Today, the House Ways and Means Committee released comprehensive tax reform legislation titled the Tax Cuts and Jobs Act. The approximately 400-page bill addresses individual, corporate, and international tax issues. The plan would reduce the corporate rate to 20 percent permanently and addresses numerous tax deductions/credits. Upon initial review, there are a number of provisions that impact natural gas production and consumption as well as electricity. These provisions include the below. Today, the House Ways and Means Committee released comprehensive tax reform legislation titled the Tax Cuts and Jobs Act. The approximately 400-page bill addresses individual, corporate, and international tax issues. The plan would reduce the corporate rate to 20 percent permanently and addresses numerous tax deductions/credits. Upon initial review, there are a number of provisions that impact natural gas production and consumption as well as electricity. These provisions include the below.
• The bill reinstates the Section 48 tax credit for qualified fuel cells and combined heat and power systems (CHP) as well as other energy systems. This is a 10 percent investment tax credit (ITC).
• The bill modifies the current production tax credit for electricity produced from qualified wind, closed-and-open-loop biomass, geothermal energy, solar, small irrigation power, municipal solid waste, and qualified hydropower. By repealing the inflation adjustment for the production tax credit, the 2.3 cent/kwH credit would in effect become a roughly 1.5 cent/kwH credit (per Ways and Means staff). This reduces the value of the credit and could increase the cost of electricity from these sources.
• The bill extends the credit for residential solar electricity and heating for use other than heating swimming pools and hot tubs. This credit is extended and phased out from 2017 to 2022.
• The bill repeals the $3/barrel and 50 -cents-per-1,000 cubic-feet credit for oil and gas production, respectively, from marginal and stripper wells.
• The bill repeals a deduction for income from domestic production activities, including natural gas production. Companies had been able to deduct a portion of their tax paid on domestic production or taxable wage income from natural gas production. This provision could have an impact on upstream natural gas production, though it is unclear what effect it will have on prices or supply.
• The bill repeals the current $7,500 per vehicle credit on the sale of electric vehicles (up to 200,000 vehicles per manufacturer). The bill does not include natural gas vehicle (NGV) tax credits that APGA has pushed for.
• The bill does not propose any revisions to tax-exempt financing, which is very positive news as APGA had worked hard to oppose changes that would have a negative impact on tax-exempt financing.
APGA is still reviewing the legislation. Please let staff know if you have any thoughts/concerns. Several groups, such as the realtors who oppose the mortgage deduction cap included in the bill and the National Federation of Independent Business, are already calling for changes to the bill. A mark-up in the Ways and Means Committee has been scheduled for November 6 and this will be the first step towards moving the legislation through the House. Once it passes the House, it will also have to then move through the Senate.
For questions on this article, please contact Doug MacGillivray of APGA staff by phone at 202-464-2742 or by email at
dmacgillivray@apga.org.