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Grassley eyes government funding bill as vehicle for extenders

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Tax Hot Topics newsletter Senate Finance Committee Chairman Chuck Grassley (R-Iowa) has indicated he will seek to include tax “extender” legislation in the government funding package Congress intends to pass by Feb. 15.

The proposal would retroactively extend the popular expired tax provisions for 2018. These include individual deductions for higher education expenses and mortgage insurance premiums, and a variety of tax incentives for businesses, such as:

  • Alternative fuel and biofuel credits
  • The energy-efficient new home credit
  • The energy-efficient commercial building property credit
  • Special expensing for film and television products
  • A three-year depreciation for racehorses
  • A seven-year cost recovery for motor sports entertainment complexes
  • Expensing for advanced mine safety equipment

With tax filing season already underway, a spending deal may present the last meaningful opportunity to renew the extender provisions. While the latter was once a routine legislative exercise that itself served as a vehicle for other bills, that dynamic has flipped. Extenders have grown increasingly unpopular among Republicans, especially in the House of Representatives. In December, a proposal to renew the provisions was dropped from a House Republican year-end tax package after failing to garner enough support from the party’s rank and file.

A Democratic House majority and support from Republican leadership in the Senate have since given new hope to the proposal, but the likelihood of passage rests largely upon how well government funding negotiations proceed in the coming weeks. Eager to avoid a second government shutdown in as many months, some lawmakers are pushing for clean spending bills that are less likely to get bogged down by opposition to ancillary issues such as extenders.

If Congress does pass extender legislation, all 28 provisions are likely to be retroactively extended for one year. However, some lawmakers, including Grassley, may try to make a select few permanent.

Contacts:

Dustin Stamper
Managing Director
Washington National Tax Office
T +1 202 861 4144

Omair Taher
Senior Associate
Washington National Tax Office
T +1 202 861 4143

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