Article Highlights:
- Build Back Better Act
- Senate is Next
- Summary of Certain Provisions Included in the House Version
- Notable Provisions That Are Absent from the Original Bill
The House of Representatives passed their proposed version of President Biden's Build Back Better Act on November 19, 2021, which was significantly altered from the original form. The bill will now be debated in the Senate, and there will undoubtedly be changes.
The Senate-adjusted version will then have to be returned to the House and a compromise version negotiated before a final law can be sent to the President for signature. According to reliable sources, a final bill will not be available until the end of the year.
Here are some of the tax provisions contained in the House version, though none of them are guaranteed to make it into the final bill.
- Increasing surtaxes on high-income individuals:
- A 5% tax on individuals with modified adjusted gross incomes of more than $10 million, as well as estates and trusts with incomes of more than $200,000.
- An additional 3% tax on earnings beyond $25 million ($500,000 for estates and trusts).
- For married taxpayers filing jointly with a MAGI of more than $500,000 ($400,000 for single taxpayers and $250,000 for married filing separate taxpayers), the Net Investment Tax is applied on business income.
- For one more year, 2022, the enhanced Child Tax Credit and advance credit payments will be extended. The credit would thus be $3,000 per qualified child in 2022, up from $2,000 in 2020. A youngster under the age of six would be eligible for a $3,600 tax credit.
- Prior to the TCJA, the deduction for state and local taxes (SALT) was capped at $10,000. The SALT limit would be raised to $80,000 beginning in 2021.
- Extending and improving green energy credits, such as home energy efficiency, solar credits, and electric vehicle credits.
The following items that were contained in the original bill are not included in this version:
- IRA limits for high-income taxpayers;
- Increased capital gains tax rates;
- Increased corporate income tax rates; and
- Increased income thresholds for the 20% deduction for business pass-through income.
Remember that none of the above is certain to be reflected in the final legislation and experts believe the bill faces a number of significant obstacles in the Senate.