Congress Passes Infrastructure Bill & Continues to Negotiate the Build Back Better Act
Over the past months, there has been much discussion concerning legislation being debated in Congress. This has been especially prevalent over the past several weeks, culminating in the passage of the Infrastructure Investment and Jobs Act (IIJA) on November 5. President Biden signed the infrastructure bill into law on November 15. BKD’s summary of the IIJA’s tax provisions can be found here. Most notably, you should know the IIJA retroactively ended the Employee Retention Credit effective September 30, 2021, unless the employer is a recovery startup business. Under the IIJA, a recovery startup business is one that began operating after February 15, 2020, and has average annual gross receipts of less than $1 million. In addition, the IIJA includes new cryptocurrency information reporting requirements and the renewal of superfund excise taxes on 42 chemicals.
With the passage of the IIJA, the House is now focused on passing the Build Back Better Act (BBBA) through the budget reconciliation process. The BBBA has gone through various iterations and has been the topic of much speculation over the past several months as the White House and Democrats continue to negotiate on how to move forward the Biden administration’s spending and economic agenda.
At the time of this article’s publication, on November 3, the House of Representatives issued its latest version of the legislative text of the bill, which can be found here, and a section-by-section summary of the bill’s provisions is available here. Some of the proposed tax policies in the latest proposal include:
- A 15 percent corporate minimum tax on large corporations
- New surtax on multimillionaires and billionaires (5 percent tax on income above $10 million and an additional 3 percent—on top of the 5 percent surtax—for aggregate gross income above $25 million)
- Strengthened net investment income tax for those making more than $400,000
- Expanded child tax credit extended for 2022
- Ten years’ worth of expanded clean energy tax credits
- Extension of the state and local tax cap and a temporary cap increase to $72,500 (a proposed amendment would increase this to $80,000)
- Limitations on contributions to traditional and Roth retirement accounts
The House has yet to vote on the BBBA, but House Speaker Nancy Pelosi has indicated she plans to schedule a floor vote before Thanksgiving. Note, while we do have draft legislative text of the BBBA, this version of the House bill is likely not the final version that will become law. Once the House passes its version of the BBBA, it will go to the Senate, where the Senate Democrats are likely to further make amendments to the legislative text as they attempt to gain the support of all 50 Senate Democrats. You can read summaries of recent proposed tax bills from the Senate here.
The uncertainty of what provisions will be included in the final BBBA requires taxpayers to remain flexible in discussing year-end tax planning with their advisors. BKD continues to monitor the legislative developments on the Hill. We host a weekly live YouTube broadcast every Tuesday morning at 10 a.m. Central time to discuss the most current developments. You can subscribe to the broadcast here. If you have questions on any of the tax provisions in the IIJA or BBBA, please reach out to your BKD Trusted Advisor™ or submit the Contact Us form below.