Dozens of tax credits to expire 2010, unless Congress acts

By Oregon Tax News,

Top lawmakers told Senate leaders they plan to move forward early in 2010 with an extension of a $31 billion package of tax measures for both businesses and individuals that are set to expire at the end of 2009.  They said they intend to extend the credits retroactively to the beginning of 2010, so there is no gap for recipients of the measures. The House passed an extension of the tax measures before they left town for the holiday recess. But the Senate has not found time to push through that measure or take up a similar measure.

Among the expiring individual tax breaks:
– Annual alternative minimum tax “patch,” which keeps 23 million additional middle-income Americans from being forced into calculating and paying the dreaded AMT;
– The deduction for state and local sales taxes for itemizers;
– The additional $1,000 deduction for real estate taxes for those who claim the standard deduction;
– The $4,000 deduction for college tuition;
– $250 deduction for teachers who spend their own money on classroom supplies.

The House package includes a $7 billion R&D credit, a number of renewable energy provisions, as well as tax credits for certain individuals.  Senate leaders did not say whether they would seek to offset the cost of extending the tax breaks or whether they would try to revive the expiring estate tax retroactively.

For businesses, the lapsing of the R&D credit–a $7 billion a year break–is a particular problem, since companies must plan for long-term research commitments amid uncertainty. According to The New York Times, TechAmerica, an association for the technology industry lobbying for the extension of the R&D credit, estimates that more than 100,000 jobs and billions of dollars in economic activity and treasury revenue projected for 2010 may be at risk if the R&D credit expires.
According to, multinational companies are also frustrated that two other provisions–the Subpart F active financing and look-through rules–haven’t been extended.

According to The New York Times, the Senate delay in renewable energy provisions may put more jobs in the biofuels and energy sector at risk and may cause investment uncertainty in those sectors.  Many companies developing new energy technology take advantage of this credit, which gives a company a tax break for labor and equipment costs.

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