Renewable Energy Tax Credits Pass Senate as Part of Bailout Plan
As of last Monday, things looked pretty bleak for renewable energy tax credits set to expire at the end of the year. As we reported, both the House and the Senate had approved renewing the energy tax credits, but the President had vowed a veto of the House version, and the House refused to accept the Senate version.
Given the situation with the economic mess and the bailout plan that failed passage in the House on Monday, it appeared likely that the impasse over renewable energy tax credits wouldn’t get solved in time to rescue them from expiring at the end of the year, putting thousands of jobs and millions of dollars of investment capital in renewable energy projects at risk.
Despite how distasteful the idea is of a “bailout” from the government for shoddy financial dealing in the private sector, it now looks like the plan passed in the Senate last night may just bailout renewable energy tax credits along with our friends on Wall Street.
Attached to the $700 billion bailout plan is a provision to extent renewable energy investment and production tax credits.
As reported in the Boston Globe and Reuters, the key elements of the provision include:
- Extending the research and development tax credit through 2009.
- Provision for $18 billion in tax breaks for clean energy by continuing production tax credits for wind and refined coal and allowing facilities that generate electricity from waves and tides to qualify. Also extends tax breaks for solar energy.
- Provision of new tax credits for carbon capture and sequestration demonstration projects for advanced coal electricity generation.
- Creating a new category of tax credit bonds to finance state and local government initiatives to cut greenhouse gas emissions.
- Creating a new tax credit of up to $7,500 for plug-in electric drive vehicles.
- Extending tax credit for biodiesel production through 2009.
- Extending tax credits for homeowners who update with energy efficient products. Energy efficient biomass fuel stoves for the first time would qualify for a $300 credit.
- Extending Alternative Minimum Tax relief for some 24 million middle class taxpayers through 2008. Includes some additional AMT relief for people who exercised company incentive stock options.
- Extending a provision allowing homeowners who do not itemize their taxes to take a deduction up to $1,000 for state and local property taxes.
- Extending through 2009 a provision allowing some taxpayers to take a deduction for state and local sales taxes.
- Extending a tax break for certain higher education expenses for taxpayers who do not itemize their deductions.
- A provision that would require insurance plans that offer mental health benefits to offer those benefits at the same level as medical-surgical benefits.
- Provision for tax exempt private activity bonds for Texas, Louisiana and Midwestern states hit by natural disasters. Also provides other tax benefits to those areas to help develop low income housing and help businesses.
All eyes are now back on the House, which takes up debate on the Senate package today, with a vote expected on Friday.