Congress extends tax breaks beneficial to farmers

At the end of the year, Congress passed a bill that retroactively reinstates for one year more than 50 tax provisions that expired at the end of 2013. President Obama has said he will sign the legislation into law. These tax provisions are essential to small businesses and rural economies, and Farm Bureau will continue to work for a long-term solution so farmers have the certainty they need to plan for the future.

Farm Bureau supports the following provisions:

Priority issues:

  • Section 179 Small Business Expensing: The maximum amount a small business can immediately expense when purchasing business assets instead of depreciating them over time will be $500,000 reduced dollar for dollar when expenditures exceed $2 million.
  • Bonus Depreciation: There will be an additional 50 percent bonus depreciation for the purchase of new capital assets, including agricultural equipment.

Renewable energy provisions:

  • Cellulosic Biofuel: $1.01 per gallon income tax credit for cellulosic biofuel sold for fuel plus the additional first-year 50 percent bonus depreciation for cellulosic biofuel production facilities.
  • Biodiesel and Renewable Diesel: $1 per gallon tax credit; the 10 cents per gallon Small Agri-Biodiesel Producer Credit, and the $1 per gallon tax credit for diesel fuel created from biomass.
  • Alternative Fuel Refueling Property: 30 percent investment tax credit for alternative vehicle refueling property.
  • Renewable Energy: 2.2 cents per kilowatt-hour Production Tax Credit for the production of electricity using wind energy and the Community and Distributed Wind Investment Tax Credit, which gives the option to take an investment tax credit in lieu of the Production Tax Credit.

Other important provisions:

  • Fair market test for Unrelated Business Income Tax
  • Tax deduction for donations of conservation easements
  • Fifty percent Railroad Track Maintenance Credit for short line railroads
  • Enhanced deduction for donated food
  • Deduction for state and local sales tax
  • Deduction for tuition and fees for higher education
  • Nine cent increase in the excise tax on fuel for inland waterways to fund locks and dams.