United States

Job-related credits extended; California wildfire incentives enacted

TAX ALERT  | 

On Feb. 9, 2018, President Trump Signed the Bipartisan Budget Act of 2018, funding the government through March 23, 2018, and extending a number of incentives focused on job growth, investment and innovation. Many of the provisions are extended to include eligibility of the 2017 year.

Accordingly, two noteworthy job-related credits and incentives extensions include:

  • Indian employment tax credit. The Indian employment tax credit provides a credit of up to $4,000 per qualified employee for companies that employ certain Indian tribe members. The credit now includes tax years beginning after Dec. 31, 2016, and is scheduled to terminate for tax years beginning after Dec. 31, 2017.
  • Empowerment zone tax incentives. The empowerment zone tax incentives include benefits relating to tax-exempt bonds, employment credits, expensing and gain exclusion from the sale of certain small-business stock for empowerment zone activity. The empowerment zone employment credit allows a credit up to 20 percent of qualified zone wages, or a maximum of $3,000 per eligible employee. The Bipartisan Budget Bill extends the effective period of empowerment zones to Dec. 31, 2017. 

Employee Retention Credit – California Wildfires

The Bipartisan Budget Act creates new incentives providing benefits to those impacted by the recent California wildfires. The new provisions include benefits such as early access to retirement funds, temporary suspension of limits on deductions for charitable contributions, allowance of deductions for personal casualty disaster losses, and a special credit for employee retention.

The California wildfire employee retention credit is equal to 40 percent of the qualified wages of each eligible employee. Qualified wages per individual cannot exceed $6,000, and must be paid or incurred after Oct. 8, 2017 and before Jan. 1, 2018. Eligible employers include those conducting an active trade or business on Oct. 8, 2017 in the California wildfire disaster zone, and which trade or business became inoperable between Oct. 8, 2017 and Jan. 1, 2018, as a result of damage sustained from the wildfires.

Takeaways

The Bipartisan Budget Act extended more than 30 different credits and incentives. Some of the extensions include various technical changes in addition to an extension. These extensions provide a number of opportunities for taxpayers among many industries to benefit from 2017 investments. Accordingly, taxpayers should speak to their tax advisers for details on the incentive extensions. For information on extensions related to alternative fuel tax credits and energy credits, please read our alert, Tax extenders package enacted as part of recent funding bill

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