As 2013 comes to a close, so will dozens of tax breaks that save companies billions of dollars in tax liability.
Congress has allowed 55 tax breaks to expire but will likely restore many of them, retroactively, in the coming months, the Associated Press reported. In years past, the breaks have expired only to be restored in the months to come.
“It’s a totally ridiculous way to run our tax system,” Rachelle Bernstein, vice president of the National Retail Federation, told the AP. “It’s impossible to plan when every year this happens, but yet business has gotten used to that.
Some of the tax breaks are big, including billions in credits for research and development, generous exemptions for banks that operate overseas and several that allow businesses to write off capital investments faster.
TOP TAX BREAKS EXPIRING
-A tax credit for research and development, benefiting a wide range of industries, including manufacturers, pharmaceutical makers and high tech companies. The tax break saved companies an estimated $6.2 billion in 2013.
-An exemption that allows banks, insurance companies and other financial firms to shield foreign profits from being taxed by the U.S. The tax break is important to major multinational banks and financial firms, saving them an estimated $9.4 billion in 2013.
-A tax break that allows profitable companies to write off large capital expenditures immediately – rather than over time – giving some companies huge tax shelters. The tax break, known as bonus depreciation, benefits automakers, utilities and heavy equipment makers. Tax break: $34 billion in 2013, though companies lose future savings because they would have already written off the cost of items.
-A tax credit for producing renewable energy, including wind and solar, in plants built before the end of 2013. Tax break: $116 million in 2013, though the savings would grow over time, saving companies more than $12 billion over the next decade as the plants continue to produce energy.
-A provision that allows restaurants and retail stores to more quickly write off the cost of improvements. Tax break: $277 million in 2013.
-Increased tax rebates to Puerto Rico and the Virgin Islands from a tax on rum imported into the United States. The U.S. imposes a $13.50 per proof-gallon tax on imported rum, and sends most of the proceeds to the two U.S. territories. Cost: $199 million in 2013.
-A 50 percent tax credit for expenses related to railroad track maintenance through 2013. Tax break: $232 million in 2013.
-A provision that allows motorsport race tracks to more quickly write off improvement costs. Tax break: $46 million in 2013.
-Enhanced deductions for companies that donate food to the needy, books to public schools or computers to public libraries. Tax break: $218 million in 2013.
-A tax break that allows TV and movie productions to more quickly write off expenses. Sexually explicit productions are ineligible. Tax break: $266 million in 2013.
-A tax credit of up to $2,500 for buying electric-powered vehicles was expanded to include electric-powered motorcycles. Golf carts, however, were excluded. Tax Break: $1 million in 2013.