The National Lumber and Building Material Dealers Association (NLBMDA) today applauded Congress for approving a tax bill that contains provisions to stimulate the economy and provide extra depreciation and expensing, but booed the Senate and House for failing to pass other proposals that could have helped dealers.
NLBMDA issued its statement less than half a day after the House passed H.R. 4853 by a 277-148 vote. The Senate approved the bill earlier this week 81-19. The bill is best known for extending the George W. Bush administration-era tax cuts for another two years.
"Hopefully, extension of the tax cuts will bring some certainty to the marketplace and accelerate growth," NLBMDA president Michael O'Brien said. "While we are also pleased with many of the provisions of the bill, including the compromise estate tax provision and the bonus depreciation and Section 179 expensing, the rollback of the home retrofit tax credit for energy efficient building materials to pre-2009 levels and the utter failure to once again repeal the 1099 health care tax are certainly disappointments."
Here is NLBMDA's summary of what's in the bill:
- Estate Tax: The bill institutes a $5 million exemption (indexed beginning in 2012) and 35% rate on estates for 2011 and 2012. While not permanent, this is based on the Lincoln-Kyl compromise previously endorsed by NLBMDA. The proposal is effective January 1, 2010, but allows an election to choose no estate tax and modified carryover basis for estates arising on or after January 1, 2010 and before January 1, 2011. The proposal sets a $5 million generation-skipping transfer tax exemption and zero percent rate for the 2010 year.
- Individual Tax Rates: Extends the 35% tax bracket for an additional two years.
- Payroll Tax: A temporary 2% reduction in employee-paid Social Security payroll taxes for 2011.
- Capital Gains and Dividends: Extends the current capital gains and dividends rates (15% for those in the 25% bracket and above) through 2012.
- New Energy-Efficient Home Credit (45L): Extended through 2011 (lapsed after 2009).
- Energy Efficiency Home Remodeling Credit (25C): Extended through 2011 at pre-ARRA levels, 10% up to $500 with a $200 cap on window purchases. Changes product criteria to ENERGY STAR for windows, doors and skylights. (This was previously 30% up to $1500 for 2009-2010).
- Bonus Depreciation: The bill extends and temporarily increases the bonus depreciation provision for investments in new business equipment. For investments placed in service after September 8, 2010 and through December 31, 2011, the bill provides for 100 percent bonus depreciation. For investments placed in service after December 31, 2011 and through December 31, 2012, the bill provides for 50 percent bonus depreciation.
- Section 179 Expensing: In 2007, tax cuts temporarily increased section 179 thresholds to $125,000 and $500,000 respectively, indexed for inflation. These amounts have been further increased and extended several times on a temporary basis, including most recently as part of the Small Business Jobs Act which increased the thresholds to $500,000 and $2,000,000 for the taxable years beginning in 2010 and 2011. This proposal extends the 2007 maximum amount and phase-out thresholds for taxable years beginning in 2012, at $125,000 and $500,000 respectively, indexed for inflation. The proposal is effective for taxable years beginning after December 31, 2011.
- Alternative fuels credit: The bill extends through 2011 the $0.50 per gallon alternative fuel tax credit.
- Tax benefits for certain retail improvements: The bill extends for two years (through 2011) the special 15-year cost recovery period for certain leasehold improvements, restaurant buildings and improvements, and retail improvements.