NEW YORK ( TheStreet) -- General Electric, ( GE), Citigroup ( C), and other giant U.S. multinational financial companies are breathing a sigh of relief after Congress extended a key tax break though 2013 following the resolution of the Congressional budget battle that was resolved late Tuesday. Known as the "active financing exception," the provision allows U.S. financial multinationals to avoid paying taxes on interest income earned by foreign subsidiaries unless the income is repatriated into the U.S. General Electric and Citigroup are among the top beneficiaries of the tax deal, since they are among the more active overseas lenders among U.S. companies. The provision saved GE about $3 billion in taxes in 2011, and it saved Citigroup about $1 billion each in 2010 and 2011. The provision by itself should allow GE, Citigroup and other companies to keep their tax rate well below the statutory rate of 35 percent, according to corporate tax consultant Robert Willens, head of Robert Willens LLC. A Citigroup spokeswoman declined to comment on the extension of the loophole. A General Electric spokesman declined to comment. "This is a load off the shoulders of multinational financial organizations, particularly GE, since it gives rise to a substantial reduction in these companies effective tax rates," Willens says. Though Congress repealed the active financing loophole in 1986, it was reinstated "temporarily" in 1997, and has been regularly extended since that time, according to Wayne State University Linda Beale writing in her blog, ataxingmatter. It had not been extended for 2012, pending resolution of the budget battle ahead of the impending "fiscal cliff" of automatic wide-ranging spending cuts and tax hikes. The active financing exception was one of several tax breaks that have been regularly extended by Congress in recent years as part of a package known in tax circles "the extenders." Also receiving Congressional approval late Tuesday was the extension of a research tax credit, granted to companies that increase spending on research above a certain base level. The credit allowed Caterpillar Inc. ( CAT) , to cut its tax bill by 2.3%, or $152 million in 2011. Other beneficiaries were Pfizer ( PFE), which saved $127 million, or one percent of its 2011 pre-tax income, and Amazon.com Inc. ( AMZN), which saved 3.2%, or nearly $30 million.
Another corporate tax break extension consists of a 50 percent "bonus" depreciation rules for "qualified property." This allows companies to accelerate write-offs for depreciation of new equipment, a benefit that has been in place since 2008. Also notable is an extension that enables small businesses to write off up to $500,000 in tangible personal property used actively for business purposes. Willens believes this credit will be a boon to the capital goods industry as it will encourage companies to accelerate purchases to benefit from the write-off. -- Written by Dan Freed in New York. Follow @dan_freed