Tax & Assurance Guidance

Insights from Washington: Reconciliation Package on the Horizon?

Posted on July 28, 2022 by

Sarah Russell

Sarah Russell

Share This

It’s been a while since we’ve reported news from Washington as things have been a little slow on the tax front. All that changed this week when it was announced Senator Joe Manchin had reached an agreement with Senate Majority Leader Chuck Schumer on tax, climate change, energy and healthcare provisions to be included in the Inflation Reduction Act of 2022.

Washington Monument

The deal is expected to raise an estimated $739 billion in revenue, spend $433 billion, and reduce the deficit by $300 billion. The increased revenue would come from a domestic 15% book minimum tax on large corporations, modifying the carried interest rules, and increased tax enforcement by boosting funding for the IRS. The deal does not include an expansion of the state and local tax deduction most House Democrats have been pushing for.

In general, a large corporation is one in which the 3-year average modified book income exceeds $1 billion. Controlled group rules are applicable and will include foreign related parties, therefore it is possible the tax would be applicable to U.S. foreign-owned businesses due to income earned in foreign jurisdictions, including by the parent company. The tax would begin after the 2022 tax year.

The agreement includes $369 billion for energy security and climate change working to lower carbon emissions by 40% by 2030. It includes various credits for clean energy sources, including a new tax credit of $4,500 to buy used electric vehicles and $7,500 for new electric vehicles, depending on income level.

The bill is expected to be considered under the rules of budget reconciliation. Majority Leader Schumer is aiming to have the bill considered before the Senate leaves for its recess August 5 and will need support from all 50 Democrats and passage in the House before it becomes law.

Continue the Conversation

We will continue to provide updates as they become available. Contact us if you have any questions on this news and how it could impact you or your business.

Sarah Russell

Shareholder

As the leader of the firm's tax group, Sarah supports growth-driven domestic and international businesses with tax planning, consulting and compliance.

Related Insights

Manufacturers & Distributors

What to Know About the CHIPS Act

Posted on August 16, 2022 by

Katie Blake
On August 9, 2022, President Biden signed the CHIPS and Science Act of 2022 into law, providing more than $52 billion for American semiconductor research, development, and production. The CHIPS Act will provide funding over five years to build, expand or modernize domestic facilities and equipment for semiconductor fabrication, assembly, testing, advanced packing or research and development. 

Industrial Automation Companies

The Sound of Automation: How IT Impacts Business Value

Posted on August 15, 2022 by

Bryan Powrozek
In this episode we talk with Brent Yax, CEO of Awecomm Technologies, specializing in IT management for small to mid-size companies. Brent and Bryan discuss how investing in cybersecurity and IT impacts the value of your company.

Architecture & Engineering Firms

5 A&E Valuation Considerations for Buyers and Sellers

Posted on August 11, 2022 by

Kevin Johns
Even if you’re not currently thinking about a transaction, building these top buyer and seller considerations into your architecture or engineering firm’s financial reporting and forecasting will ensure you’ll be ready when opportunity comes knocking. 

Sign up for our newsletters

Get business and industry-specific news and knowledge straight from our consultants and accounting specialists.

The Sound of Automation Podcast

The Sound of Automation Podcast

Industrial automation businesses are the driving force behind Industry 4.0, and Clayton & McKervey is here to help.

Insights & Perspectives

What to Know About the CHIPS Act

On August 9, 2022, President Biden signed the CHIPS and Science Act of 2022 into law, providing more than $52 billion for American semiconductor research, development, and production. The CHIPS Act will provide funding over five years to build, expand or modernize domestic facilities and equipment for semiconductor fabrication, assembly, testing, advanced packing or research and development. 

Read More

The Sound of Automation Podcast

Industrial automation businesses are the driving force behind Industry 4.0, and Clayton & McKervey is here to help.

Skip to content