A look at tax breaks that expired this year
- Article by: The Associated Press
- Associated Press
- December 17, 2012 - 2:44 AM
While much of Washington is consumed by the debate over tax cuts scheduled to expire next year, a big package of tax breaks already expired this year. Among the biggest, along with the cost to retroactively extend each one for 2012 and 2013:
Individual tax breaks
_ Relief from the Alternative Minimum Tax. The tax is designed to ensure that wealthy people can't use tax breaks to avoid paying any federal taxes. However, it was never indexed for inflation, so Congress routinely adjusts it to keep it from imposing hefty tax increases on millions of middle-income families. Cost: $132 billion.
_ State and local sales tax deduction. Taxpayers can take this itemized deduction instead of deducting state and local income taxes. It is geared for people who live in states without state income taxes: Alaska, New Hampshire, Tennessee, Florida, South Dakota, Washington, Nevada, Texas and Wyoming. Cost: $4.4 billion.
_ A deduction of up to $4,000 for qualified higher education expenses: Cost: $4.2 billion.
_ A tax credit for improvements to make homes more energy efficient. Cost: $2.4 billion.
_ A provision that allows tax-free distributions from Individual Retirement Accounts, when used for charitable donations. People older than 70-and-a-half can make tax-free withdrawals of up to $100,000 a year from IRAs. Cost: $1.3 billion.
_ A deduction for mortgage insurance premiums. Cost: $1.3 billion.
_ A deduction of up to $250 for teachers who buy classroom supplies with their own money. Cost: $462 million.
Business tax breaks
_ A tax credit for manufacturers and other businesses that invest in research and development. Cost: $14.3 billion.
_ A tax break that allows restaurants and retail stores to write off the cost of certain capital improvements over 15 years instead of 39 years. Cost: $3.7 billion.
_ An exemption that allows banks, insurance companies and other financial firms to shield the profits of foreign subsidiaries from being taxed by the U.S. Cost: $11.2 billion.
_ A $1 per-gallon tax credit for businesses that use or sell biodiesel, a renewable fuel for diesel engines derived from vegetable oils and animal fats. Cost: $2.2 billion.
_ A tax credit of up to $2,400 for businesses that hire people who receive benefits from a variety of government programs, including disability benefits and Temporary Assistance to Needy Families. Cost: $1.8 billion.
Source: Joint Committee on Taxation.
© 2014 Star Tribune