Congress Fails to Extend Tax Credits—For Now

Three tax incentives that have relevance to the door, window and skylight industry were among the 55 allowed to expire at the beginning of 2014, but the glass industry isn’t ready to write them off just yet.

Ben Gann, director of legislative affairs and grassroots activities for the Window and Door Manufacturers Association (WDMA), says the zest for tax reform was the driving force behind Congress’s failing to extend the tax credits providing for energy-efficient improvements to existing homes (25C), new homes (45L) and to commercial buildings (179D).

“Traditionally, Congress, at the end of each year, has extended expiring tax incentives,” Gann says. “However, the push for comprehensive tax reform has caused a renewed look at all expiring tax incentives and determining which ones should be retained. The interest in comprehensive tax reform has delayed the traditional consideration of a ‘tax extenders’ package at the end of 2013.”

Both Bill Yanek, executive vice president of the Glass Association of North America (GANA), and Rich Walker, the president and CEO of the American Architectural Manufacturers Association (AAMA), agree that Congress needs to act now.

“Over the course of the past few years – especially as commercial construction continued to struggle – GANA supported tax policies that would spur commercial construction,” Yanek says. “With regard to energy-efficient construction, tax incentives are especially important to help offset initial commercial construction/improvement investment that may only prove financially viable over a long period of time. The 179D credit is such a credit and GANA supports its renewal.”

Walker adds, “The industry and consumers are far less reliant on federal tax incentives for energy-efficient fenestration purchases than they have been in the past. State-, municipal-, and utility-based programs have picked up the gauntlet on offering real incentives and attractive financing options that are necessary to improve the energy efficiency of both homes and commercial structures across the country.”

There’s reason to be optimistic that Congress will soon take the needed actions to extend the tax benefits, which are enticing incentives for businesses to continue investing in more energy-efficient products.

“Given that the efforts for comprehensive tax reform appear to be moving on a slower timeline than once thought,” Gann says, “it’s possible we could see Congress consider a “tax extenders” package in 2014 and make it retroactive to the beginning of this year.”

It would hardly be the first time that has happened.

Both 25C and 45L expired at the end of 2011, Gann says, but at the beginning of 2013, each tax credit was extended through 2013 and made retroactive for 2012.

Tax incentive 179D was last extended in 2008, but also expired at the end of 2013. All three credits were products of the Energy Policy Act of 2005.

Walker says it is remains important for window, door and skylight manufacturers to monitor and participate in the continued development of appropriate incentives at both the state and local level.

Tax credit 179D is one of the most common business deductions because it allows businesses to deduct the purchase price of certain equipment, while reducing federal income tax liability. The credit was meant to stimulate the economy for businesses.

“Buildings are responsible for roughly 40 percent of all energy consumed in the U.S.,” Yanek says. “More widespread use of energy-efficient glazing in commercial buildings represents one of the most readily available methods to improve building energy performance. Glazing systems have made dramatic advances in energy efficiency during the past decade. By replacing the existing glazing with modern materials and systems, commercial buildings can realize significant energy savings. [Tax credit] 179D helps ensure that the right incentives exist for people to invest in energy efficient building materials to realize these savings.”

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