55 Federal Tax Breaks Expire
In what Washington D.C. observers call an “almost annual ritual,” the U.S. Congress let 55 popular federal tax deductions expire at the end of 2013. The other part of the ritual, say the pundits, will come if Congress reinstates the breaks before the end of the year—something they believe will happen.
Nothing is certain, so businesses and individuals will have to assume that the breaks are gone for good.
One of the most significant developments for Connecticut’s economy is the expiration of the federal research and development tax break. That’s because Connecticut is home to many leading R&D-based manufacturers, pharmaceuticals, and other high technology businesses.
“Some tax breaks correspond to many jobs and economic activity,” says Pete Gioia, CBIA vice president and economist. “Losing the R&D tax credit, in particular for Connecticut, is a blow to innovation and job creation.”
Other tax credits that expired:
- Brownfields—the expensing of “brownfield” environmental remediation costs
- Section 179 expense deduction—through 2013, business owners could deduct up to $500,000 of assets they need to run their businesses (machinery and equipment). But now, the limit is just $25,000
- Renewable energy—tax credit for producing renewable energy such as wind and solar in plants built before the end of 2013
- Restaurants and retail—a break that allowed the writing off the cost of improvements
- Energy efficiency home improvements—a tax credit of $500 for energy-saving home improvements to primary residences
- Higher education tuition—tax deduction of from $2,000 to $4,000 of qualified tuition costs
- Hiring vets—the Work Opportunity Tax Credit targeted to hiring qualified veterans
The complete list can be found at http://www.fas.org/sgp/crs/misc/R43124.pdf
Of course, the federal tax breaks were good through 2013, so they can be claimed on the returns to be filed this year. That will not be the case for next year, however—unless lawmakers reinstate them.
Rachelle Bernstein, vice president and tax counsel for the National Retail Federation, said, “It’s impossible to plan when every year this happens, but yet business has gotten use to that.”
For more information, contact CBIA’s Bonnie Stewart at 860.244.1925 or email@example.com.
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