There are 34 temporary tax provisions scheduled to expire at the end of 2016. These provisions can be categorized as primarily affecting individuals, businesses, or being energy-related. These categorizations follow those used in past “tax extender” legislation.
Individuals
Four individual tax provisions are scheduled to expire at the end of 2016. They include the following:
- The above-the-line deduction for certain higher education expenses, including qualified tuition and related expenses. This was first added as a temporary provision in Economic Growth and Tax Relief Reconciliation Act of 2001, but has regularly been extended since.
- The provision allowing homeowners to deduct mortgage insurance premiums was first enacted in 2006 (effective for 2007).
- The provision allowing qualified canceled mortgage debt income associated with a primary residence to be excluded from income was first enacted in 2007.
- The other individual provision set to expire at the end of 2016 is one that allows taxpayers over age 65 to deduct medical expenses in excess of 7.5% of adjusted gross income (AGI). For most taxpayers, an itemized deduction for unreimbursed medical expenses is allowed to the extent that such expenses exceed 10% of AGI. The threshold for the unreimbursed medical expense deduction was increased from 7.5% to 10%, effective in 2013 for most taxpayers, as part of the Patient Protection and Affordable Care Act. However, an exception from the increase for tax years 2013 through 2016 provided that, if either the taxpayer or their spouse was age 65 or older, the 7.5% threshold would apply during this four-year period.For businesses there are fourteen tax provisions are scheduled to expire at the end of 2016. All but one of these provisions have been included in recent tax extenders legislation. The largest of these provisions are the empowerment zone tax incentives and the credit for railroad track maintenance. As discussed further below,
- Most of the business provisions scheduled to expire at the end of 2016 have been part of the tax code for close to a decade or longer. Several were first enacted in the 1990s, such as,
Businesses
- The temporary increase in the limit on transfer or “cover-over” of rum excise tax revenues to Puerto Rico and the Virgin Islands;
- The Qualified Zone Academy Bond allocation of bond limitation;
- The Indian employment tax credit; accelerated depreciation for business property on Indian reservations;
- The empowerment zone tax incentives
- Several others were first enacted in the mid-2000s, including the credit for railroad track maintenance;
- Seven-year recovery for motorsport racing facilities;
- The domestic production activities deduction allowable for activities in Puerto Rico;
- The mine rescue team training credit;
- Expensing for mine-safety equipment;
- The special expensing rules for film and television production.Sixteen energy tax provisions are also scheduled to expire at the end of 2016. Thirteen of these provisions were extended in the PATH Act. Of the energy tax provisions that were extended in the PATH Act, the largest are the incentives for biodiesel and renewable diesel, the production tax credit (PTC) for nonwind technologies, and the credit for nonbusiness energy property (also known as the credit for energy efficiency improvements to existing homes).
- Most of the energy provisions scheduled to expire at the end of 2016 have been included in past tax extender legislation. They include the following:
Energy
- Beginning-of-Construction Date for Non-Wind Facilities to Claim the Production Tax Credit (PTC) or the Investment Tax Credit (ITC) in Lieu of the PTC
- Special Rule to Implement Electric Transmission Restructuring
- Credit for Construction of Energy Efficient New Homes
- Energy Efficient Commercial Building Deduction
- Credit for Section 25C Nonbusiness Energy Property
- Alternative Fuel Vehicle Refueling Property
- Energy Credit for Hybrid Solar Lighting Systems, Geothermal Heat Pumps, Small Wind, Combined Heat and Power, Fuel Cell, and Stationary Microturbine Power Plant Property
- Credit for two-wheeled plug-in electric vehicles
- Credit for Residential Energy Property