In September, the House released language for the Build Back Better (BBB) bill, which would implement much of President Joe Biden’s social, climate, and tax agenda. On Oct. 28, the House Rules Committee released a significantly skinnier, revised version of the BBB bill. The committee released a further revised version of the bill on Nov. 3. Some provisions from the original version of the bill have carried over into the revisions, such as the expansion of the limits on the deduction for executive compensation and a delay of the effective date for the IRC Section 174 rule that requires capitalization of research and development costs. However, other provisions of the Sept. 15 version of the bill have been removed or changed. Highlights of the changes follow.
Revisions to the Build Back Better bill include several changes
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What’s out
Provisions that were in the original bill but that are not in the revised bills include:
- Increase in corporate tax rates
- Increase in the individual top marginal tax rate
- Increase in the top capital gains tax rate
- Changes to the carried interest rules under IRC Section 1061
- Limit on the deduction for qualified business income
- Changes to the estate and gift tax rules
- Tightening of rules for charitable deductions with respect to conservation easements
What’s new
New provisions in the revised bills include:
- A minimum tax of 15% of book income for corporations with financial statement income in excess of $1 billion
- A 1% excise tax on certain public company stock buybacks
- A 5% surtax on individuals with adjusted gross income (AGI) of more than $10 million ($5 million for married individuals filing separately) and estates and trusts with AGI of more than $200,000; a 3% surtax on individuals with AGI of more than $25 million ($12.5 million for married individuals filing separately) and estates and trusts with AGI of more than $500,000
- A delay in the effective date for certain international tax provisions as well as other changes
- A higher state and local tax deduction cap ($72,000 for married couples filing jointly) extended through 2031
Looking ahead
Revisions to the BBB bill appear to be ongoing as negotiations continue. It remains unclear what provisions might get enacted. Taxpayers should continue to consult with their tax advisers to keep abreast of the latest developments and plan for how tax law changes, if any, will affect them.
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