The Obama Administration released its explanation of the tax proposals in its FY 2017 Budget (the Greenbook) on February 9, 2016, which contains several provisions that would alter incentives. The Administration proposes to make permanent several credits and create a new carbon dioxide investment and sequestration tax credit and a New Manufacturing Communities Tax Credit. Each of the proposals were made in prior years. Please see Tax Alert 2015-249 for last year's more detailed discussion of the proposals.

Energy-related incentives

Carbon dioxide investment and sequestration tax credit (Section 45Q)

Additional tax credits for property used in qualifying advanced energy manufacturing project (Section 48C)

Extend Second Generation Biofuel Producer Credit (Section 40)

Extend Renewable Electricity Production Tax Credit and Investment Tax Credit (Section 45 and Section 48)

Deduction for energy-efficient, commercial building property (Section 179D)

New Manufacturing Communities Tax Credit

Real estate incentives

New Markets Tax Credit (NMTC) (Section 45D)

Low-income housing tax credit (LIHTC) (Section 42)

Implications

All of the proposals described above are returning proposals from last year's budget. All of these provisions are merely proposals at this stage of the legislative process, and the prospects for further action on the proposals are unclear at this time. However, taxpayers and advisors will want to monitor any developments with respect to these items, and plan accordingly.

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