Factbox: Senate tax bill has business, estate provisions

(BestGrowthStock) – Tax legislation the Senate is to consider on Saturday that would extend some of the Bush-era tax cuts for middle-income people also includes provisions that would extend a number of expired business tax breaks.

While the bill is expected to fail in Saturday’s Senate vote, many of these business tax breaks are likely to be included in a compromise bill the White House and congressional leaders hope to negotiate in coming days.

Here are some of the major provisions in the bill that was drafted by Senate Finance Committee Chairman Max Baucus.


* The Middle Class Tax Cut Act of 2010 would make permanent Bush-era tax cuts for income of up to $200,000 for individuals and $250,000 for families. The 10, 15, 25, 28 and 33 percent tax rates would be made permanent. Without congressional action, tax rates for these income levels rise to 15, 28, 31 and 36 percent next year.

* The current 15 percent capital gains tax rate would be made permanent for individuals making up to $200,000 and families making up to $250,000. The rate rises to 20 percent for incomes above these levels.

* The $400 “making work pay” tax credit for all working Americans would be extended through 2011.

* Makes permanent the child tax credit.


* Estate taxes would be set at 2009 levels with exemptions of $3.5 million for individuals and $7 million for couples. The top tax rate would be 45 percent. The proposals would be retroactively effective to January 2010, when the estate tax expired, and give people a choice between current law and a modified carry-over basis for estates between January and December 2, when Baucus introduced the bill.

* Build America Bonds program, which is set to expire at the end of the month, would be extended through 2011. The amount of payment for direct pay bonds issued in 2011 would be reduced from 35 percent to 32 percent of the coupon interest. Issuers would be allowed to issue bonds to refund outstanding Build America bonds, which could help lower interest costs.


* The bill repeals a controversial revenue-raising measure that was part of the healthcare overhaul signed into law by President Barack Obama that requires businesses to file tax reports for all payment transactions over $600. Small business groups were up in arms over the increased IRS reporting requirement.


* The Research and Development tax credit is reinstated for two years through 2011.

* A new markets tax credit to encourage business development in low-income communities is also reinstated and extended for two years through 2011.

* Tax credits for heavy hybrid and natural gas vehicles extended through 2011. A 30 percent investment tax credit for alternative fuel refueling stations extended through 2011.

* Tax breaks for ethanol extended through 2011. The blenders credit is 36 cents a gallon, while the small producers credit is 8 cents per gallon. A 54 cents per gallon tariff on ethanol imports and 22.67 cents per liter tariff on ethyl tertiary-butyl ether through 2011.

* A $1-per-gallon production tax credit for biodiesel and the small agri-biodiesel producer credit of 10 cents per gallon extended through 2011. The production tax credit for diesel fuel from biomass also extended.

* A 50-cent-per-gallon tax credit for biomass and other alternative fuels extended through 2011.

* Tax credits for energy-efficient appliances and homes extended through 2011.

* A $3.36 tax credit for coke or coke gas also extended.

(Reporting by Donna Smith, editing by Philip Barbara)

Factbox: Senate tax bill has business, estate provisions