WASHINGTON — Congress passed a $1.5 trillion tax cut package just two months ago. Turns out it wasn’t enough.
Wedged into the new mammoth Senate spending deal is a pack of tax breaks for homeowners and electric car owners — as well as goodies for motor speedways. There’s also tax relief for people and businesses affected by the California wildfires and the hurricanes that devastated Texas, Florida, Puerto Rico and the U.S. Virgin Islands. Owners of racehorses will get a break, too.
The new tax benefits didn’t make it into the Republican-backed tax overhaul enacted in December, which had to land under a $1.5 trillion limit in order to pass the Senate with a simple majority of 51 votes. Now, with fresh bipartisan legislation allowing the shattering of tight caps on defense and domestic programs, lawmakers have found room for dozens more tax breaks.
The provisions for the disaster-struck areas and the extensions of benefits for homeowners and energy savers are popular with lawmakers from both parties and may have helped sweeten the deal for Democrats, all of whom rejected the GOP tax plan. Most of the proposed tax breaks are not new, but extend expired provisions through the end of this year.
Among the proposed extensions of tax benefits for homeowners: the deduction for mortgage insurance premiums and the exclusion from income of some forgiven debts on mortgages. The deduction for qualified tuition and related expenses for higher education also is extended.
Tax credits are extended for investments homeowners make to improve energy efficiency, such as solar panels and heat pumps. The $1,000 to $2,000 credit for building or selling new energy-efficient homes is extended. The $4,000 to $40,000 credit for purchases of new hydrogen fuel-cell vehicles is extended, as is the credit for 10 percent of the amount paid for new two-wheeled plug-in electric cars. Electric car charging stations also benefit.
The tax law that kicked in Jan. 1 already provides a credit of up to $7,500 for purchases of larger plug-in electric cars.
Puerto Rico, whose leaders criticized the Republican tax writers for giving them short shrift in the tax overhaul, does benefit from a provision in the new legislation. All low-income communities on the island would be treated as opportunity zones, eligible for tax benefits.