On December 20, 2006, President Bush signed the Tax Relief and Health Care Act of 2006 into law.  The new law includes both an extension and an expansion of the Federal government’s Brownfields Tax Incentive.  Originally signed into law in August 1997, the Taxpayer Relief Act (Public Law 105-34) included a tax incentive to spur the cleanup and redevelopment of brownfields in distressed urban and rural areas.  The new law extends the incentive to December 31, 2007 and makes it retroactive from December 31, 2005.  Under the Brownfields Tax Incentive, environmental cleanup costs are fully deductible in the year they are incurred, rather than having to be capitalized over a period of time, thus making redevelopment of brownfields more financially appealing.  The government estimates that approximately 8,000 brownfield properties will be returned to productive use, making the tax incentive a valuable tool for restoring brownfields and spurring economic growth.

A major improvement in the new law is a provision that allows developers to claim the tax incentive when redeveloping petroleum contaminated sites, such as former gas stations or sites with a leaking underground storage tank (UST) .  The new law allows the deduction of expenses associated with the cleanup of petroleum products such as crude oil, crude oil condensates, and gasoline, all of which were previously been ineligible under the Brownfields Tax Incentive.

Developers and other interested parties interested in applying for the Brownfields Tax Incentive must receive a certification of eligibility from their appropriate state site remediation program prior to qualifying for the Federal tax incentive.