Senate Passes Reconciliation Bill

Early Sunday morning (8/7/22), the Senate approved the Inflation Reduction Act of 2022 (H.R. 5376) by a 51-50 party-line vote, with Vice President Harris casting the tie-breaking vote. The House is expected to take up the measure later this week.

The Senate considered dozens of amendments but only two were adopted, one amending the book minimum tax to prevent certain small and mid-sized businesses from being subject to the 15 percent minimum tax. (a special rule for farmer cooperatives allows them to reduce income by amounts paid out in patronage dividends and per-unit retain allocations. See page 19 of the full text of the bill.)

Offered by Sen. Thune (R-SD), the book minimum amendment was offset by a one-year extension of the SALT cap. However, Sen. Mark Warner (D-VA) offered a subsequent amendment, striking the SALT cap extension and replacing it with a two-year extension of the excess business loss limitation. Sen. Warner’s amendment also amended the small business R&D credit.

Other provisions of interest to farmer cooperatives:

· Climate Smart Solutions for Agriculture. The bill includes more than $20 billion in funding for climate-smart agriculture practices, along with tax credits and grants to support domestic production of biofuel and related infrastructure. Of the $20 billion, USDA will receive about $16 billion in new funding for conservation programs and technical assistance. This new money ramps up over four years and provides baseline increases that may have positive farm bill implications.

· Pass-Through Credits. The bill would create a new Section 45Y Clean Electricity Production Credit and a new Section 45Z Clean Fuel Production Credit. Both new credits include language enabling farmer cooperatives to pass through the credits to patrons on the basis of the amount of business conducted with the cooperative.

Source: National Council of Farmer Cooperatives 8/8/2022