Just before Congress ran home for August recess, it passed a major energy bill that includes a few tax breaks aimed at consumers, manufacturers and home builders. President Bush signed the bill on Aug. 8. The new law includes:
• New and improved tax credits for alternative power vehicles. Those credits replace the current deduction for clean-fuel vehicles.
• A new credit for energy-efficient improvements to existing homes.
• A business tax credit for building new energy-efficient homes.
• A new credit for manufacturers who produce energy-efficient appliances.
Congress eyes other tax action
Congress is looking to tackle other tax provisions when it returns next month. Some key items on the agenda:
AMT reform. Unlike prior years, some heavy hitters are pushing AMT reform. In fact, the two leaders of the Senate Finance Committee, Sens. Charles Grassley (R-Iowa) and Max Baucus (D-Montana), have proposed an outright repeal of the AMT, starting in 2006.
Our advice: Don't hold your breath. We expect the AMT to remain in place for the foreseeable future.
Estate tax reform. The House ap-proved a permanent repeal of the federal estate tax earlier this year, now, it's the Senate's turn to act.
But rather than a complete repeal, it's more likely that the Senate will drastically scale back the tax—by increasing the estate-tax exemption limit to between $5 million and $10 million—so the "death tax" applies only to the wealthiest Americans.
Pension reform. The Pension Protection Act of 2005 would change the rules for employer pension funding and boost the required insurance premiums for the Pension Benefit Guaranty Corp. (PBGC).
Other tax breaks. Lawmakers could toss in a host of other special tax breaks to the mix, including a new deduction for first-time home buyers, an enhanced home-sale exclusion for senior citizens and a tax break for donating life-saving organs.