President Biden’s Build Back Better Act Passed by The House; Fate Now in the Senate’s Hands
On November 19, 2021, the House of Representatives passed their proposed version of President Biden’s Build Back Better Act, which was substantially pared down from the original version. The Senate will now take up the legislation, and without question there will be changes.
Then the Senate-altered version will have to go back to the House and a compromised version negotiated before a final bill can go to the President’s Desk for his signature. Reliable sources indicate a final bill will not be available until towards the end of the year.
Here are some of the tax provisions included in the House version, but there’s no guarantee any of them will make it through to the final legislation.
- Adding surtaxes on high-income taxpayers:
- 5% tax on individuals with modified adjusted gross incomes more than $10 million and more than $200,000 for estates and trusts.
- An additional 3% tax on income in excess of $25 million ($500,000 for estates and trusts).
- Applying the Net Investment Tax to business income for married taxpayers filing jointly with a MAGI more than $500,000 ($400,000 for single and $250,000 for married filing separate taxpayers).
- Extending the increased Child Tax Credit and advance credit payments for one additional year, 2022. Thus for 2022 the credit would be $3,000 per qualifying child, up from $2,000 in 2020. The credit for a child under age 6 would be $3,600.
- Under prior law as enacted in the TCJA the state and local tax (SALT) deduction was limited to $10,000. The SALT limitation would be increased to $80,000, effective for 2021.
- Extending and enhancing green energy credits, including home energy savings, solar credit, and electric vehicle credits.
Not included in this version of the bill are the following provisions that were included in the original:
- High-income taxpayer limits on IRAs.
- Increased capital gains tax rates;
- Increased corporate income tax rates; and
- Increased income limits for the 20% deduction for business pass-through income.
Remember, there is no certainty any of the above will be reflected in the final legislation.