On Dec. 18, President Obama signed into law an omnibus appropriations bill and a package of tax provisions, both of which include items of significant interest and impact to farmers and the agricultural industry. Below is a summary of the two laws. The House of Representatives passed the tax package by a vote of 318-108 and the Omnibus Appropriations bill by a vote of 316-113; the Senate approved the package together with a vote of 65-33.
Omnibus Appropriations Act
Following are the highlights of the agriculture-related issues in this law:
- Repeal of the mandatory country of origin labeling rule
- Increased funding for Agricultural Research Service (ARS) salaries and expenses to $1.114 million (a $11.2 million increase) and for ARS buildings and facilities to $212.1 million (an increase of $167 million)
- Increased funding for the National Institute of Food and Agriculture to $819.7 million (an increase of $32.8 million), including $350 million for the Agriculture and Food Research Initiative (a $25 million increase)
- Continued funding for the Market Access Program and Foreign Market Development (Cooperator) program at current levels of $200 million and $34.5 million, respectively
- Funding for the McGovern/Dole and Food for Peace development and assistance programs
- Funding for the Conservation Stewardship Program, which also helps to fund the Regional Conservation Partnership Programs
- Increased funding for the construction, operation and maintenance of projects administered by the Army Corps of Engineers along the Mississippi River and its tributaries
- $1.25 billion for eligible activities financed by the Harbor Maintenance Trust Fund, which funds port maintenance and improvements
- Dedicated funds for U.S. Department of Agriculture disaster assistance programs, including those assisting growers suffering significant losses from recent flooding in the Carolinas
Prominent policy “riders” – one to prevent the U.S. Environmental Protection Agency from implementing waters of the U.S. regulations and another on pre-emption of state GMO labeling initiatives – were on the table during negotiations over the omnibus, but ultimately were not included. Both issues are expected to be the focus of continued debate and legislative maneuvering again in 2016.
Following are the highlights of issues of most interest to agriculture in the Protecting Americans from Tax Hikes Act of 2015:
- Section 179 Expensing Limits – The law includes extension and modification of increased expensing limitations and treatment of certain real property as section 179 property. The provision permanently extends the small business expensing limitation and phase-out amounts in effect from 2010 to 2014 ($500,000 and $2 million, respectively). These amounts currently are $25,000 and $200,000, respectively. The provision modifies the expense limitation by indexing both the $500,000 and $2 million limits for inflation beginning in 2016.
- Bonus Depreciation – The law provides a five-year extension of the bonus depreciation for property acquired and placed in service 2015-2019 (with an additional year for certain property with a longer production period). The bonus depreciation percentage is 50 percent for property placed in service during 2015, 2016 and 2017 and phases down, with 40 percent in 2018 and 30 percent in 2019. The provision also modifies bonus depreciation to include qualified improvement property and permit certain trees, vines and plants bearing fruit or nuts to be eligible for bonus depreciation when planted or grafted rather than when placed in service.
- Food Donations – The law includes a provision to create a permanent “enhanced” tax deduction for surplus food donations to food banks and soup kitchens. Under enhanced deductions, the taxpayer gets credit for the full value of the food plus an additional deduction for the expense and labor of donating the product.
The package also extends tax credits for conservation easement, donations to agricultural research organizations, and biodiesel and cellulosic biofuels.
Dale Thorenson is assistant director of the U.S. Canola Association in Washington, D.C.