On Friday, November 19th, the House of Representatives passed a $1.75 trillion bill that funds universal pre-K, Medicare expansion, renewable energy credits, affordable housing, a year of expanded Child Tax Credits and major Obamacare subsidies. The final vote was 220-213.
Now that it has cleared the House, President Joe Biden’s Build Back Better Act goes to the Senate, where it is likely to be revised in the coming weeks. Senate Majority Leader Chuck Schumer said he aims to have the chamber pass the bill before Christmas. The House will need to vote on it again if the bill is altered.
What’s in the current version of the bill:
- A 15% minimum tax on corporate profits for firms with earnings over $1 billion reported to shareholders, and a 1% surtax on stock buybacks
- A 5% surtax on “modified adjusted income” above $10 million, as well as an additional 3% on “modified adjusted income” above $25 million (for taxable years beginning after 12/31/21)
- A Global Minimum Tax, consistent with OECD, The Organization for Economic Co-operation and Development, of 15%
- The Net Investment Income Tax would be extended to cover net investment income derived in the ordinary course of a trade or business for individuals with taxable income of greater than $400,000 for individuals filing single, $500,000 for joint return filers as well as for trusts and estates. (for taxable years beginning after 12/31/21)
- Continue the limitation on excess business losses
- Universal, free preschool for three- and four-year olds, and an extension of an expanded child tax credit through 2022
- Extend the expanded Affordable Care Act premium tax credits through 2025
- Extend for one year the current expanded Earned Income Tax Credit for childless workers
- Increased IRS enforcement aimed at the wealthy
- Capping childcare costs at 7% of income for parents earning up to 250% of a state’s median income.
- 4 weeks of federal paid parental, sick or caregiver leave.
- New hearing benefits for Medicare beneficiaries, including coverage for a new hearing aid every five years.
- $500 billion to combat climate change, largely through clean energy tax credits
Of special note is an increase in the SALT deduction that is in the House bill that was not included in the original framework:
- Raising the State and Local Tax deduction limit from $10,000 to $80,000.
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