Today, America’s electrical and medical imaging industries applaud Congress for passing a $1.1 trillion omnibus legislative package that funds the government through September 30, 2016, addresses certain tax provisions and includes NEMA-supported cybersecurity language. Passage of the package completes legislative work for this session of the 114th Congress; the second session is scheduled to start when Congress returns on January 4, 2016.
In particular, the two-year delay of the medical device excise tax, the extension of energy efficiency and electric vehicle supply equipment tax provisions, and important cybersecurity information sharing legislation have been top 2015 legislative priorities for the electrical and medical imaging industries. Important provisions in the omnibus to both NEMA and MITA members include the following:
- Medical Device Excise Tax: The legislation suspends the 2.3 percent excise tax on medical devices through 2017. The tax will not be implemented for medical imaging equipment sold in 2016 or 2017.
- Energy-Efficient Commercial Building Tax Deduction (179D): A $1.80 per-square-foot deduction for commercial buildings that exceed ASHRAE Standard 90.1-2001 efficiency levels by 50 percent or more was extended to cover 2015 retroactively and 2016 prospectively. This provision also extends the partial deduction for lighting of up to $0.60 per square foot for a 40 percent lighting power density reduction below ASHRAE Standard 90.1-2001 levels. For projects completed after January 1, 2016, the improvements must exceed levels specified in the 2007 version of the ASHRAE standard.
- $2 billion for the Office of Energy Efficiency and Renewable Energy (EERE) for its work on accelerating the development and deployment of energy efficiency and renewable energy technologies. This includes funding for EERE offices, such as the Building Technologies Office, Advanced Manufacturing Office, and Vehicle Technologies Office.
- $206 million for the Office of Electricity Delivery and Energy Reliability (OE) for research, development, and other programs to strengthen the electric grid’s resiliency and reliability and to protect the grid against cyberattack and extreme weather.
- $291 million for the Advanced Research Projects Agency—Energy (ARPA-E) to carry out innovative research on high-potential energy projects that are too early for private-sector investment.
- $24 million for the Solid-State Lighting program, plus $5 million for the Bright Tomorrow Lighting Prize. The program works with lighting manufacturers to drive R&D breakthroughs in efficiency and performance, and to equip buyers to successfully apply next-generation lighting technologies.
- Extends the production tax credit for wind at current levels through 2016. The credit will be phased out starting in 2017 and will expire at the end of 2019.
- Extends the current 30 percent solar investment tax credit and the solar residential energy-efficiency property for three additional years through 2019. Both solar tax provisions will then be phased out over 2020 and 2021.
The legislation continues a provision from past appropriation bills that prohibits the use of funds by the Department of Energy to enforce or implement the 2007 incandescent light bulb efficiency standards. The efficiency standards, however, remain in effect and manufacturers are required to comply with the requirements.
The legislation blocks a change in reimbursement policy for breast cancer screening, mammography, and breast cancer prevention. The provision will ensure these procedures continue to be covered by insurers without a co-pay.
The omnibus bill includes cybersecurity information-sharing legislation, multiple versions of which were passed by both the House and Senate earlier this year. The final version that emerged from a conference between three separate bills most closely resembles the Senate-passed Cybersecurity Information Sharing Act of 2015 (S. 754). It would allow businesses to voluntarily share information about cybersecurity attacks with federal agencies and each other in a secure manner that does not jeopardize the personal information of their customers. The bill also offers businesses certain liability protections when sharing information.
The full text of the omnibus budget bill is available online.
In terms of the tax provisions, the package extends more than 50 tax provisions and delays the 2.3-percent medical device tax for two years. Here is a summary of the key tax provisions that are important to NEMA and MITA members:
- Medical Device Excise Tax (4191): The legislation suspends the 2.3-percent excise tax on medical devices through 2017. The tax will not be implemented for medical imaging equipment sold in 2016 or 2017.
- Energy-Efficient Commercial Building Tax Deduction (179D): A $1.80 per-square-foot deduction for commercial buildings that exceed ASHRAE Standard 90.1-2001 efficiency levels by 50 percent or more was extended to cover 2015 retroactively and 2016 prospectively. This provision also extends the partial deduction for lighting of up to $0.60 per square foot for a 40-percent lighting power density reduction below ASHRAE Standard 90.1-2001 levels. For projects completed after January 1, 2016, the improvements must exceed levels specified in the 2007 version of the ASHRAE standard.
- Energy-Efficient New Home Credit (45L): Builders and contractors of new, energy-efficient homes will continue to be able to claim a $2,000 credit (or $1,000 in some cases) through the end of 2016.
- Alternative Fuel Vehicle Refueling Property Tax Credit (30C): This provision extends a 30-percent credit for electric vehicle supply equipment (up to $1,000) and other alternative fuel vehicle supply equipment to apply retroactively in 2015 and through the end of 2016.
- Small Business Expensing (179): This provision permanently extends the small business expensing limit at $500,000. The deduction limit is reduced on a dollar-for-dollar basis when aggregate property costs exceed $2 million (i.e., the deduction reaches $0 if you have placed more than $2,500,000 of property into service in a given tax year). The deduction is indexed to inflation beginning in 2016.
- Bonus Depreciation (168(k)): This provision extends bonus depreciation for property acquired and placed in service during 2015 through 2019. The bonus depreciation is worth 50 percent in 2015, 2016, and 2017, and phases down to 40 percent in 2018 and 30 percent for property placed into service in 2019.
- Research and Development (41): The research and development tax credit is made permanent, and it is expanded to allow small businesses to claim the credit against their alternative minimum tax liability. It can also be used against an employer’s payroll tax liability.