ASA Celebrates Passage of Retroactive Biodiesel Tax Credit Extension

Dec 17, 2010

Applauds Estate Tax Provisions in Legislation

The American Soybean Association (ASA) is celebrating the final passage of legislation that includes a retroactive extension of the biodiesel tax incentive and ASA-supported estate tax provisions. The House passed H.R. 4853 by a vote of 277-148. The bill will now be sent to President Barack Obama, who is expected to sign the legislation as early as this afternoon.

"Retroactive extension of the biodiesel tax credit through Dec. 31, 2011, represents a significant legislative achievement on a key ASA priority," said ASA President Alan Kemper, a soybean farmer from Lafayette, Ind. "Soybean farmers greatly appreciate the work of Congress and the Administration to get this legislation passed before the end of the year."

The biodiesel tax credit has been expired for 349 days, resulting in job losses and undermining the United States’ ability to increase production of domestic renewable biodiesel. Biodiesel production in 2010 decreased over 35 percent from the previous year. The biodiesel tax credit has a direct impact on jobs and is critical to supporting the biodiesel industry, a major market for U.S. soybean oil and a key factor in supporting domestic soybean prices in recent years.

"It’s been a long process and ASA has worked tirelessly since the tax credit’s expiration to get it reinstated," Kemper said. "ASA farmer-leaders have met with Members of Congress on numerous occasions, supported by ASA members, the National Biodiesel Board, and supporters who have responded to our Action Alerts by calling and emailing their representatives in an effort to get a retroactive extension of the biodiesel tax credit passed."

The one-dollar-per-gallon biodiesel tax incentive is structured in a manner that makes biodiesel more competitive with petroleum diesel fuel in the market place. Absent the tax incentive, biodiesel is more expensive than conventional diesel fuel.

ASA and its state affiliates successfully championed the original biodiesel incentive that became law in 2004. In 2005, ASA also achieved its goal when the landmark Energy Bill extended the biodiesel tax incentive through 2008. And in 2010, ASA successfully worked for the inclusion of soy biodiesel in the Environmental Protection Agency’s Final Rule for the Renewable Fuel Standard, which requires the use of 800 million gallons of biodiesel in 2011.

In addition to reinstating the tax incentive, the legislation includes provisions that will raise the exclusion level to $5 million per spouse and lower the tax rate on estates exceeding the exclusion to 35 percent. Passage of this legislation will strengthen the business climate for farm and ranch families and help to ensure that agricultural businesses can be passed to future generations.

"ASA supports the estate tax provisions of this bill and thanks the House for not making changes to the legislation," Kemper said. "Without those provisions, family farm operations would have been put at risk and succession to the next generation of farmers would have been threatened."

Without the new estate tax provisions, the exclusion amount would have gone to $1 million with a tax rate of 55 percent on Jan. 1. With farmland in many regions selling for $5,000 per acre or more, it takes only 200 acres of land to reach the exclusion value of $1 million, which was inadequate to account for the value of machinery, livestock, and buildings necessary to a capital-intensive farming operation.