the
provision do not exceed the cost (in terms of foregone tax revenue).
Tax policy may also be used to address temporary circumstances in the form of economic
stimulus or disaster relief. Economic stimulus measures might include bonus depreciation or
generous expensing allowances.8 Disaster relief policies might include enhanced casualty loss
deductions or additional net operating loss carrybacks.9 Other recent examples of temporary
provisions that have been enacted to address special economic circumstances include the
exclusion of mortgage forgiveness from taxable income during the recent housing crisis,10 the
payroll tax cut,11 and the grants in lieu of tax credits to compensate for weak tax-equity markets
during the economic downturn (the Section 1603 grants).12 It has been argued that provisions that
were enacted to address a temporary situation should be allowed to expire once the situation is
resolved.13
6 U.S. Congress, Senate Committee on Finance, Extenders and Tax Reform: Seeking Long-Term Solutions, Testimony
of Dr. Rosanne Altshuler, 112th Cong., January 31, 2012, available at http://www.finance.senate.gov/hearings/hearing/?
id=b1604e2e-5056-a032-52ff-dd661f9280f6.
7 See U.S. Government Accountability Office, Biofuels: Potential Effects and Challenges of Required Increases in
Production and Use, GAO-09-44, August 2009, http://www.gao.gov/new.items/d09446.pdf and U.S. Government
Accountability Office, Opportunities to Reduce Potential Duplication in Government Programs, Save Tax Dollars, and
Enhance Revenue, GAO-11-318SP, March 2011, http://www.gao.gov/assets/320/315920.pdf.
8 For a discussion of bonus depreciation in the context of tax extenders, see CRS Report R43432, Bonus Depreciation:
Economic and Budgetary Issues, by Jane G. Gravelle. For background on these policies, see CRS Report RL31852,
Section 179 and Bonus Depreciation Expensing Allowances: Current Law, Legislative Proposals in the 113th Congress,
and Economic Effects, by Gary Guenther.
9 For more information, see CRS Report R42839, Tax Provisions to Assist with Disaster Recovery, by Erika K. Lunder,
Carol A. Pettit, and Jennifer Teefy.
10 For more information, see CRS Report RL34212, Analysis of the Tax Exclusion for Canceled Mortgage Debt
Income, by Mark P. Keightley and Erika K. Lunder.
11 For more information, see CRS Report R42103, Extending the Temporary Payroll Tax Reduction: A Brief
Description and Economic Analysis, by Donald J. Marples and Molly F. Sherlock.
12 For more information, see CRS Report R41635, ARRA Section 1603 Grants in Lieu of Tax Credits for Renewable
Energy: Overview, Analysis, and Policy Options, by Phillip Brown and Molly F. Sherlock.
13 This point was made in U.S. Congress, Senate Committee on Finance, Extenders and Tax Reform: Seeking Long-
Term Solutions, Testimony of Dr. Rosanne Altshuler, 112th Cong., January 31, 2012, available at
http://www.finance.senate.gov/hearings/hearing/?id=b1604e2e-5056-a032-52ff-dd661f9280f6 and U.S. Congress,
House Committee on Ways and Means, Subcommittee on Select Revenue Measures, Framework for Evaluating
(continued...)
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Tax Provisions that Expired in 2014 (“Tax Extenders”)
Congress may also choose to enact tax policies on a temporary basis for budgetary reasons. If
policy makers decide that legislation that reduces revenues must be paid for, it is easier to find
resources to offset short-term extensions rather than long-term or permanent extensions.14
Additionally, by definition the Congressional Budget Office (CBO) assumes under the current
law baseline that temporary tax cuts expire as scheduled. Thus, the current law baseline does not
assume that temporary tax provisions are regularly extended. Hence, if temporary expiring tax
provisions are routinely extended in practice, the CBO current law baseline would tend to
overstate projected revenues, making the long-term revenue outlook stronger. In other words, by
making tax provisions temporary rather than permanent, these provisions have a smaller effect on
the long-term fiscal outlook.15
Extenders as Tax Benefits16
Temporary tax benefits are a form of federal subsidy that treats eligible activities favorably
compared to others, and channels economic resources into qualified uses. Extenders influence
how economic actors behave and how the economy’s resources are employed. Like all tax
benefits, extenders can be evaluated by looking at the impact on economic efficiency, equity, and
simplicity.17 Temporary tax provisions may be efficient and effective in accomplishing their
intended purpose, though not equitable. Alternatively, an extender may be equitable but not
efficient. Policy makers may have to choose the economic objectives that matter most.
Economic Efficiency
Extenders often provide subsidies to encourage more of an activity than would otherwise be
undertaken. According to economic theory, in most cases an economy best satisfies the wants and
needs of its participants if markets allocate resources free of distortions from taxes and other
factors. Market failures, however, may occur in some instances, and economic efficiency may
actually be improved by tax distortions.18 Thus, the ability of extenders to improve economic
welfare depends in part on whether or not the extender is remedying a market failure. According
to theory, a tax extender reduces economic efficiency if it is not addressing a specific market
failure.
(...continued)
Certain Expiring Tax Provisions, Testimony of Donald B. Marron, 112th Cong., June 8, 2012, available at
http://waysandmeans.house.gov/uploadedfiles/marron.pdf.
14 U.S. Congress, House Committee on Ways and Means, Subcommittee on Select Revenue Measures, Framework for
Evaluating Certain Expiring Tax Provisions, Testimony of Donald B. Marron, 112th Cong., June 8, 2012, available at
http://waysandmeans.house.gov/uploadedfiles/marron.pdf.
15 U.S. Congress, Senate Committee on Finance, Extenders and Tax Reform: Seeking Long-Term Solutions, Testimony
of Dr. Rosanne Altshuler, 112th Cong., January 31, 2012, available at http://www.finance.senate.gov/hearings/hearing/?
id=b1604e2e-5056-a032-52ff-dd661f9280f6.
16 This section is adapted from archived CRS Report RL32367, Certain Temporary Tax Provisions that Expired in
December 2009 (“Extenders”), by James M. Bickley.
17 Using these “criteria for good tax policy” to evaluate tax extenders was discussed in U.S. Congress, House
Committee on Ways and Means, Subcommittee on Select Revenue Measures, Framework for Evaluating Certain
Expiring Tax Provisions, Testimony of Dr. Jim White, 112th Cong., June 8, 2012, available at
http://waysandmeans.house.gov/uploadedfiles/white.pdf.
18 Market failure occurs when the marginal benefit of an action does not equal the marginal cost. For example,
polluting forms of energy production cause social costs that are not taken into account by the producer; hence, there is
an argument for taxing this type of energy or, alternatively, subsidizing less-polluting firms.
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Tax Provisions that Expired in 2014 (“Tax Extenders”)
An extender is also considered relatively effective if it stimulates the desired activity better than a
direct subsidy. Direct spending programs, however, can often be more successful at targeting
resources than indirect subsidies made through the tax system such as tax extenders.19
Equity
A tax is considered to be fair when it contributes to a socially desirable distribution of the tax
burden. Tax benefits such as the extenders can result in individuals with similar incomes and
expenses paying differing amounts of tax, depending on whether they engage in tax-subsidized
activities. This differential treatment is a deviation from the standard of horizontal equity, which
requires that people in equal positions should be treated equally.
Another component of fairness in taxation is vertical equity, which requires that tax burdens be
distributed fairly among people with different abilities to pay. Most extenders are considered
inequitable because they benefit those who have a greater ability to pay taxes. Those individuals
with relatively less income and thus a reduced ability to pay taxes may not have the same
opportunity to benefit from extenders as those with higher income. The disproportionate benefit
of tax expenditures to individuals with higher incomes reduces the progressivity of the tax
system, which is often viewed as a reduction in equity.
An example of the effect a tax benefit can have on vertical equity is illustrated by two teachers
who have both incurred $250 in classroom-related expenses and are eligible to claim the above-
the-line deduction for expenses. Yet the tax benefit to the two differs if they are in different tax
brackets. A teacher with lower income, who may be in the 15% income tax bracket, receives a
deduction with a value of $37.50, while another teacher, in the 33% bracket, receives a deduction
value of $82.50. Thus, the higher-income taxpayer, with presumably greater ability to pay taxes,
receives a greater benefit than the lower-income taxpayer.
Simplicity
Extenders contribute to the complexity of the tax code and raise the cost of administering the tax
system. Those costs, which can be difficult to isolate and measure, are rarely included in the cost-
benefit analysis of temporary tax provisions. In addition to making the tax code more difficult for
the government to administer, complexity also increases costs imposed on individual taxpayers.
With complex incentives, individuals devote more time to tax preparation and are more likely to
hire paid preparers.
Tax Provisions that Expired in 2014
Dozens of temporary tax provisions expired at the end of 2014 (see Table 1). Most of these
provisions have been extended as part of previous “tax extender” legislation. For the purposes of
this report, expiring provisions have been classified as belonging to one of four categories:
individual, business, charitable, or energy. The following sections provide additional details on
expiring provisions within each category. Table 1 also notes which provisions were extended as
part of P.L. 113-295, and the 10-year revenue cost of that one-year extension.
19 Stanley S. Surrey, “Tax Incentives as a Device for Implementing Government Policy: A Comparison with Direct
Government Expenditures,” Harvard Law Review, vol. 83, no. 4 (February 1970), pp. 705-738.
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Tax Provisions that Expired in 2014 (“Tax Extenders”)
Individual20
All six of the individual tax extender provisions that expired at the end of 2014 have previously
been extended as part of tax extenders legislation. The longest-standing individual extender
provision is the above-the-line deduction for classroom expenses incurred by school teachers.
This provision was first enacted on a temporary basis in 2002 and has regularly been included in
tax extender packages. Other individual provisions that have been extended more than once
include the deduction for state and local sales taxes,21 the above-the-line deduction for tuition and
related expenses,22 the deduction for mortgage insurance premiums,23 and the parity for the
exclusion of employer-provided mass transit and parking benefits.
Business24
All of the business provisions that expired at the end of 2014 have been extended at least once,
most more than once. Long-standing provisions that are scheduled for expiration include the
research tax credit,25 the rum excise tax cover-over,26 the Work Opportunity Tax Credit,27 the
Qualified Zone Academy Bond (QZAB) allocation limitation,28 and the active financing
exception under Subpart F.29 The New Markets Tax Credit, first enacted in 2000 to promote
investment in low-income communities, also expired at the end of 2014.30 Bonus depreciation and
enhanced expensing allowances, which are often viewed as economic stimulus measures, also
expired at the end of 2014.31
20 For more information, see CRS Report R43688, Selected Recently Expired Individual Tax Provisions (“Extenders”):
In Brief, by Jane G. Gravelle.
21 For more information, see CRS Report RL32781, Federal Deductibility of State and Local Taxes, by Steven Maguire
and Jeffrey M. Stupak.
22 For more information, see CRS Report R41967, Higher Education Tax Benefits: Brief Overview and Budgetary
Effects, by Margot L. Crandall-Hollick.
23 For general background on expired housing-related provisions, see CRS Report R43449, Recently Expired Housing
Related Tax Provisions (“Tax Extenders”): In Brief, by Mark P. Keightley.
24 For more information, see CRS Report R43510, Selected Recently Expired Business Tax Provisions (“Tax
Extenders”, by Jane G. Gravelle, Donald J. Marples, and Molly F. Sherlock.
25 For more information, see CRS Report RL31181, Research Tax Credit: Current Law and Policy Issues for the 114th
Congress, by Gary Guenther.
26 For more information, see CRS Report R41028, The Rum Excise Tax Cover-Over: Legislative History and Current
Issues, by Steven Maguire.
27 For more information, see CRS Report R43729, The Work Opportunity Tax Credit, by Benjamin Collins and Sarah
A. Donovan.
28 For more information, see CRS Report R40523, Tax Credit Bonds: Overview and Analysis, by Steven Maguire.
29 For more information, see CRS Report R41852, U.S. International Corporate Taxation: Basic Concepts and Policy
Issues, by Mark P. Keightley and Jeffrey M. Stupak.
30 For more information, see CRS Report RL34402, New Markets Tax Credit: An Introduction, by Donald J. Marples
and Sean Lowry and CRS Report R43541, Recently Expired Community Assistance-Related Tax Provisions (“Tax
Extenders”): In Brief, by Sean Lowry.
31 For more information, see CRS Report RL31852, Section 179 and Bonus Depreciation Expensing Allowances:
Current Law, Legislative Proposals in the 113th Congress, and Economic Effects, by Gary Guenther. For more on
bonus depreciation in the context of tax extenders, see CRS Report R43432, Bonus Depreciation: Economic and
Budgetary Issues, by Jane G. Gravelle.
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Table 1. Tax Provisions that Expired at the End of 2014
(extensions in previous “tax extenders” legislation)
P.L. 113-295
Extending Legislation
10-Year
Cost
Estimate P.L. 112- P.L. 111- P.L. 110- P.L. 109- P.L. 108- P.L. 107- P.L. 106-
Extended? (billions)
240
312
343
432
311
147
170
Individual Provisions
Above-the-Line Deduction of up to $250 for Teacher
Y $0.2 X X X X X
Classroom Expenses
Deduction for State and Local General Sales Taxes
Y
$3.1
X
X
X
X
Above-the-Line Deduction for Qualified Tuition and Related
Y $0.3 X X X X
Expenses
Mortgage Insurance Premiums Treated as Qualified
Y $0.9 X X a
Residence Interest
Parity for Exclusion for Employer-Provided Mass Transit and
Y
-i-
X
X
Parking Benefits
Exclusion of Discharge of Principal Residence Indebtedness
Y $3.1 X Xb
from Gross Income for Individuals
Business Provisions
Tax Credit for Research and Experimentation Expenses
Y
$7.6
X
X
X
X
X
c X
Temporary Increase in Limit on Cover Over of Rum Excise
Y $0.2 X X X X X X X
Tax Revenues to Puerto Rico and the Virgin Islands
Work Opportunity Tax Credit
Y
$1.4
Xd X e X X X X
Qualified Zone Academy Bonds - Allocation of Bond
Y $0.1 X X X X X X X
Limitation
Exceptions under Subpart F for Active Financing Income
Y
$5.1
X
X
X
f
f X X
CRS-7
P.L. 113-295
Extending Legislation
10-Year
Cost
Estimate P.L. 112- P.L. 111- P.L. 110- P.L. 109- P.L. 108- P.L. 107- P.L. 106-
Extended? (billions)
240
312
343
432
311
147
170
Indian
Employment
Tax
Credit
Y $0.1 X X X X X X
Accelerated Depreciation for Business Property on Indian
Y $0.1 X X X X X X
Reservations
New Markets Tax Credit
Y
$1.0
X
X
X
X
American Samoa Economic Development Credit
Y
-i-
X
X
X
X
Look-Through Treatment of Payments Between Related
Y $1.2 X X X
Control ed Foreign Corporations under the Foreign Personal
Holding Company Rules
Credit for Railroad Track Maintenance
Y
$0.2
X
X
X
15-Year Straight-Line Cost Recovery for Qualified Leasehold,
Y $2.4 X X X
Restaurant, and Retail Improvements
7-Year Recovery for Motorsport Racing Facilities
Y
-i-
X
X
X
Deduction Allowable with Respect to Income Attributable to
Y $0.1 X X X
Domestic Production Activities in Puerto Rico
Modification of Tax Treatment of Certain Payments under
Y -i- X X X
Existing Arrangements to Controlling Exempt Organizations
Treatment of Certain Dividends of Regulated Investment
Y $0.1 X X X
Companies (“RICs”)
RIC Qualified Investment Entity Treatment under FIRPTA
Y
-i-
X
X
X
Mine Rescue Team Training Credit
Y
-i-
X
X
X
Election to Expense Mine-Safety Equipment
Y
—
X
X
X
Employer Wage Credit for Activated Military Reservists
Y
-i-
X
X
Special Expensing Rules for Film and Television Production
Y
-i-
X
X
CRS-8
P.L. 113-295
Extending Legislation
10-Year
Cost
Estimate P.L. 112- P.L. 111- P.L. 110- P.L. 109- P.L. 108- P.L. 107- P.L. 106-
Extended? (billions)
240
312
343
432
311
147
170
Exclusion of 100% Gain on Certain Smal Business Stock
Y
$0.9
X
X
Increase in Expensing to $500,000 / $2,000,000 and
Y $1.4 X
g
Expansion of Definition of Section 179 Property
Empowerment Zone Tax Incentivesh
Y
$0.3
X
X
Bonus
Depreciationi Y
$1.2
X
X
i
i
i
Reduction in S Corporation Recognition Period for Built-In
Y
$0.1
X
Gains Tax
Election to Accelerate AMT Credits in Lieu of Additional
Y
$0.3
X
First-Year Depreciation
Low-Income Housing Tax Credit (LIHTC) Rate
Y
-i-
Xj
Treatment of Military Basic Housing Allowances under Low-
Y
-i-
X
Income Housing Creditk
Three-Year Depreciation for Race Horses Two Years or
Y
—
Youngerl
Charitable Provisions
Enhanced Charitable Deduction for Contributions of Food
Y $0.1 X X X m
Inventory
Tax-Free Distributions From Individual Retirement Accounts
Y $0.4 X X X
for Charitable Purposes
Basis Adjustment to Stock of S Corporations Making
Y $0.1 X X X
Charitable Contributions of Property
Special Rules for Contributions of Capital Gain Real Property
Y $0.1 X X n
for Conservation Purposes
CRS-9
P.L. 113-295
Extending Legislation
10-Year
Cost
Estimate P.L. 112- P.L. 111- P.L. 110- P.L. 109- P.L. 108- P.L. 107- P.L. 106-
Extended? (billions)
240
312
343
432
311
147
170
Energy Provisions
Construction Date for Eligible Facilities (Including Wind) to
Y $6.4 X p
q
p
q
q
q
Claim the Production Tax Credit (PTC) or the Investment
Tax Credit (ITC) in Lieu of the PTCo
Special Rule to Implement Electric Transmission
Y — X X X r
Restructuring
Credit for Construction of Energy Efficient
New
Homes Y $0.3 X X X X
Energy Efficient Commercial Building Deduction
Y
$0.1
Xs X
Credit for Section 25C Nonbusiness Energy Property
Y
$0.8
X
Xt
X
Alternative Fuel Vehicle Refueling Property
Y
-i-
X
X
X
Incentives for Alternative Fuel and Alternative Fuel Mixtures
Y
$0.4
X
X
X
Incentives for Biodiesel and Renewable Dieselu
Y $1.3 X X X
Second Generation (Cellulosic) Biofuel Producer Credit
Y
-i-
X
Credit for Production of Indian Coal
Y
-i-
X
Special Depreciation Allowance for Second Generation
Y
-i-
X
(Cellulosic) Biofuel Plant Propertyw
Alternative motor vehicle credit for qualified fuel cell
*
vehiclesx
Source: CRS analysis of extending legislation; Joint Committee on Taxation, List of Expiring Federal Tax Provisions 2014-2025, January 9, 2015, JCX-1-15; and Joint
Committee on Taxation, Estimated Revenue Effects of H.R. 5771, the “Tax Increase Prevention Act of 2014,” Scheduled for Consideration by the House of
Representatives on December 3, 2014, 113th Cong., December 3, 2014, JCX-107-14R.
Notes: A “*” indicates that the provision expired in 2014, but not in 2013, and thus was not extended as a part of P.L. 113-295. An “-i-“ indicates an estimated revenue
loss of less than $50 million between 2014 and 2024. For additional information on specific provisions, see U.S. Congress, Senate Committee on the Budget, Tax
CRS-10
Expenditures: Compendium of Background Material on Individual Provisions, committee print, prepared by Congressional Research Service, 112th Cong., 2nd sess., December
2012.
a. This provision was extended as part of the Mortgage Forgiveness Debt Relief Act of 2007 (P.L. 110-142).
b. This provision was enacted as part of P.L. 110-142 and extended through 2012 in P.L. 110-343.
c. The Ticket to Work and Work Incentives Improvement Act of 1999 (P.L. 106-170) extended the research credit through June 30, 2004. The credit was next
extended by the Working Families Tax Relief Act of 2004 (P.L. 108-311).
d. The expiration date of the Work Opportunity Tax Credit for qualified veterans was extended through December 31, 2012, as part of P.L. 112-56. Under P.L. 112-
240 the expiration date was extended through December 31, 2013, for al eligible employees.
e. The Work Opportunity Tax Credit was extended through August 31, 2011, as part of the U.S. Troop Readiness, Veterans’ Care, Katrina Recovery, and Iraq
Accountability Appropriations Act of 2008 (P.L. 110-28).
f.
The exceptions under Subpart F for active financing income were extended for five years as part of the Job Creation and Worker Assistance Act of 2002 (P.L. 107-
147) and for two years by the Tax Increase Prevention and Reconciliation Act of 2005 (P.L. 109-222).
g. The Smal Business Jobs Act of 2010 (P.L. 111-240) set the maximum amount a taxpayer can expense at $500,000, with the phaseout threshold raised to $2 million,
for tax years 2010 and 2011. The Tax Relief Act of 2010 set the expensing limit at $125,000 for 2012, with a phaseout threshold of $500,000. For background on
Section 179 expensing, see CRS Report RL31852, Section 179 and Bonus Depreciation Expensing Allowances: Current Law, Legislative Proposals in the 113th Congress, and
Economic Effects, by Gary Guenther.
h. Empowerment zone tax incentives include (1) designation of an empowerment zone; (2) increased exclusion of gain; (3) empowerment zone tax-exempt bonds; (4)
empowerment zone employment credits; (5) increased expensing under IRC Section 179; (6) nonrecognition of gain on rol over of empowerment zone investments.
i.
Under ATRA, 50% bonus depreciation was extended for one year. The Job Creation and Worker Assistance Act of 2002 (P.L. 107-147) created the initial bonus
depreciation al owance of 30%. The al owance was increased to 50% and extended as part of the Jobs and Growth Tax Relief Reconciliation Act of 2003 (JGTRRA;
P.L. 108-27). Under the Economic Stimulus Act of 2008 (P.L. 110-185) bonus depreciation was reinstated at 50%. Bonus depreciation was again extended as part of
the American Recovery and Reinvestment Act (ARRA; P.L. 111-5), the Smal Business Jobs Act (P.L. 111-240), and the Tax Relief, Unemployment Insurance
Reauthorization, and Job Creation Act of 2010 (P.L. 111-312). For more on the history of this provision, see CRS Report RL31852, Section 179 and Bonus
Depreciation Expensing Allowances: Current Law, Legislative Proposals in the 113th Congress, and Economic Effects, by Gary Guenther.
j.
The Housing and Economic Recovery Act of 2008 (HERA, P.L. 110-289) temporarily changed the LIHTC rate to not less than 9% for new construction placed in
service before December 31, 2013. The American Taxpayer Relief Act of 2012 (ATRA, P.L. 112-240) extended the 9% floor for credit allocations made before
January 1, 2014.
k. This provision was enacted as part of the Housing and Economic Recovery Act of 2008 (P.L. 110-289).
l.
This provision was enacted as part of the Heartland, Habitat, Harvest, and Horticulture Act of 2008 (P.L. 110-246).
m. This provision was extended as part of the Pension Protection Act of 2006 (P.L. 109-280).
n. This provision was extended for two years, from 2007 through 2009, as part of the Food, Conservation, and Energy Act of 2008 (P.L. 110-234).
o. As part of ATRA, the expiration date for the renewable energy production tax credit (PTC) was modified such that facilities that were under construction but not
yet placed in service by the end of 2013 would qualify. The option to claim the ITC in lieu of the PTC was not available prior to 2009.
p. The renewable energy PTC placed-in-service deadline was extended as part of the EPACT05 and as part of ARRA.
q. Prior to 2013, the renewable energy PTC expiration was a placed-in-service deadline. Historical y, this placed-in-service deadline has been regularly extended as part
of tax extenders legislation.
CRS-11
r. This provision was extended as part of the Energy Policy Act of 2005 (EPACT05; P.L. 109-58).
s. This provision was extended for five years, through 2013, in P.L. 110-343.
t.
This provision was extended at a reduced rate of 10%, with the maximum credit reduced to $500. During 2009 and 2010, a 30% credit of up to $1,500 had been
available.
u. Tax incentives for biodiesel were introduced as part of the American Jobs Creation Act of 2004 (AJCA; P.L. 108-357).
v. This provision was enacted as part of EPACT05. P.L. 110-343 extended the placed in service deadline for two years, through the end of 2013. To qualify for this
incentive, a binding construction contract must have been in place by January 1, 2010.
w. In addition to extending this provision through 2013, ATRA expanded the definition of qualified cel ulosic biofuel production to include algae-based fuels.
x. The alternative motor vehicle credit for qualified fuel cell vehicles was enacted as part of P.L. 109-58. When enacted, this provision was set to expire on December
31, 2014.
y. This provision was extended through 2010 in P.L. 108-311.
CRS-12
Tax Provisions that Expired in 2014 (“Tax Extenders”)
Charitable32
The four charitable provisions that expired at the end of 2014 have previously been extended
multiple times. Provisions providing an enhanced deduction for noncorporate businesses donating
food inventory were first enacted in response to Hurricane Katrina in 2005.33 The remaining
charitable provisions set to expire were first enacted as part of the Pension Protection Act of 2006
(P.L. 109-280).34
Energy35
The longest-standing energy-related provision that expired at the end of 2013 is the renewable
energy production tax credit (PTC).36 Several of the temporary energy-related tax provisions that
expired at the end of 2014 were first enacted as part of the Energy Policy Act of 2005 (EPACT05;
P.L. 109-58). These include the credit for construction of energy efficient new homes, the
deduction for energy efficient commercial buildings, and the credit for nonbusiness energy
property (also known as the tax credit for energy efficiency improvements for existing homes).37
Certain tax incentives for alternative technology vehicles and alternative fuel vehicle refueling
property were also first included in EPACT05.
The alternative motor vehicle credit for qualified fuel cell vehicles also expired at the end of
2014. This provision was introduced as part of EPACT05, and set to expire December 31, 2014,
when first introduced. EPACT05 incentives for other alternative motor vehicles—including
hybrids, alternative fuel, and advanced lean-burn technology vehicles—expired at earlier dates.
32 The Tax Increase Prevention Act of 2014 contained separate subtitles for individual, business, and energy extenders,
but not for charitable extenders. Charitable extenders have been separately identified for the purposes of this report, as
there was considerable debate regarding permanent extension of these provisions in the 113th and 114th Congresses
(discussed below). For more information, see CRS Report R43517, Recently Expired Charitable Tax Provisions (“Tax
Extenders”): In Brief, by Jane G. Gravelle and Molly F. Sherlock.
33 For more information, see CRS Report RL34608, Tax Issues Relating to Charitable Contributions and
Organizations, by Jane G. Gravelle and Molly F. Sherlock.
34 For more information on the provision allowing tax-free distributions from retirement accounts for charitable
contributions, see CRS Report RS22766, Qualified Charitable Distributions from Individual Retirement Accounts:
Features and Legislative History, by John J. Topoleski and Gary Sidor.
35 For general background on energy tax policy, see CRS Report R43206, Energy Tax Policy: Issues in the 114th
Congress, by Molly F. Sherlock and Jeffrey M. Stupak and CRS Report R41227, Energy Tax Policy: Historical
Perspectives on and Current Status of Energy Tax Expenditures, by Molly F. Sherlock.
36 For more information, see CRS Report R43453, The Renewable Electricity Production Tax Credit: In Brief, by
Molly F. Sherlock. The PTC was first enacted in 2002. When first enacted, the PTC was only available for wind and
closed-loop biomass technologies. Over time, Congress has expanded the list of qualifying technologies.
37 For more information, see CRS Report R42089, Residential Energy Tax Credits: Overview and Analysis, by Margot
L. Crandall-Hollick and Molly F. Sherlock.
Congressional Research Service
13
Tax Provisions that Expired in 2014 (“Tax Extenders”)
The Cost of Extending Expired and Expiring Tax
Provisions
The Congressional Budget Office (CBO) provides estimated costs of extending all tax provisions
scheduled to expire before 2025 (see Table 2).38 CBO’s estimates can be viewed as the cost of a
long-term extension. According to CBO’s estimates, over the 2016 to 2025 budget window,
• extending all expiring tax provisions would cost $897.9 billion;
• extending bonus depreciation would cost $223.6 billion and extending Section
179 expensing would cost $60.8 billion;39 and
• extending expansions to the child tax credit, the earned income tax credit, and the
American Opportunity Tax Credit currently scheduled to expire at the end of
2017 would cost $202.8 billion.40
Of the 70 tax provisions set to expire before the end of 2025, 52 expired at the end of 2014. Thus,
most of the revenue cost associated with extending expiring provisions is for provisions that have
already expired.
Since tax extender provisions are assumed to expire as scheduled by CBO, their extension—even
if expected by policy makers—is not included in CBO’s current law revenue baseline. As a result,
CBO’s revenue projections are higher than actual revenue levels that are likely to occur.
Consequently, projected budget deficits under the current law baseline are smaller than actual
deficits that are likely to occur.
The baseline used in the President’s FY2016 budget proposal also makes adjustments for certain
expiring provisions. Specifically, the President’s FY2016 budget uses a baseline that assumes that
the American Opportunity Tax Credit (AOTC), expansions to the earned income tax credit
(EITC), and child tax credit (CTC) are made permanent.
The cost of providing a short-term extension, as is typical in “tax extenders” legislation, is less
than the cost of extending expiring provisions through the budget window, as is done by CBO for
the purposes of constructing the alternative fiscal scenario baseline. The CBO scores presented
here, some might argue, provide a more accurate measure of the overall or long-term budget
impact of temporary tax provisions. The Joint Committee on Taxation (JCT) scores
accompanying extenders legislation reflect the budget impact of the temporary extension relative
to current law.
38 CBO provides this estimate to calculate their alternative fiscal scenario. CBO’s baseline for spending and revenues
assumes current law. Thus, revenue levels under CBO’s baseline assume that all tax policies expire as scheduled. The
alternative fiscal scenario assumes that current policies remain in place (i.e., expiring tax provisions are extended). The
estimated revenues that would be raised from extending certain provisions might change depending on how provisions
are stacked (i.e., interaction effects might cause revenue estimates for specific provisions to be higher or lower
depending on what other provisions are also assumed to have been extended).
39 For more on bonus depreciation in the context of tax extenders, see CRS Report R43432, Bonus Depreciation:
Economic and Budgetary Issues, by Jane G. Gravelle.
40 Extending these provisions would reduce revenues by $44.3 billion between 2016 and 2025, and increase outlays by
$158.5 billion.
Congressional Research Service
14
Table 2. The Cost of Extending Expired and Expiring Provisions
(billions of dollars)
2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2016-2025
Extend bonus depreciationa
68.6 38.6 29.0 21.2 15.2 12.0 10.2 9.3 9.5 9.9
223.6
Extend
Section
179
expensing
13.8 10.2 8.0 6.2 4.8 4.0 3.4 3.3 3.6 3.4
60.8
Extend Temporary ARRA Provisionsb
2.8 29.1 28.9 28.8 28.7 28.3 28.2 28.0
202.8
Extend al Other Expired or Expiring
Tax Provisionsc
26.6 29.1 32.9 36.0 39.1 43.2 46.3 49.8 52.4 55.2
410.7
Totald
109.0 78.0 72.7 92.5 88.0 88.1 88.6 90.7 93.7 96.5
897.9
Source: CRS calculations using data published in the Congressional Budget Office, The Budget and Economic Outlook, Washington, DC, January 26, 2015,
http://www.cbo.gov/publication/45069.
Notes:
a. The cost of extending bonus depreciation depends on whether the cost is estimated alongside other tax policy changes, such as an extension in Section 179
expensing, or in isolation. See Table 3 below for additional cost estimates for extending bonus depreciation.
b. Provisions are currently scheduled to expire on December 31, 2017. Includes a lower earned income threshold for the refundable portion of the child tax credit,
expansions to the earned income tax credit (EITC), and the American Opportunity Tax Credit (AOTC). The figures in this line include both the reduction in tax
revenues as well as the change in outlays from refundable tax credits.
c. Expired provisions include those that expired or are set to expire between December 31, 2014, and December 31, 2025.
d. This line includes the cost of extending al provisions scheduled to expire between 2014 and 2024.
CRS-15
Tax Provisions that Expired in 2014 (“Tax Extenders”)
If expiring provisions are temporarily extended, the 10-year revenue cost may be less than the
cost in year 2015, as many of the expired provisions are tax deferrals, or timing provisions. Bonus
depreciation is one example of a timing provision, where the short-term cost of extension is
greater than the long-term or budget window cost. The one-year extension of bonus depreciation
enacted as part of the Taxpayer Relief Act of 2014 (P.L. 113-295) cost an estimated $1.2 billion
over the 10-year budget window; however, the one-year revenue loss of the same provision in
2015 was $45.3 billion, with much of the cost recovered in the later years in the budget window.
As a timing provision, bonus depreciation shifts cost recovery forward, resulting in revenue
losses in earlier years, with part of that revenue loss recovered in later years. In contrast to a
temporary extension, making bonus depreciation permanent would cost $223.6 billion over the
10-year budget window (see Table 2).
Recent “Tax Extenders” Legislation and Proposals
During the 113th Congress, the House considered legislation to make permanent certain expired
tax provisions. In the 114th Congress, the House has again considered a number of the measures
that passed in the 113th Congress but did not become law.
114th Congress
On February 4, 2015, the House Committee on Ways and Means voted to report six bills that
would permanently extend six separate tax provisions that expired at the end of 2014 (see Table
3). America’s Small Business Tax Relief Act (H.R. 636) would permanently extend the enhanced
expensing allowances under Section 179. Two other bills would permanently extend expired S
corporation provisions—the Permanent S Corporation Built-in Gains Recognition Period Act of
2015 (H.R. 629) and the Permanent S Corporation Charitable Contribution Act of 2015 (H.R.
630). The remaining three extenders-related bills would make permanent expired charitable
provisions—the Fighting Hunger Incentive Act of 2015 (H.R. 644), the Permanent IRA
Charitable Contribution Act of 2015 (H.R. 637), and the Conservation Easement Incentive Act of
2015 (H.R. 641). Taken together, these six measures approved by the House Committee on Ways
and Means would cost $91.5 billion over the 10-year budget window. Of that total cost, 84.3%
($77.1 billion) is from the proposal to extend the enhanced expensing allowances under Section
179.
The President’s FY2016 Budget Proposal
The President’s FY2016 budget also proposes to permanently extend or modify certain expired
provisions, and temporarily extend others.41 Provisions that would be permanently extended (and
in some cases modified) include (1) the increased expensing for certain businesses under Section
179; (2) the 100% exclusion for qualified small business stock; (3) the research and
experimentation (R&E) tax credit; (4) certain employment-related credits (the Work Opportunity
Tax Credit (WOTC) and the Indian employment credit); (5) incentives for renewable electricity
(the production tax credit (PTC) and investment tax credit (ITC)); (6) the energy-efficient
commercial building deduction; (7) the New Markets Tax Credit (NMTC); and (8) the enhanced
deduction for conservation easements. The President’s budget also proposes permanently
41 For a complete description of the tax-related proposals in the President’s FY2016 budget, see Department of the
Treasury, General Explanations of the Administration’s Fiscal Year 2016 Revenue Proposals, February 2015,
http://www.treasury.gov/resource-center/tax-policy/Pages/general_explanation.aspx.
Congressional Research Service
16
Tax Provisions that Expired in 2014 (“Tax Extenders”)
extending the exception under Subpart F for active financing income and the look-through
treatment of payments between related controlled foreign corporations (CFCs) as part of a
broader reform to the U.S. international tax system.42
Provisions that would be temporarily extended in the President’s FY2016 budget proposal include
(1) the exclusion for cancellation of home mortgage debt (through 2017); (2) the tax credit for
second generation (cellulosic) biofuel (through 2020, with a phaseout between 2021 and 2024);
and (3) the tax credit for energy-efficient new homes (through 2025).43
As noted above, the President’s FY2016 budget assumes that the American opportunity tax credit
(AOTC), the earned income tax credit (EITC) expansions, and the child tax credit (CTC)
expansions, which were extended through 2017 as part of ARTA, are made permanent.
113th Congress
During the 113th Congress, various bills were considered to either extend or make permanent
certain tax extender provisions. Ultimately, a one-year “tax extenders” bill was passed and
enacted late in the year (the Tax Increase Prevention Act of 2014 (P.L. 113-295) was signed into
law on December 19, 2014). Earlier in the year, the Senate Finance Committee had reported a
two-year extenders package, the Expiring Provisions Improvement Reform and Efficiency
(EXPIRE) Act (S. 2260). The EXPIRE Act proposed extending most expiring provisions for two
years, through 2015.44
The House also considered legislation to make certain expiring tax provisions permanent during
the 113th Congress. As noted in Table 3, the House passed legislation that would have made
permanent nine provisions that are currently part of the tax extenders. Taken together,
permanently extending these nine provisions would have reduced revenues by an estimated
$511.4 billion over the 10-year budget window. Six of these nine provisions were included in the
Jobs for America Act (H.R. 4), which also passed the House in the 113th Congress.45 Three other
charitable-related provisions were passed as part of the America Gives More Act of 2014 (H.R.
4719). The Committee on Ways and Means reported legislation during the 113th Congress that
would have made two additional international-related extender provisions permanent, although
this legislation was not considered in the full House.
42 For background information on international tax reform, see CRS Report RL34115, Reform of U.S. International
Taxation: Alternatives, by Jane G. Gravelle.
43 The President’s FY2016 budget also proposed to provide additional funds for or to modify certain other tax
incentives that are not necessarily expired (although limited allocations may be available). For example, the FY2016
budget proposes additional funds be provided for tax incentives for carbon dioxide sequestration, advanced energy
manufacturing tax credits, credits for certain alternative technology vehicles, geographically targeted incentives for
economic development, and support of tax-favored financing for infrastructure.
44 In the Senate, the EXPIRE Act became an amendment to H.R. 3474, and a motion to end debate on H.R. 3474 was
voted down on May 15, 2014.
45 The Jobs for America Act (H.R. 4) contained the text of a number of previously passed House bills.
Congressional Research Service
17
Table 3. House Legislation to Permanently Extend Expired Tax Provisions
113th and 114th Congresses
Cost of
114th Congress
113th Congress
Extension
(billions of
Legislative
dollars)
Action
Legislation
Legislative
Action
Legislation
Business Provisions
Tax Credit for Research and
$155.5
Passed in the
American Research and Competitiveness
Experimentation Expenses
House
Act of 2014 (H.R. 4438) and Jobs for
America Act (H.R. 4)
Exceptions under Subpart F for
$58.8
Approved
by
the
Permanent Active Financing Exception Act
Active Financing Income
Committee on
of 2014 (H.R. 4429)
Ways and Means
Look-Through Treatment of
$20.3
Approved
by
the
Permanent CFC Look-Through Act of
Payments Between Control ed
Committee on
2014 (H.R. 4464)
Foreign Corporations under the
Ways and Means
Foreign Personal Holding
Company Rules
Increase in Expensing to $500,000
$77.1 Approved
by
the America’s Small Business Tax
Passed in the
America’s Small Business Tax Relief Act of
/ $2,000,000 and Expansion of
Committee on
Relief Act of 2015 (H.R. 636)
House
2014 (H.R. 4457) and Jobs for America Act
Definition of Section 179 Property
Ways and Means
(H.R. 4)
$244.7a
Passed in the
H.R. 4718, to amend the Internal Revenue
Bonus Depreciation
House
Code of 1986 to modify and make
permanent bonus depreciation and Jobs for
America Act (H.R. 4)
Election to Accelerate AMT
$24.5
Passed in the
H.R. 4718, to amend the Internal Revenue
Credits in Lieu of Additional First-
House
Code of 1986 to modify and make
Year Depreciation
permanent bonus depreciation and Jobs for
America Act (H.R. 4)
Reduction in S Corporation
$1.5 Approved
by
the
Permanent S Corporation Built-in
Passed in the
S Corporation Permanent Tax Relief Act of
Recognition Period for Built-In
Committee on
Gains Recognition Period Act of
House
2014 (H.R. 4453) and Jobs for America Act
Gains Tax
Ways and Means
2015 (H.R. 629)
(H.R. 4)
Cost of
114th Congress
113th Congress
Extension
(billions of
Legislative
dollars)
Action
Legislation
Legislative
Action
Legislation
Charitable Provisions
Enhanced Charitable Deduction
$2.2 Approved
by
the
Fighting Hunger Incentive Act of
Passed in the
America Gives More Act of 2014 (H.R.
for Contributions of Food
Committee on
2015 (H.R. 644)
House
4719)
Inventory
Ways and Means
Tax-Free Distributions From
$8.8 Approved
by
the Permanent IRA Charitable
Passed in the
America Gives More Act of 2014 (H.R.
Individual Retirement Accounts for
Committee on
Contribution Act of 2015 (H.R.
House
4719)
Charitable Purposes
Ways and Means
637)
Basis Adjustment to Stock of S
$0.6 Approved
by
the Permanent S Corporation
Passed in the
S Corporation Permanent Tax Relief Act of
Corporations Making Charitable
Committee on
Charitable Contribution Act of
House
2014 (H.R. 4453) and Jobs for America Act
Contributions of Property
Ways and Means
2015 (H.R. 630)
(H.R. 4)
Special Rules for Contributions of
$1.2 Approved
by
the
Conservation Easement Incentive
Passed in the
America Gives More Act of 2014 (H.R.
Capital Gain Real Property for
Committee on
Act of 2015 (H.R. 641)
House
4719)
Conservation Purposes
Ways and Means
Source: Joint Committee on Taxation revenue estimates for the legislation listed in the table can be found at: https://www.jct.gov/publications.html.
Notes: The cost of extension is the estimated revenue loss in the most recent proposal considered by the House. This table includes only legislation that was
considered either at the committee level or on the House floor.
a. The estimated cost of making bonus depreciation permanent, as proposed in H.R. 4718, was $262.9 billion over the 2014 through 2024 budget window. The lower
revenue cost estimate in H.R. 4 is likely due to interaction effects with other provisions that would be extended in H.R. 4, specifically the increased expensing
al owances under Section 179. Thus, absent these other provisions, the cost of bonus depreciation would likely be greater.
Tax Provisions that Expired in 2014 (“Tax Extenders”)
Tax Provisions that Expired in 2013 that Were Not Extended
Several provisions that had expired at the end of 2013 were not extended as part of the Tax
Increase Prevention Act of 2014 (P.L. 113-295). Two of these provisions would have been
extended in the EXPIRE Act, but were not included in P.L. 113-295: the health coverage tax
credit and the credit for electric-drive motorcycles and three-wheeled vehicles.
The health coverage tax credit had been extended as part of past “tax extenders” legislation. The
health coverage tax credit was first enacted, without an expiration date, as part of the Trade Act of
2002 (P.L. 107-240). A January 1, 2014, termination date was enacted as part of an act to extend
the Generalized System of Preferences in 2011 (P.L. 112-40).46
The other provision that was not extended in P.L. 113-295, but that would have been extended by
the EXPIRE Act, was the credit for electric-drive motorcycles and three-wheeled vehicles. In
recent years, a number of incentives have been available for various alternative technology
vehicles. There are currently incentives available for plug-in electric vehicles. Incentives for most
other alternative technology vehicles have expired.47
Two other energy-related provisions were not extended past their January 1, 2014, termination
date: the placed-in-service date for partial expensing of certain refinery property and the credit for
energy efficient appliances. The EXPIRE Act did not propose extending either of these
provisions.
Two disaster-related provisions that expired at the end of 2013—one that provided tax-exempt
bond financing authority for facilities in the New York Liberty Zone and another related to the
replacement period for nonrecognition of gain for areas damaged by the 2008 Midwestern
storms—were not extended in P.L. 113-295. The EXPIRE Act also did not include an extension
for these disaster-related provisions.
Author Contact Information
Molly F. Sherlock
Coordinator of Division Research and Specialist
msherlock@crs.loc.gov, 7-7797
46 For more information, see CRS Report RL32620, Health Coverage Tax Credit, by Bernadette Fernandez.
47 For more information, see CRS Report R42566, Alternative Fuel and Advanced Vehicle Technology Incentives: A
Summary of Federal Programs, by Lynn J. Cunningham et al. and CRS Report R43206, Energy Tax Policy: Issues in
the 114th Congress, by Molly F. Sherlock and Jeffrey M. Stupak.
Congressional Research Service
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