The Federal Tax Cuts and Jobs Act (No. 115-97) was passed into law on December 22, 2017 and contains several key provisions with impacts to clean energy taxes and jobs. The law amends the Internal Revenue Code (IRC) to reduce tax rates and modify policies, credits, and deductions for individuals and businesses. These include:
- The corporate tax rate will be cut to 21 percent starting in 2018.
- There will be no changes to the production, investment, and electric vehicle tax credits—positive or negative.
- The corporate alternative minimum tax (AMT) will be eliminated.
- Some pass-through businesses (LLCs, S-Corps) will qualify for a 20% deduction for income, expiring after 2025.
- The base erosion anti-abuse (BEAT) tax was included in the final bill with modifications.
- In the individual tax code, several rates and brackets are adjusted.
Energy efficiency and residential impacts are both present. While the Tax Cuts and Jobs Act does not include an extension of any expired clean energy tax credits, congressional leaders are taking up a separate tax extenders package. This package would reinstate and retroactively extend several categories of credits that expired at the end of 2016- including production tax credit, commercial energy efficiency (Sec. 179D), residential energy property credits (Sec. 25D and 45L) and alternative fuel and vehicle credits.
For residential, the Tax Cuts and Jobs Act reinstates and extends residential tax credit for all expired technologies on the same schedule as solar (for projects placed into service by the end of 2021: 30% initially, phasing out over time).
NCBPA will continue to monitor this legislation and its impact on our members. Please contact us with your questions.