Earlier this month, the Senate gave bipartisan approval of a $1 trillion infrastructure bill, sending it to the House for review. Last week, the House Ways and Means Committee released proposed changes to be incorporated into the current budget reconciliation bill, also known as the “Build America Back Better” Act. The House Budget Committee will now assemble these changes into the infrastructure bill to be considered by the House.
House Speaker Pelosi has suggested that without the promise of a reconciliation bill, the House may not hold the vote on the previously proposed, Senate-approved infrastructure bill. With the September 27 scheduled vote, tensions are high in Congress.
Below are some of the highlights of the infrastructure bill:
- Replace the flat 21% corporate income tax rate with graduated rates of 18% on the first $400,000 of income, 21% on income up to $5 million, increasing to 26.5% for income above $5 million. The benefits of the graduated rate would phase out for firms earning more than $10 million a year.
- Raise the top marginal personal income tax rate of 39.6% from 37%, for individuals making more than $400,000 and joint filers making more than $450,000.
- Impose a 3% surtax on individuals with adjusted gross income of more than $5 million.
- Increase the capital gains tax rate to 25% from 20% for “certain high-income individuals.”
- Prohibit taxpayers from claiming losses on digital assets, such as cryptocurrencies.
- Increases in the estate-tax exemption that are scheduled to expire after 2025 would now end on December 31, 2021.
- Taxpayers with tax-preferred retirement accounts totaling $10 million or more would no longer be able to contribute to those accounts and would face higher mandatory distributions once the account balances reached that level. These provisions would apply to individuals with taxable income of more than $400,000 and married couples earning more than$450,000.
DeBee Clark will continue to monitor the ever-changing tax landscape to best serve our clients.
