The U.S. House and Senate have now each passed the Tax Cuts and Jobs Act (H.R.1) and have sent the bill to President Trump’s desk for final passage. The final bill is expected to cost nearly $1.5 trillion over the next ten years and completely overhaul a tax code that hasn’t seen an update in nearly three decades. While the bill has broad impacts on individuals and corporations across the financial spectrum, the following chart details changes to certain business tax credits that may be of interest to you.
| TAX CREDITS | ||
| Item | Current Law | New Law under TCJA |
| Historic Rehabilitation Tax Credit | 20% credit for qualified rehabilitation expenditures with respect to certified historic structures and 10% credit for qualified rehabilitation expenditures for buildings built before 1936. | TCJA retains the 20% credit but provides for the credit to be taken over 5 years rather than when the project is placed in service, which is current law. TCJA eliminates the 10% credit. |
| New Markets Tax Credit (NMTC) | 39% credit for qualified investments in low-income communities. $3.5 billion of NMTC allocation for each of 2018 and 2019. | The House bill eliminated NMTCs, but the TCJA conference report retains current law. |
| Renewable Energy Production Tax Credit (PTC) | Tax credit for the production of electricity from renewable energy sources, such as wind, biomass and hydropower. Taxpayers may elect to take the 30% ITC discussed below in lieu of the PTC. | The House bill eliminated the inflation adjustment for the credit, but the TCJA conference report retains current law. |
| Renewable Energy Investment Tax Credit (ITC) | 10% credit for certain renewable energy property, but such percentage is adjusted to 30% for solar energy property prior to 2020, with a phase down of the percentage thereafter. | The House bill eliminated the permanent 10% credit, but the TCJA conference report retains current law. |
| For a complete breakdown of the upcoming changes, click here.
If you have questions or concerns about any aspect of this legislation, please contact a member of our Tax Credits Group. |