This morning, the House of Representatives voted 220 to 213 in favor of passing the Build Back Better Act (the Bill). The Congressional Budget Office estimates the bill will cost almost $1.7 trillion and add $367 billion to the federal deficit over 10 years. Although passed by the House, the Bill still has a few hurdles to clear before becoming law. At this point, it is unclear what changes the Senate may incorporate into the Bill or if the Senate even has the requisite votes. The Bill incorporates some of the proposed changes from the September House Ways and Means Committee draft legislation, although most of the major changes have been omitted — including an increase in tax rates, a reduction of the estate and gift tax exemption, and an overhaul of the grantor trust rules. The Bill provides for a number of “new” taxes on corporations and individuals. The Bill also provides the IRS with substantial additional funding. A few of the Bill’s provisions related to tax and estate planning are described below.
Provisions Impacting Income Taxes
The Bill contains several provisions which serve to increase income taxes, including:
Provisions Impacting Retirement Planning
The Bill contains several provisions to curtail perceived retirement account abuses, including the following:
Prior Tax Proposals Not Currently in Bill
The Bill omits several prior tax proposals, including the following:
While the Bill still has a few hurdles to clear, it has made it past an important stage. Some of the above changes may not make the final legislation; however, it seems reasonable that a number will remain, and we anticipate future articles detailing the surviving provisions as this Bill progresses.