Extenders

Current status and outlook

Updated December 21, 2007

A number of tax provisions that expire at the end of 2007 but appear likely to be renewed in 2008.

Use this page to keep on top of developments concerning legislation to extend certain expiring provisions.

The issue
Who's affected
The politics
Recent events
What's next

The issue

Congress sometimes creates temporary tax breaks, either to allow for a later evaluation of the measure or, more often, because budgetary constraints don't allow for a permanent provision. (Cynics suggest another reason for temporary provisions that are renewed every year or two: they require ongoing political contributions to politicians whose votes are required to keep these provisions in place.) The following items are among the provisions expiring at the end of 2007:

The itemized deduction for sales tax (allowed to those who itemize but do not claim a deduction for state and local income tax)
The deduction for qualified tuition and related expenses
Tax-free IRA distributions for charitable purposes
Penalty-free "qualified reservist distributions" for certain individuals called to active duty

The AMT patch might be considered an extender as well, but special considerations apply so we discuss it separately here. There are a number of other items, many of which are primarily important to businesses.

Who's affected

"Extender" legislation affects anyone who seeks to use these tax benefits after the end of 2007.

The politics

These provisions are generally popular with both parties in Congress. Democrats prefer to abide by pay-as-you-go budget rules ("paygo"), which require offsetting tax increases so that an extension of these tax benefits will not increase the federal budget deficit. Republicans oppose the paygo rules in general but otherwise stand ready to support legislation that will extend these and other expiring provisions.

Recent events

Late in the 2007 legislative session Senate Republicans blocked a vote on legislation including extenders (for reasons unrelated to the extenders), and the legislation was not adopted.