Early Morning Budget Deal Brings the Return of Previously Expired Short-Term Tax Breaks

Early this morning, the House and Senate voted to pass a budget deal that included $17 billion in tax provisions, ending a short overnight government shutdown.  The bill (H.R. 1892) extends the investment tax credit (ITC)  to “orphaned” technologies that were not included in the extension of ITC for solar property in 2015. The bill makes ITC available again for fiber optic solar lighting property, qualified fuel cells, micro-turbines, combined head and power systems, small wind energy property and geothermal property, provided construction of such property begins before January 1, 2022. ITC with respect to all  of these technologies is subject to phase-out. ITC is 30 percent if construction begins before January 1, 2020, 26 percent if construction begins in 2020, 22 percent if construction begins in 2021 and zero thereafter. ITC is also completely phased out for property that is not placed in service before January 2, 2024. In addition to the ITC extension, the bill also extends the beginning construction deadline for the production tax credit (PTC) until January 1, 2018, for closed-loop biomass, open-loop biomass, geothermal, landfill gas, municipal solid waste, hydropower and marine and hydrokinetic facilities and extends the election to claim ITC in lieu of PTC until January 1, 2018.

The Senate passed the bill shortly after 2:00 AM EST, with the House following suit around 5:30 AM EST. The bill was signed into law by President Trump later this morning.

201 Trade Case Update: Trump Administration Imposes Tariff on Imported Solar Panels

201 Trade Case Update: Trump Administration Imposes Tariff on Imported Solar Panels

After months of uncertainty, the Trump administration announced on Monday that it is imposing a 30% tariff on imported solar cells and modules, which will step down 5% each year thereafter for a duration of four years. In addition, the first 2.5 gigawatts of imported solar cells are exempted from the tariff each year.

Safeguard Tariffs on Imported Solar Cells and Modules
Year 1 Year 2 Year 3 Year 4
Tariff Increase 30% 25% 20% 15%

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President Trump Signs Tax Cuts and Jobs Act into Law

Today, President Trump signed the $1.5 trillion Tax Cuts and Jobs Act (TCJA) into law, marking the first major overhaul of the U.S. tax code in over 30 years.

As we discussed in our prior blog post here, the TJCA is a mixed bag for the renewable energy industry. On one hand, it cuts the tax rate and provides for 100% expensing for both new and used property. However, on the other hand, it limits interest deductions and includes a complicated new base erosion anti-abuse tax (BEAT) that could claw back tax credits from multinational tax equity investors.

BREAKING NEWS: Congress Sends Tax Cuts and Jobs Act to President Trump’s Desk for Signing

The Tax Cuts and Jobs Act (TCJA) has been passed by both houses of Congress and is now set to be signed into law by President Trump. The vote was 224-201 in the House with all the Democrats joined by twelve Republicans voting “no” and 51-48 in the Senate along party lines. Although the TCJA isn’t exactly great news for the renewable energy industry, it is far better than what was originally proposed in the House and Senate bills. Here are the main takeaways:

  • PTC Inflation Adjustment – The TCJA preserves the current 2.4¢/kWh PTC amount for wind with an annual inflation adjustment. The House bill would have reduced the PTC to 1.5¢/kWh with no annual inflation adjustment.
  • ITC Phase-out Schedule – The TCJA does not eliminate the permanent 10% solar ITC beginning 2023.
  • Continuous Construction Requirement – The TCJA does not include the statutory continuous construction requirement that was included in the House bill. Despite clarification from the House, which we blogged about here, there was some concern as to whether the House bill would eliminate the four-year safe harbor that wind developers rely on under IRS guidance.

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Senate GOP Pass Tax Bill

Senate Republicans passed along party lines the most sweeping rewrite of the tax code in decades early Saturday morning. A copy of the bill, which was unveiled just hours before the vote, is available here.

The House will vote today on a motion to go to conference with the Senate to iron out the differences between the Senate’s bill and the bill that the House passed last month. A resulting conference report must then be passed by each chamber before putting the final bill on President Trump’s desk, which GOP leaders hope to do before Christmas. Republicans in the House and Senate are confident that the differences between the two bills are not irreconcilable. However, there are some notable differences: how the estate tax will be handled, when certain tax cuts will expire, repealing the individual mandate under Obamacare, the treatment of pass-through businesses, education incentives and medical expenses, just to name a few. There are also differences with respect to renewable energy incentives, which we discussed in our prior blog post here.

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