Senate Bill Would Extend Expired Provisions for GHPs

The Senate Finance Committee passed by voice vote a number the “Expiring Provisions Improvement Reform and Efficiency (EXPIRE) Act.” Proposed by Senate Finance Committee Chairman Ron Wyden (D-OR), the bill extends a number of energy related tax breaks that expired at the end of 2013 or will expire at the end of 2014. The bill must still be considered by the full Senate and House. The House may not consider its own tax extenders bill until November or December of 2014.

The legislation includes credits for plug-in electric vehicles, alternative fuel vehicle refueling property, cellulosic biofuel production, renewable diesel, coal production on American Indian land, construction of new energy-efficient homes, alternative fuel production and fuel cell motor vehicles. A last-minute provision includes Production Tax Credits for renewable electricity generated by wind, geothermal, biomass, landfill gas, and waste-to-energy facilities. The legislation would extend the PTC for two years, the same period as most of the credits in the bill.

Geothermal Exchange Organization (GEO) and its Washington DC advocacy team successfully ensured that the following provisions that impact tax deductions for geothermal heat pump (GHP) installations were included in the Senate legislation:

  1. Bonus Depreciation Taxpayers are allowed an additional first-year depreciation deduction of 50% (bonus depreciation) of commercial GHP equipment that is placed into service after Dec. 31, 2013 but before Jan. 1, 2016.
  2. Business-Related Deductions A taxpayer may deduct up to $500,000 per year—indexed for inflation—for GHP equipment and other property used in a trade or business during calendar years 2014 and 2015.
  3. Energy Efficient Homes A contractor may take a credit for each new energy-efficient home used as a residence in calendar years 2014 and 2015. Homes must meet a reduction in annual heating and cooling energy consumption compared to a comparable residence constructed in accordance with standards of the 2006 International Energy Conservation Code. The credit is $1,000 for new homes that meet a 30% reduction in annual heating and cooling energy consumption, and $2,000 for new homes that meet a 50% reduction in annual heating and cooling energy consumption.
  4. Energy Efficient Commercial Buildings The energy efficient commercial building deduction (section 179D) is extended for calendar years 2014 and 2015. A building owner will be allowed a deduction for equipment installed in 2014 and 2015 as part of a plan to reduce total annual energy and power costs of a building with respect to interior lighting systems; heating, cooling, ventilation; and hot water systems by 50% or more compared to a building that meets the minimum requirements for energy-efficient commercial building expenditures under ASHRAE /IESNA* Standards 90.1-2001 in 2014 and 90.1-2007 in 2015. The deduction is $1.80 per square foot of property for which the expenditures were made. The deduction is allowed in the year the property is placed into service. Tribal governments and non-profit organizations can allocate the deduction to the person primarily responsible for designing a property. * American Society of Heating, Refrigerating and Air Conditioning Engineers (ASHRAE) and the Illuminating Engineering Society of North America (IESNA).