Summary

President Biden’s $3.5 trillion 2022 budget – the Build Back Better Act – is a pretty lofty financial plan that seeks to aid American families, workers, and businesses by evening our country’s economic playing field.

Build Back Better will increase federal revenue by $2.1 trillion over 10 years and includes over $1 trillion in expanded tax credits for both individuals and businesses.

The three main goals for the agenda are as follows:

  • Lower Costs for low-to-mid income American families
  • Cut Taxes by providing tax breaks for families
  • Create Jobs through new sustainability efforts and increased investment in worker training

House Speaker Nancy Pelosi (D-CA) says that lawmakers are working to pass the bill by September 27, though it looks to remain a partisan package, with no Republican backing.

Top Implications for High Earners

  • Top Marginal Income Tax Rate

Part of the new spending budget will be funded by an increased top marginal income tax rate for America’s high-earners. The proposed rate is set at a steep 39.6% for individual earners with an adjusted gross income (AGI) over $400K.

Total increases on individual taxes are expected to raise $950 billion in revenue.

  • Capital Gains Tax Rate

Capital gains tax rates are also poised to take a hard hit. The President has proposed increasing the top marginal capital gains tax rate by 5% to 25% for individual earners with an AGI over $400K.

Top Implications for Businesses

  • Corporate Taxes

The budget proposed a return to progressive tax rates for major corporations with those will annual income over $5 million getting hit with a 26.5% tax rate.

  • Multinational Taxes

The budget also suggests assessing Global Intangible Low-Taxes Income (GILTI) on a country-by-country basis as well as lowering the GILTI deduction to 37.5%. These plus several other limitations on multinational corporations will be purposed to prevent profit offshoring and other tax avoidance schemes used by big businesses.

Follow DSJCPA on LinkedIn and Facebook and visit our website to stay up to date on all tax news! Call our office at 516-541-6549 to speak to a tax pro today.

Devin McQuillan
Associate, Creative Solutions

Contact:
516-541-6549 | Email

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