Daily Update on Taxes From The Business Tax Advisors at Wouch Maloney in Horsham

Build Back Better Plan Goes to House for Vote Today

The House is tentatively planning to vote on the Build Back Better bill today. That may or may not happen. If it does, then the Senate will debate the bill. It is expected that the Senate will make additional changes, which means that the bill will have to go back to the House to be voted on again before it becomes law.

A 2,135 page bill was released yesterday. The draft legislation would include the following major changes, effective January 1, 2022, unless otherwise noted:

Individual Income Taxes

  • Create a new surcharge on modified adjusted gross income (MAGI), defined as adjusted gross income less investment interest expense, equal to 5 percent on MAGI in excess of $10 million plus 3 percent on MAGI above $25 million.
  • Extend the American Rescue Plan Act (ARPA) Child Tax Credit (CTC) expansion through 2022, and make the entire CTC fully refundable on a permanent basis

Pass-through Business Taxes

  • Expand the base of the 3.8 percent Net Investment Income Tax (NIIT) to apply to active business income for pass-through firms
  • Make permanent the excess business loss limitation enacted in the 2017 Tax Cuts and Jobs Act (TCJA)

Corporate and International Taxes

  • Impose a 15 percent minimum tax on corporate book income for corporations with profits over $1 billion, effective for tax years beginning after December 31, 2022
  • Create a 1 percent excise tax on the value of stock repurchases during the taxable year, net of new issuances of stock, effective for repurchases after December 31, 2021. Excluded from the tax are stock contributed to retirement accounts, pensions, and employee-stock ownership plans (ESOPs)
  • Various changes to the Global Intangible Low-Taxed Income (GILTI) regime, effective for tax years beginning after December 31, 2022.

DISCLAIMER: The WM Daily Update COVID-19, COVID-19 Business Resources, and COVID-19 Client News Alerts and other related communications are intended to provide general information on legislative COVID-19 relief measures as of the date of this communication and may reference information from reputable sources. Although our firm has made every reasonable effort to ensure that the information provided is accurate, we make no warranties, expressed or implied, on the information provided. As legislative efforts are still ongoing, we expect that there may be additional guidance and clarification from regulators that may modify some of the provisions in this communication. Some of those modifications may be significant. As such, be aware that this is not a comprehensive analysis of the subject matter covered and is not intended to provide specific recommendations to you or your business with respect to the matters addressed.