President’s Proposed 2014 Budget Includes R&E Credit Expansion, §179D Enhancements

Monday, May 13, 2013 - 12:24

Though Presidential budgets seldom resemble the final budget adopted by the federal government, nevertheless, President Obama’s 2014 budget proposal does include some interesting insight into the goals of the executive for several key business tax incentives.

The budget calls for the expansion, simplification, and permanence of the Research and Experimentation (R&E) Tax Credit. According to the introductory materials to the budget proposal, “The Research and Experimentation (R&E) Tax Credit is an important Federal incentive for research. But the R&E Tax Credit is less effective than it could be in spurring additional research because it is complicated and temporary.” By simplifying the credit and increasing the rate of the credit, the proposal suggests an additional $99 billion in research incentives will be provided in the next ten years.

As part of his Better Building Initiative, the President’s budget includes a call to “modify and permanently extend the deduction for energy-efficient commercial building property,” what we know as §179D. The budget suggests that the proposed changes, along with alterations to the Production Tax Credit, would generate $23 billion in incentives for renewable energy production and energy-efficiency.

This is far from the only suggestion that the commercial building incentive is popular in the Capital, however. A bipartisan bill introduced last fall proposed not only extending the incentive until 2016, but increasing the potential benefit to up to $4 per square foot for properties achieving 50% or more in energy savings.

We’ll have to wait and see where the chips fall with the actual budget, and which proposals make it through to law. However, all indications suggest that some of our favorite tax incentives might be here to stay—and might be getting a boost!

For more information: The President's proposed budget; Commercial Building Modernization Act