The long wait is over! The Further Consolidated Appropriations Act, 2020, was signed into law on December 20, 2019, avoiding a federal government shutdown. The year-end spending bill, H.R. 1865, includes several fixed asset tax provisions that may benefit you. In particular, the bill includes provisions referred to as fixed asset tax-extenders, because they retroactively extend certain tax incentives by 3 years to December 31, 2020. These tax incentives had previously expired on December 31, 2017.
Highlights of Fixed Asset Tax ProvisionsFor a quick look at how the new tax law may affect you, here are some highlights of the more notable fixed asset tax-extenders:
- Section 179D Energy Tax Credits for installing qualifying energy efficient heating, cooling, ventilation, hot water, lighting, and building envelope systems for commercial buildings. For more details on Section 179D tax credits and whether you may qualify, read our related blog post and website page.
- Tax credits of $1,000 or $2,000 for manufacturers and builders of energy-efficient homes, under the Federal Energy Policy Act of 2005. These homes must meet federal ENERGY STAR requirements.
- Additional first-year 50% bonus depreciation for second generation cellulosic biofuel plant property. See the U.S. Department of Energy’s Alternative Fuels Data Center for more information.
- Accelerated depreciation for qualified business property on Indian reservations.
- Empowerment Zone Tax Incentives for certain businesses and employers operating in 41 designated areas. Among the various benefits, it includes accelerated depreciation deductions on qualifying equipment under Section 179, and capital gains tax deferral on qualified assets replaced and sold.
- A 7-year cost recovery period for motorsports entertainment complexes.
- A 3-year cost recovery period for certain qualifying race horses.
- Other various energy tax credits.