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Congress extends tax breaks, retroactive for 2014

Stephen Ohlemacher Associated Press

WASHINGTON – Banks, retailers, commuters and teachers will keep their temporary tax breaks for another year after Congress gave final approval Tuesday to a massive tax package affecting millions of businesses and individuals.

The last-minute bill would extend the expired tax breaks through the end of the year, enabling taxpayers to claim them on their 2014 tax returns. Beyond this year, their fate will once again be uncertain.

The package now goes to President Barack Obama, who is expected to sign it. It would add nearly $42 billion to the budget deficit over the next decade, according to congressional estimates.

The 54 tax breaks benefit big corporations and small businesses, as well as struggling homeowners and people who live in states without a state income tax. More narrow provisions include tax breaks for filmmakers, racehorse owners and rum producers in Puerto Rico and the Virgin Islands.

The Senate voted 76-16 to approve the package Tuesday evening as lawmakers rushed to finish their work before heading home for the holidays. The House passed the bill earlier this month.

Lawmakers from both political parties said they were disappointed they were unable to extend the tax breaks beyond this year.

“This package of incentives – which applies only to 2014 – will last two more weeks before families and businesses will be thrown back into the dark about what taxes they owe,” said Sen. Ron Wyden, D-Ore., chairman of the Senate Finance Committee. “This tax bill doesn’t have the shelf life of a carton of eggs.”

Congress routinely extends the package of tax breaks every year or two. But they were allowed to expire in January.

Technically, the bill is a one-year, retroactive extension of the tax breaks, even though it only lasts through the end of the month.

“This bill represents the worst habits in Washington,” said Sen Tom Coburn, R-Okla. “Politicians in a lame duck, end-of-the-year session, passing out goodies to well-connected industries instead of lowering tax rates for all Americans.”

Business groups have complained for years that the patchwork of temporary tax breaks makes it difficult for them to plan.

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