Washington Update: IFB's Tax Victories

In 2012, Illinois Farm Bureau members focused much of their energy into resolving critical federal tax issues. With this week's Congressional votes, Illinois' farm community has seen that all that hard work has been worth it!

Illinois Farm Bureau called an action request from November 30 to December 7, which generated more than 4,400 contacts to our delegation in support of current estate tax and capital gains provisions, and supporting extensions of Section 179 expensing and renewable fuels and energy tax credits. Senators, including Majority Whip Dick Durbin, voted overwhelmingly (89-8) early New Year's Day to pass the bill, which successfully resolved several of our tax priority issues.  

The House voted 257-167 to pass the fiscal cliff measure before adjourning. Illinois Farm Bureau is very pleased that Reps. Biggert, Costello, Davis, Dold, Gutierrez, Johnson, Kinzinger, Lipinski, Manzullo, Quigley, Rush, Schakowsky, Schock, and Shimkus each voted for the bill. The remaining four Illinois congressman opposed the bill.    

Because the fiscal cliff legislation addressed each and every issue in our last action request, IFB urged a "yes" vote on H.R. 8. Again, thanks to all of you who participated in our end-of-the-year action request and made your contacts.  As you can see, we were able to help persuade the vast majority of our delegation to support the bill and resolve some of our biggest ticket agenda items.

Estate tax- H.R. 8 sets a permanent personal exemption at $5 million, ($10 million per couple) indexed for inflation. The tax rate will be 40%. The law also provides for a step up in basis. Without action, the estate tax exemption would have fallen to $1 million dollars and the tax rate would have risen from 35% to 55%. The 40% rate was a concession for those who sought a lower ($3.5 million) exemption.

Capital gains rate- The law leaves the capital gains rate unchanged at 15% for individuals earning below $400,000 and couples earning below $450,000. The rate moves to 20% for the top tax bracket.  

Section 179 expensing option - The maximum amount that 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 (2012 and 2013). The Section 179 threshold will fall to a maximum $20,000 dollar for dollar reduction on $200,000 purchases in tax year 2014 and after.

Bonus depreciation - Congress extended 50% bonus depreciation for the 2013 tax year.

Expiring tax provisions extended benefitting renewable fuels and energy -

• Cellulosic Biofuel Producer Tax Credit (2013) -- $1.01 per gallon income tax credit for cellulosic biofuel sold for fuel; additional first-year 50% bonus depreciation for cellulosic biofuel production facilities;
• Alternative Fuel Refueling Property - 30% credit for installation costs (2012 and 2013);
• Biodiesel Tax Incentives (2012 and 2013): The biodiesel and renewable diesel $1.00 per gallon tax credit; 10¢ per gallon small agri-biodiesel producer credit; and $1.00 per gallon tax credit for diesel fuel created from biomass;
• Incentives for Renewable Electricity (2013) including the Production Tax Credit, which provides an income tax credit of 2.2¢ per kilowatt-hour for the production of electricity using wind energy (Sec. 45); 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 (Sec. 48).

IFB invites you to be part of the next victory. Join our FB ACT team and receive action requests. During these action requests, farmers and supporters across the state unite, contacting their legislators at the same time and proving the dedication we have to building a brighter future for Illinois agriculture.