Propane Benefits from "Fiscal Cliff" Deal

After a protracted post-Christmas negotiation between the President and Congress, an agreement has been reached on important tax related issues affecting all Americans.

On January 1, 2013 Congress completed action on legislation to avoid the consequences of sending the country over the so-called fiscal cliff. Unfortunately, some other critical decisions affecting the U.S economy have been put off for consideration during the next session of Congress, due to begin tomorrow.

The legislation, which is expected to be signed by the President, contains several provisions that will affect the propane industry.  First, there were some propane specific energy tax credits that had expired and have been extended through 2013. In addition these provisions were also made retroactive for taxable year 2012. These credits are:
Alternative Fuel Tax Credit (50 cents per gallon including propane used in forklifts)
Alternative Fuel Infrastructure Tax Credit (30% up to a maximum of $30,000)
Energy Efficient Existing Homes Tax Credit ($150 for qualified propane furnace and $300 for qualified propane water heater)
Energy Efficient New Homes Tax Credit (Up to $2,000 to an eligible contractor who constructs a qualified energy efficient new home)

All the same rules apply to these credits as in the past. The only thing that has changed are the expiration dates.

The other provision of interest to the propane industry concerns the estate tax. The change to the estate tax provisions have now been made permanent. These changes include an exemption level of $5 million (permanently indexed to inflation) with a top tax rate of 40%. While a complete repeal of estate taxes was preferable, it was never a realistic expectation. The fact that these new thresholds have been made permanent is a step in the right direction.

Based on comments by key Members of Congress, we fully expect that there will be an effort this year to address significant tax reform, and we will be working with Congress to explore new opportunities for propane in the tax code as well as all other legislation that may move through Congress in this coming session. As always, we encourage anyone who plans to take advantage of any of the above tax provision to consult with their tax advisor or accountant.

For more articles from the NPGA visit here.