Tax & Assurance Guidance

Insights from Washington: Draft Legislation Released

Posted on November 2, 2021 by

Sarah Russell

Sarah Russell

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On Thursday, October 28, the House Rules Committee released draft text of the modified Build Back Better Act. The long-awaited text includes a substantial number of changes to the tax-related provisions included in the bill released in September 2021. As negotiations began on the original bill, it became apparent that the bill would not pass the Senate and compromises would be needed. Most of the tax provisions included in the bill begin on page 1509.

The bill does not include many of the increased tax rates originally planned. Below are some of the items not included in the revised bill:

  • Increase in corporate income tax rate
  • Increase in individual ordinary income tax rates (with exception of a surcharge for certain taxpayers discussed below)
  • Increase in capital gains and qualified dividend rates
  • Carried interest modifications
  • Limit on deduction of qualified business income for certain “high income” individuals

New tax provisions have been added to the prior version of the bill, including, but not limited:

  • Imposes a 5% surtax on individual taxpayer’s modified adjusted gross income (MAGI) in excess of $10 million and an additional 3% (total 8% surtax) of MAGI in excess of $25 million. The 5% and 3% surtax will apply to estates and trusts at $200,000 and $500,000, respectively.
  • Imposes 3.8% net investment income tax on trade or business income for individual taxpayers earning $400,000 ($500,000 if filing a joint return).
  • Imposes new limitation on excess business losses.
  • Imposes a 15% minimum tax on adjusted financial statement income for corporations with a three-year average of such income over $1 billion. A corporation that is a member of an international financial reporting group would be required to include the adjusted financial statement income of all members of the reporting group to determine whether the $1 billion threshold is met.
  • Increases global intangible low-taxed income (GILTI) from 10.5% to 15% and assesses the tax on a country-by-country basis.
  • Adjusts the Base Erosion Anti-Abuse Tax and other international tax provisions.
  • Limits the gain exclusion on the sale of qualified small business stock to taxpayers with adjusted gross income under $400,000.
  • Introduces green energy credits.

These are only some of the high-level items currently included in the bill. There could be additional changes before the bill is brought to the floor for a vote in the House and Senate. The timing of a vote is still unclear. If you have any questions, please contact us.

Sarah Russell


Sarah leads the firm’s domestic and international tax practice and is known for the practical & passionate way she advocates for clients.

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