On December 17, President Obama signed into law the Tax Relief, Unemployment Insurance Authorization, and Job Creation Act of 2010. This action culminates more than a year’s work on the part of NPGA lobbyists to extend some of the critical tax credits authorized by the federal government. The new law has many favorable tax provisions that apply to individuals and businesses. But most important from NPGA’s standpoint, the law contains many provisions that benefit specifically the propane industry.
Propane Fuel Tax Credit: The $0.50 per gallon fuel tax credit is extended through December 31, 2011 and made retroactive to 2010. For both years the fuel credit includes forklift fuel, despite efforts by the House Ways and Means Committee to eliminate this from the credit mechanism. Alternative fuel vehicle refueling property: The alternative fuel infrastructure tax credit has been extended through December 31, 2011. Per the law, the percentage of the credit for refueling property reverts back to the pre-stimulus levels of 30% with a $30,000 cap.
Propane appliance credits: The “non-business energy property” tax credit for propane furnaces, boilers and hot water heaters is extended for 2011 but at pre-stimulus levels of 10% percent and a maximum credit of $500. The law also reinstates the caps for the appliances as they were in the original provision. Those caps are $300 for water heaters and $150 for furnaces. Installation costs can be claimed.
Extension of bonus depreciation: Allows 100% depreciation for qualifying expenditures or investments from September 8, 2010 through December 31, 2011. Also included is an additional 50% depreciation - above the standard percentage depreciation schedule - for calendar year 2012.
Small business expensing: Businesses with smaller annual investments may deduct the cost of certain property placed in service for the year rather than depreciate costs over time. For taxable years 2010 and 2011, the amount small businesses may expense is temporarily set at $500,000, with a phase-out of the benefit beginning when qualified investment hits $2 million. For 2012, the tax bill just signed into law extends for one year a $125,000 expensing limit, and a $500,000 phase-out, indexed for inflation.
Looking forward to the 112th Congress, NPGA plans to continue its aggressive advocacy for policies that grow gallons and build markets. While we were disappointed that the alternative fuel vehicle tax credit was not extended by the law, we anticipate that our work building relationships in Congress will be helpful in moving us toward that goal next year. Furthermore, we will be on the lookout for additional opportunities to benefit propane in other areas such as commercial mowing.
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