• Tracking Federal Tax Legislative Proposals

As the Biden administration’s tax priorities continue to take shape, so too does the need for careful planning around the possible changes. Track the status of the various federal tax proposals below to understand how possible new legislation could impact you and your business.


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RetirementEmployeesIRSBusiness Credits
 

BUSINESS PROVISIONS

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Item

Current Law

ADMINISTRATION
Treasury Green Book Proposal

SENATE
Wyden Discussion Draft

HOUSE OF REPRESENATIVES
House Ways & Means Committee Proposal (H.R. 5376)

May 28, 2021

August 25, 2021

As originally reported September 27, 2021

 As modified as of October 28, 2021
 Latest Update

Corporate income tax rates Corporate income generally is subject to tax at a 21% rate. The proposal would increase the corporate income tax rate to 28%.

The proposal would be effective for tax years beginning after December 31, 2021, with a phase-in for fiscal tax years beginning in 2021.
TBD The proposal would establish a corporate income tax table:
  • Income up to $400,000: 18%
  • Income over $400,000 and up to $5 million: 21%
  • Income over $5 million: 26.5%
In addition, the proposal would increase the corporate tax by 3% of taxable income in excess of $10 million – by an amount not to exceed $287,000 – in order to phase-out the benefits of the lower 18% and 21% tax brackets.

The proposal would be effective for tax years beginning after December 31, 2021.

Sec. 138101 of H.R. 5376; IRC Sec. 11.
No provision.
Minimum tax on book earnings of certain corporations No provision. The proposal would impose a 15% minimum tax on worldwide book income for corporations with such income over $2 billion.

The proposal would be effective for tax years ending after December 31, 2021.
TBD No proposal. The proposal would impose a corporate alternative minimum tax (AMT) at a rate of 15% on the adjusted financial statement income for corporations with such income over $1 billion.
 
The proposal would be effective for taxable years beginning after December 31, 2022.
Limitation on certain special rules for IRC Sec. 1202 gains (qualified small business stock, QSBS) IRC Sec. 1202 permits a taxpayer, other than a corporation, to exclude up to 100% of the gain from the sale or exchange of QSBS held for more than five years.

IRC Sec. 1202 was originally enacted in 1993 to encourage investment in small companies. The provision initially granted a 50% exclusion of gain, which was later increased to 75% for QSBS stock acquired after February 17, 2009 and then to 100% for QSBS stock acquired after September 27, 2010.
No proposal. TBD The proposal would amend the rules to provide that the special 75% and 100% exclusion rates for gains realized from certain QSBS would not apply to taxpayers with adjusted gross income equal to or exceeding $400,000, effective for sales and exchanges (not original issuances) after September 13, 2021, subject to a binding contract exception (1).

While a section-by-section summary of the proposal prepared by Ways & Means staff states that it would apply to sales and exchanges after September 13, 2021, the text of the draft legislation provides that the proposal would apply to sales and exchanges on or after September 13, 2021, subject to a binding contract exception.
Same as September 15, 2021, House Ways & Means Committee proposal (1), except that the effective date is clarified. The proposal would apply to sales and exchanges after September 13, 2021, subject to a binding contract exception.
Research and Experimental (R&E) Expenditures For tax years beginning after 2021, all U.S.-based and non-U.S.-based R&E expenditures under IRC Sec. 174 must be capitalized and amortized over five and 15 years, respectively, beginning with the midpoint of the tax year in which the expenditure is paid or incurred. No proposal.   The proposal would delay the effective date of the required amortization of R&E expenditures to tax years beginning after 2025. In effect, this would extend the ability to currently deduct Sec. 174 R&E expenditures paid or incurred in tax years beginning before 2026 (2). Same as September 15, 2021, House Ways & Means Committee proposal (2).
 

INTERNATIONAL PROVISIONS

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The Senate Finance Committee has not yet marked up legislation; however, Finance Committee Chair Ronald Wyden and committee members Sherrod Brown and Mark Warner on August 25, 2021 released their “International Tax Reform Framework".
 

Item

Current Law

ADMINISTRATION
Treasury Green Book Proposal

SENATE
Wyden Discussion Draft

HOUSE OF REPRESENATIVES
House Ways & Means Committee Proposal (H.R. 5376)

May 28, 2021

August 25, 2021

As originally reported September 27, 2021

 As modified as of October 28, 2021
 Latest Update

Global intangible low-taxed income (GILTI) Domestic corporations are allowed a 50% deduction of their GILTI. For tax years beginning after December 31, 2025, the deduction for GILTI is reduced to 37.5 %.

The calculation of GILTI and the associated foreign tax credit (FTC) are made on an aggregate basis. The GILTI taxes available for FTC are subject to a 20% reduction.

Taxpayers receive a reduction for GILTI inclusions equal to 10% of the qualified business asset investment (QBAI) of their controlled foreign corporations (CFCs).
The proposal would reduce the GILTI deduction to 25%.
GILTI and the associated FTC would be calculated on a country-by-country basis.

The GILTI and Subpart F high-tax exclusion election would be repealed.

The reduction of GILTI for QBAI would be repealed.

The proposal would be effective for taxable years beginning after December 31, 2021.

Read more
The discussion draft would change the GILTI deduction to a yet-to-be-determined percentage.

GILTI and the associated FTC would be calculated on a country-by-country basis, with an automatic high-tax exclusion for countries with a tax rate equal to the GILTI rate.

The reduction of GILTI for QBAI would be repealed.

The proposal would be effective for tax years beginning after December 31, 2021.
The proposal would reduce the GILTI deduction to 37.5%.

GILTI and the associated FTC would be calculated on a country-by-country basis.

A country with an aggregate tested loss would be permitted to carry that loss forward to the succeeding taxable year.

The reduction of GILTI for QBAI would be reduced from 10% to 5%.

The proposal would be effective for taxable years beginning after December 31, 2021, with a transition rule for fiscal-year taxpayers.

Sec. 138126 of H.R. 5376; IRC Sec. 951A and IRC Sec. 250.
The proposal would reduce the GILTI deduction to 28.5%.
 
GILTI and the associated FTC would be calculated on a country-by-country basis.
 
A country with an aggregate tested loss would be permitted to carry that loss forward to the succeeding taxable year.
 
The reduction of deemed paid taxes under GILTI would be reduced from 20% to 5%.
 
The reduction of GILTI for QBAI would be reduced from 10% to 5%.
 
The proposal would be effective for taxable years beginning after December 31, 2022.
Foreign tax credit categories and carryover rules Taxpayers determine their FTC limitation separately for each category of income included in IRC Sec. 904(d), including passive, general, foreign branch, GILTI and treaty-based.

Other than the GILTI category, which has no carryback or carryover for FTCs, all other categories are entitled to a one-year carryback and 10-year carryforward of excess FTCs.

Current law provides a complex set of expense allocation and apportionment rules for expenses contained in the IRC Sec. 861 regulations for purposes of determining the FTC limitation. IRC Sec. 904(b)(4) provides that expenses allocated and apportioned against IRC Sec. 245A income increase the denominator of the FTC limitation fraction for each category of income.
In addition to the changes to the GILTI FTCs being calculated on a country-by-country basis, the proposal would also extend the country-by-country FTC limitation to the branch category.
The proposal contains no changes to the FTC carryover provisions.

The proposal also would repeal IRC Sec. 904(b)(4) and, instead, modify IRC Sec. 265 to provide that any expenses allocated and apportioned to IRC Sec. 245A income or to income for which an IRC Sec. 250 deduction is claimed against GILTI are treated as if they generated tax-exempt income and would not be deductible.

The proposal would be effective for taxable years beginning after December 31, 2021.
The discussion draft provides that the branch category would be changed to be computed on a country-by-country basis, with an automatic high-tax exclusion provision similar to the GILTI high-tax exclusion provisions.
The discussion draft does not include any proposed modifications to the FTC carryover rules.

The discussion draft would modify the expense allocation and apportionment rules for purposes of determining the FTC limitation under IRC Sec. 904 by providing that stewardship and research and development expenses would be treated as US-source if the activities are conducted in the U.S. Expenses for activities conducted outside the U.S. would be sourced under the existing rules.

The proposal would be effective for taxable years beginning after December 31, 2021.
The proposal would amend IRC Sec. 904(d) so that the FTC would be calculated on a country-by-country basis for all categories of income.

The FTC carryover provisions would be amended to provide that, for all categories of income (including GILTI) there would be no FTC carryback and the FTC carryforward period would be reduced from 10 years to five years.

The proposals would modify the expense allocation and apportionment rules for purposes of determining the FTC to indicate that the only expense allocable to GILTI income is the IRC Sec. 250 deduction.

The proposal also would repeal IRC Sec. 904(b)(4).

The proposal would generally be effective for taxable years beginning after December 31, 2021. The modifications to the carryback and carryforward provisions would apply to taxes paid or accrued in taxable years beginning after December 31, 2021. The modification relating to the redetermination of foreign taxes would be effective 60 days after the date of enactment (3).
Same as September 15, 2021, House Ways & Means Committee proposal (3), except that the proposed effective date is changed.

The rules related to IRC Sec. 904(b)(4) would apply to dispositions after the date of enactment. The other modifications would apply to taxable years beginning after December 31, 2022 (3)

The FTC carryover provisions would be amended to provide that, for all categories of income (excluding GILTI) there would be no FTC carryback and the FTC carryforward would remain at 10 years. For GILTI, no FTC carryback would be permitted; however, a five-year carryforward would be permitted for tax years beginning after December 31, 2022 and before January 1, 2031, with a 10-year carryforward applying thereafter.
Foreign-derived intangible income (FDII) deduction Domestic corporations are allowed a 37.5% deduction for FDII for any taxable year beginning after December 31, 2017, and 21.875% for any taxable year beginning after December 31, 2025. The FDII deduction would be repealed.

The proposal would be effective for taxable years beginning after December 31, 2021.
The discussion draft provides that the FDII rules would become the foreign-derived innovation income rules.

The IRC Sec. 250 deduction for FDII would be harmonized with the GILTI IRC Sec. 250 deduction rate.

Changes to the calculation would include limitations based on qualifying wages and various modifications to the existing method of calculation.

The proposal would be effective for taxable years beginning after December 31, 2021.
The FDII percentage change to the 21.875% would be accelerated to be effective generally for any taxable year beginning after December 31, 2021.

The proposal generally would be effective for taxable years beginning after December 31, 2021, with a transitional rule for fiscal-year taxpayers.

Sec. 138121 of H.R. 5376; IRC Sec. 250.
The FDII percentage would be reduced to 24.8% for taxable years beginning after December 31, 2022, with a transitional rule for fiscal-year taxpayers.
 
If the IRC Sec. 250 deduction with respect to GILTI or FDII exceeds taxable income, the excess would be allowed as a deduction, which would increase the net operating loss for the taxable year.
Base erosion and anti-abuse tax (BEAT) An additional tax is imposed on certain multinational corporations with respect to payments made to foreign affiliates; it applies to corporations with average gross receipts over $500 million.
 
The BEAT rate is generally 10% for taxable years beginning in 2021 through 2025 and 12.5% for taxable years beginning after 2025.
The proposal would replace BEAT with the Stopping Harmful Inversions and Ending Low-Tax Developments (SHELD) provisions.
 
SHIELD would deny deductions to corporations or branches by reference to gross payments made to “low-taxed members,” which would be any financial reporting group member whose income is subject to an effective rate below a designated minimum rate.
 
The proposal would be effective for taxable years beginning after December 31, 2022.
The discussion draft would modify the BEAT rules to include a second, higher rate of tax when determining the base erosion tax liability. (This second, higher rate is still under consideration.) The higher rate would apply to “base erosion income,” which is the amount of income added to taxable income to determine modified taxable income (MTI).
 
IRC Sec. 38 domestic business credits are provided full value under BEAT by providing that not all IRC Sec. 38 general business credits reduce regular tax liability for purposes of determining the base erosion minimum tax amount.
 
The proposal would be effective for base erosion payments paid or accrued for tax years beginning after the date of enactment.
The proposal modifies the applicable percentage.
 
For taxable years beginning after December 31, 2021, and ending before January 1, 2024, the BEAT rate would be 10%. For taxable years beginning after December 31, 2023, and ending before January 1, 2026, the BEAT rate would be 12.5%. For taxable years beginning after December 31, 2025, the BEAT rate would be 15%.

Sec. 138131 of H.R. 5376; IRC Sec. 59A.
For taxable years beginning after December 31, 2021, and before January 1, 2023, the BEAT rate would be 10%. For taxable years beginning after December 31, 2022, and before January 1, 2024, the BEAT rate would be 12.5%. For taxable years beginning after December 31, 2023, and before January 1, 2025, the BEAT rate would be 15%. For taxable years beginning after December 31, 2024, the BEAT rate would be 18%. The BEAT rate would be determined by taking into account tax credits.
 
The proposal would add to the definition of base erosion payments amounts paid to a foreign related party that are required to be capitalized under IRC Sec. 263A and payments to a foreign related party for inventory which exceed the costs of the property to the foreign related party.
 
The proposal would add an exception for payments subject to U.S. tax and for payments that are subject to sufficient foreign taxes (generally the BEAT rate).
 
The proposal would add a provision that states that an applicable taxpayer remains an applicable taxpayer for ten years after it is determined to be an applicable taxpayer.
 
The proposal would be effective for taxable years beginning after December 31, 2021.
IRC Sec. 245A deduction for eligible foreign-source dividends A 100% deduction is provided for qualifying foreign-source dividends received from 10% or more owned foreign corporations held by a U.S. corporation that meets various ownership and holding period requirements. No proposal. No proposal. The proposal would change the requirements to be eligible for an IRC Sec. 245A deduction from qualifying foreign-source dividends received from 10% or more owned foreign corporations to qualifying foreign-source dividends received from CFCs, limiting the availability of the IRC Sec. 245A deduction and eliminating the deduction for those foreign corporations that are so-called “10-50 companies.”

The proposal would be effective for distributions made after the date of enactment (4).
Same as September 15, 2021, House Ways & Means Committee proposal (4).
Downward attribution provisions for CFC status and various other provisions IRC Sec. 958(b)(4) had provided that, when determining whether a foreign corporation was a CFC, ownership by a foreign corporation of another foreign corporation could not be attributed under IRC Sec. 318 to a U.S. corporation (the so-called downward attribution rule).
 
IRC Sec. 958(b)(4) was repealed as part of the Tax Cuts and Jobs Act.  The repeal of the rule caused complexity for various individual shareholders, private equity funds and foreign-parented groups in the determination of CFC status for certain foreign subsidiaries and the implications of such determination.
No proposal. No proposal. The proposal would reinstate IRC Sec. 958(b)(4), thereby providing that, for purposes of IRC Sec. 318(a)(3), when determining attribution of ownership to a U.S. person, such ownership will not be attributed if the stock of the foreign corporation is not owned by a U.S. person.
 
The proposal would establish new IRC Sec. 951B, which would apply IRC Secs. 951A and 965 to foreign-controlled U.S. shareholders of a foreign CFC. The provisions would essentially create a new status of foreign corporation for which U.S. owners would have inclusions for GILTI and IRC Sec. 965 purposes as if IRC Sec. 958(b)(4) were still repealed.
 
The effective dates of these provisions would be retroactive and would apply to the last taxable year of foreign corporations beginning before January 1, 2018, and each subsequent taxable year of such foreign corporation and taxable years of U.S. persons in which or with which such taxable years of foreign corporations end (5).
Same as September 15, 2021, House Ways & Means Committee proposal (5).
Subpart F – Limitation on Foreign Base Company Sales and Services Income         The proposal would limit Subpart F foreign base company sales or services income to transactions with U.S. residents or branches and passthrough entities in the U.S. The amendments would apply to taxable years beginning after December 31, 2021.
 

INDIVIDUAL PROVISIONS

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Item

Current Law

ADMINISTRATION
Treasury Green Book Proposal

SENATE
Wyden Discussion Draft

HOUSE OF REPRESENATIVES
House Ways & Means Committee Proposal (H.R. 5376)

May 28, 2021

August 25, 2021

As originally reported September 27, 2021

 As modified as of October 28, 2021
 Latest Update

Individual income tax rates Top marginal rate is 37%. Top marginal rate would be raised to 39.6%.
 
The proposal would be effective for taxable years beginning after December 31, 2021.
TBD Top marginal rate would be raised to 39.6%.
 
The proposal would be effective for taxable years beginning after December 31, 2021.

Sec. 138201 of H.R. 5376; IRC Sec. 1.
No provision.
Surcharge on high-income individuals, estates and trusts No provision. No proposal. TBD The proposal would impose a 3% tax on modified adjusted gross income (MAGI) that exceeds $100,000 for estates or trusts and $5 million for individuals ($2.5 million for married individuals filing separately).
 
The proposal would apply to taxable years beginning after December 31, 2021.

Sec. 138206 of H.R. 5376; IRC Sec. 1A.
The proposal would impose a 5% surcharge on MAGI that exceeds $5 million for married filing separately, $200,000 for estates and trusts and $10 million for all other individuals; an additional 3% surcharge would further be imposed on MAGI in excess of $12.5 million for married filing separately, $500,000 for estates and trusts and $25 million for all other individuals.
 
The proposal would apply to taxable years beginning after December 31, 2021.
Capital gains rate Long-term capital gains are taxed at rates of 0%, 15% and 20%, depending on the taxpayer’s income. Long-term capital gains would be taxed at the highest individual marginal rate to the extent taxpayer’s adjusted gross income (AGI) exceeds $1 million.
 
The proposal also would treat transfers of appreciated property by gift or at death as realization events, subjecting the gain to tax, with some exclusions.

The proposal for an increased capital gains rate would be effective for gains after the date of announcement (understood to be April 28, 2021).
 
The proposal for capital gains tax on the transfer of appreciated property by gift or at death would be effective for decedents dying after December 31, 2021.
TBD The top long-term capital gains rate would be increased to 25%.
 
The proposal to increase the capital gains rate would be effective for taxable years ending after the date of introduction (September 13, 2021); transitional rules would allow taxable years that include September 13, 2021 to tax net gains realized before September 13, 2021 at 20%. Agreements subject to a binding contract in place before September 13, 2021 would be subject to the 20% top rate (unless the contract was materially modified after September 13, 2021).

Sec. 138202 of H.R. 5376; IRC Sec. 1(h).
No provision.
Net investment income tax A 3.8% tax is imposed on the lesser of net investment income or the excess of MAGI over a threshold amount ($250,000 for married joint filers; $200,000 for single filers). The proposal would expand the application of the net investment income tax for taxpayers with AGI in excess of $400,000 by subjecting to the net investment income tax gross income and gains from any trades or businesses that are not otherwise subject to employment taxes. TBD The proposal would expand the application of the net investment income tax of high-income individuals (MAGI over $500,000 for joint filers, $250,000 for married filers filing separately, $400,000 for single filers) and expand the definition of net investment income subject to tax.

The proposal would be effective for taxable years beginning after December 31, 2021 (6).
Same as September 15, 2021, House Ways & Means Committee proposal (6).
Taxation of carried interest Carried interest allocations attributable to property with a holding period of less than three years are taxed at ordinary rates. The proposal would tax all carried interest allocations at ordinary rates, provided the recipient’s taxable income (from all sources) exceeds $400,000. TBD The proposal would expand the holding period requirement from three to five years, except in the case of taxpayers with taxable income below $400,000 or allocations from real property trades or businesses.

Sec. 138149 of H.R. 5376; IRC Sec. 1061
No provision.
Qualified business income deduction Individuals, fiduciaries and trust/estate beneficiaries may deduct 20% of qualified business income from a partnership, S corporation or sole proprietorship (20% of total qualified real estate investment trust dividends and publicly traded partnership income are also eligible).

There is no cap on the deduction.
No proposal. TBD The proposal would impose a dollar limitation on the deduction. For a taxable year, the deduction would not exceed $500,000 for joint filers, $250,000 for married filers filing separately, $400,000 for single filers, or $10,000 for estates and trusts.

The proposal would be effective for taxable years beginning after December 31, 2021.
No provision.
  

ESTATE AND GIFT PROVISIONS

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Item

Current Law

ADMINISTRATION
Treasury Green Book Proposal

SENATE
Wyden Discussion Draft

HOUSE OF REPRESENATIVES
House Ways & Means Committee Proposal (H.R. 5376)

May 28, 2021

August 25, 2021

As originally reported September 27, 2021

 As modified as of October 28, 2021
 Latest Update

Temporary unified credit exemption equivalent amount For estates of decedents dying and gifts made after December 31, 2017, and before January 1, 2026, the unified credit exemption equivalent amount is $10 million, which indexed for inflation is $11,700,000 for 2021.
 
For decedents dying and gifts made prior to January 1, 2018, and after December 31, 2025, the exclusion amount is $5 million, indexed for inflation.
No proposal. TBD The proposal would accelerate the expiration of the $10 million unified credit exemption equivalent amount. For decedents dying and gifts made after December 31, 2021, the exemption equivalent amount would be $5 million, indexed for inflation. (The Joint Committee staff estimates the indexed amount would be $6,020,000 for 2022.)

Sec. 138207 of H.R. 5376; IRC Sec. 2010.
No provision.
Inclusion of grantor trusts in a decedent’s estate When a deemed owner of a grantor trust dies, the assets of that grantor trust (other than a fully revocable trust) are generally not included in the gross estate of the deceased deemed owner. No proposal. TBD The proposal would require that assets in a grantor trust be included in the gross estate of the deceased owner.
 
Additionally, the proposal would treat distributions (other than to the deemed owner or spouse) during the life of the deemed owner and the termination of grantor trust status during the life of the deemed owner as completed gifts.
 
The proposal would also disregard grantor trust status when determining whether a transfer between a deemed owner and his or her grantor trust is a sale or an exchange, possibly resulting in a taxable event.
 
The proposal would apply to trusts created on or after the date of enactment of this provision and to any portion of a trust established before the date of enactment attributable to contributions made on or after the date of enactment.
 
The portion of the provision relating to sales and exchanges between a deemed owner and a grantor trust is intended* to be effective for sales and other dispositions after date of enactment.  (* The staff description of the provision notes that a technical correction may be needed to reflect this intended effective date.)

Sec. 138209 of H.R. 5376; IRC Secs. 1062, 2091
No provision.
Valuation discounts for estate and gift tax purposes Valuation discounts, such as discounts for lack of control and marketability, are available for certain transfers of nonbusiness assets. No proposal. TBD The proposal would eliminate valuation discounts for certain transfers of nonbusiness assets.
 
The proposal would apply to transfers after the date of enactment.

Sec. 138210 of H.R. 5376; IRC 2031.
No provision.
  

RETIREMENT PLAN PROVISIONS

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Item

Current Law

ADMINISTRATION
Treasury Green Book Proposal

SENATE
Wyden Discussion Draft

HOUSE OF REPRESENATIVES
House Ways & Means Committee Proposal (H.R. 5376)

May 28, 2021

August 25, 2021

As originally reported September 27, 2021

 As modified as of October 28, 2021
 Latest Update

Requirement for Employers to Maintain or Facilitate Automatic Employee Contributions to Retirement Plans       The proposal would impose a $10, indexed for inflation, per day tax for each employee that the employer does not facilitate automatic retirement savings to an employer sponsored plan or IRA.
 
The proposal would apply to plan years beginning after December 31, 2022.
 
Sec.131101 and Sec. 131102 of H.R. 5376
 
Changes to Credits for Small Employer Pension Plan Startup Costs Allows a credit for two tax years to eligible employers to offset the cost of setting up a qualified retirement plan equal to 50% of the qualified startup costs.  The credit can range from $500 to $5,000 based on the number of eligible employees.      Increases the number of years that the credit is allowed from 2 to 4 taxable years.  50% credit for plan startup costs for eligible employer under current law increased to 100 with 25 or fewer employees.

Also, terminates the credit for non-automatic contribution plans or arrangements after 2022.
 
The proposals would apply to plan years beginning after December 31, 2021.  Provisions terminating the credit for non-automatic contribution plans/arrangements effective for taxable years beginning after December 31, 2022.
 
Sec. 131103 of H.R. 5376

New $500 credit established for certain small employer automated deferral only retirement arrangements.

The proposals would apply to plan years beginning after December 31, 2021.

Sec. 131104 of H.R. 5376
 
Matching Payments for elective deferral and IRS contributions by certain individuals       This proposal would provide a personal income tax credit up to $500(phased out based on AGI)  for individuals contributing to an applicable retirement savings vehicle

This proposal would be effective for tax years beginning after December 31, 2024. 

Sec. 131201 of H.R. 5376
 
Deadline to Fund IRA with Tax Refund       Taxpayers can fund IRAs with tax refund by electing it be deposited directly into the IRA account.
 
This provision would apply to taxable years beginning after December 31, 2022.
 
Sec. 131202 of H.R. 5376
 
Limitations on contributions to IRAs and Roth IRAs for high-income taxpayers with large account balances in IRAs, Roth IRAs or defined contribution retirement plans Taxpayers may contribute to IRAs, Roth IRAs and defined contribution plans regardless of how much they already have saved in such accounts. No proposal.   The proposal would prohibit contributions by "applicable taxpayers" to IRAs and Roth IRAs if the total value of "applicable retirement plans" (including traditional and Roth IRAs, 403(b) plans and annuities, 475(b) deferred compensation plans and defined contributions qualified under IRC Sec. 401(a)) exceeds the "applicable dollar amount" as of the end of the prior year.  The applicable dollar amount for 2022 is $10 million per individual. Applicable taxpayers are those with taxable income above $400,000, $450,000 for married filing jointly and $425,000 for head of household. Both the applicable dollar amount and adjusted taxable income limits are indexed for inflation beginning after 2022.
 
Contributions exceeding the limit would be subject to annual 6% excise tax.
 
The proposal would be effective for taxable years beginning after December 31, 2021.

Sec. 138301 of H.R. 5376.
No provision.
New reporting requirement for employer-sponsored defined contribution plans Reporting to IRS does not include account balances of active plan participants. No proposal.   The proposal would require defined contribution plan sponsors to report employees who have aggregate vested balances of more than $2.5 million to the IRS and notify the employee that this information is being reported.
 
The proposal would be effective for taxable years beginning after December 31, 2021.

Sec. 138301 of H.R. 5376.
No provision.
Increased minimum required distributions (MRD) from IRAs, Roth IRAs and defined contribution retirement plans MRD is required only based on age, not on the retirement asset amount. No proposal.   The proposal would require applicable taxpayers, as defined above, to take an additional MRD, regardless of their age, equal to 50% of the aggregate vested balances in applicable retirement plans in excess of $10 million, as indexed, at the end of the prior year. The taxpayer could elect from which account to make the distribution, unless the aggregate vested balances exceed 200% of the applicable dollar amounts ($20 million for 2022).  Exceeding the 200% threshold would require a Roth distribution equal to the lesser of all Roth balances or 100% of the excess over $20 million before complying with the remaining MRD requirements for balances over $10 million. No 10% premature distribution tax would apply.

The proposal would be effective for taxable years beginning after December 31, 2021.

Sec. 138302 of H.R. 5376.
No provision.
High-income taxpayers cannot convert pretax IRA and employer-sponsored defined contribution plan accounts to Roth IRAs Contributions to Roth IRAs have income limitations; Roth IRA conversions do not have income limitations. No proposal.   The proposal would eliminate Roth conversions for IRAs and employer-sponsored defined contribution plans for applicable taxpayers, as defined above.

The proposal would be effective for rollovers and conversions after December 31, 2031.

Sec. 138311 of H.R. 5376.
No provision.
“Back-door” Roth strategy Taxpayers who cannot contribute directly to a Roth IRA can make nondeductible contributions to a traditional IRA or after-tax contributions to an employer-sponsored defined contribution plan and convert to a Roth IRA shortly thereafter. This is commonly known as a “back-door” Roth. No proposal.   The proposal would amend the definition of rollovers and conversions to Roth IRAs to include only amounts that would be includable in gross income and subject to tax regardless of the taxpayer’s income level.
 
The proposal would be effective for distributions, transfers and contributions made after December 31, 2021.

Sec. 138311 of H.R. 5376.
No provision.
Limits on IRA and Roth IRA investments IRA and Roth IRA owners can be required to satisfy certain requirements to be accredited for certain IRA or Roth IRA investments. No proposal.   The proposal would prohibit IRAs and Roth IRAs from holding any security that requires the IRA owner to have certain income or education levels.
 
The proposal would be generally effective for taxable years beginning after December 31, 2021. For existing investments in newly prohibited assets, IRA the effective date would be for taxable years beginning after December 31, 2023.
 
Sec. 138312 of H.R. 5376
No provision.
Limits on IRA and Roth IRA investments in which the IRA owner owns a substantial interest Generally, IRAs and Roth IRAs can invest in investments in which the IRA owner has an interest, provided the IRA owner’s interest is less than 50%. No proposal.   The proposal would expand the definition of prohibited investments in IRAs and Roth IRAs to include investments in which the IRA owner has a substantial interest. A substantial interest is defined as (a) a direct or indirect interest in a security not tradeable on an established market in which the IRA owner has at least 10% of the (i) the combined voting power or value of all classes of stock, (ii) capital or profits interest of a partnership, or (iii) beneficial interest of a trust or estate; or (b) a corporation, partnership or other unincorporated enterprise in which the IRA owner is an officer or director (or similar).

The proposal would be effective for investments made in taxable years beginning after December 31, 2021. For existing investments in newly prohibited assets, IRA the effective date would be for taxable years beginning after December 31, 2023.
No provision.
 
 

EMPLOYEE BENEFITS

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Item

Current Law

ADMINISTRATION
Treasury Green Book Proposal

SENATE
Wyden Discussion Draft

HOUSE OF REPRESENATIVES
House Ways & Means Committee Proposal (H.R. 5376)

May 28, 2021

August 25, 2021

As originally reported September 27, 2021

 As modified as of October 28, 2021
 Latest Update

Acceleration of the expiration date for Family Medical Leave Act (FMLA) business income tax credits FMLA business income tax credits expire in 2025. No proposal.   The proposal would terminate the business income tax credit for wages paid to employees during applicable family and medical leave for tax years beginning after 2023. No provision.
Work Opportunity Tax Credit (WOTC) The WOTC is 10% of the first $10,000 of wages and is available only for the first year of employment. No proposal.   The proposal would increase the WOTC to 50% for the first $10,000 in wages through December 31, 2023, for all WOTC-targeted groups except for summer youth employees. The WOTC also would be extended to include the second year of employment.

Sec. 138513 of H.R. 5376; IRC Sec. 51.
No provision.
Executive Compensation Effective for tax years beginning after December 31, 2026, the American Rescue Plan Act of 2021 (ARPA) expanded the set of applicable employees under IRC Sec. 162(m) to include the eight most highly compensated officers other than the principal executive and principal financial officers. The additional five employees ARPA added are not considered permanent covered employees for purposes of that section. The provision also applies the IRC Sec. 414 aggregation rules for covered health insurance providers to IRC Sec. 162(m), expands the IRS’s regulatory authority under the general rule and expands the definition of applicable employee renumeration No proposal.   The proposal would move up the effective date of the amendment to IRC Sec. 162(m) in the ARPA to tax years following December 31, 2021. The set of applicable employees under IRC Sec. 162(m) would be expanded to include the eight most highly compensated officers other than the principal executive and principal financial officers. The additional five employees ARPA added are not considered permanent covered employees for  purposes of that section. The provision also applies the IRC Sec. 414 aggregation rules for covered health insurance providers to IRC Sec. 162(m), expands the IRS’s regulatory authority under the general rule and expands the definition of applicable employee renumeration.
 
The proposal would be effective for tax years beginning after December 31, 2021.

Sec. 138501 of H.R. 5376; IRC Sec. 162(m)
The provision would apply the IRC Sec. 414 aggregation rules for covered health insurance providers to IRC Sec. 162(m), expand the IRS’ regulatory authority under the general rule and expand the definition of applicable employee renumeration.
 
The proposal would be effective for tax years beginning after December 31, 2021.
 

IRS PROVISIONS

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Item

Current Law

ADMINISTRATION
Treasury Green Book Proposal

SENATE
Wyden Discussion Draft

HOUSE OF REPRESENATIVES
House Ways & Means Committee Proposal (H.R. 5376)

May 28, 2021

August 25, 2021

As originally reported September 27, 2021

 As modified as of October 28, 2021
 Latest Update

Funding for the IRS   The proposal would provide the IRS an additional $417 million in FY 2022 for new enforcement and compliance initiatives, part of a proposed $6.7 billion "program integrity" adjustment proposed for FYs 2022 through 2031. The IRS would also receive $72.5 billion in mandatory funding for FYs 2022 through 2031 for enforcement, compliance, enhanced information technology capabilities, implementing the proposed financial information reporting regime and improving taxpayer service.   The proposal would provide the IRS $79 billion to strengthen tax enforcement activities, increase voluntary compliance, and modernize information technology to effectively support enforcement activities. No use of these funds is intended to increase taxes on any taxpayer with taxable income below $400,000. Another $41 billion would be appropriated for the Treasury Inspector General for Tax Administration to provide oversight of the IRS. Finally, $157 million would be appropriated for the Tax Court (7).

Sec. 138401 of H.R. 5376.
Same as September 15, 2021, House Ways & Means Committee proposal (7).
 

BUSINESS CREDITS

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Item

Current Law

ADMINISTRATION
Treasury Green Book Proposal

SENATE
Wyden Discussion Draft

HOUSE OF REPRESENATIVES
House Ways & Means Committee Proposal (H.R. 5376)

May 28, 2021

August 25, 2021

As originally reported September 27, 2021

 As modified as of October 28, 2021
 Latest Update

Small business taxpayer exemption – gross receipts test under IRC Sec. 448(c) For purposes of applying the gross receipts test under Sec. 448, taxpayers must apply the aggregation rules under Secs. 52(a), 52(b) and 414(m). In particular, Sec. 52(b) requires taxpayers to aggregate gross receipts for trades or businesses under common control. However, Sec. 52(b) presently does not clarify what constitutes a “trade or business” for aggregation purposes. No proposal. No proposal. The proposal would amend Sec. 52(b) to include any activity treated as a trade or business under paragraph (5) or (6) of Sec. 469(c) – i.e., any activity involving research or experimentation under Sec. 174 as well as any activity for which expenses are allowable as a deduction under Sec. 212.
 
The proposal would be effective for taxable years beginning after December 31, 2021 (8).
Same as September 15, 2021, House Ways & Means Committee proposal (8).
Renewable Electricity Production Tax Credit
(PTC)
 
The current PTC for qualified renewable production facilities is 60% of the base PTC rate for facilities that begin construction before January 1, 2022. There is no PTC for facilities that begin construction after 2021. The proposal would increase the credit to 100% of the PTC rate for qualified facilities that begin
construction after December 31, 2021 and before January 1, 2027. 

Starting in 2027, the credit rate would begin to phase down to zero over a five-year period.

The taxpayer would be able to elect a cash payment in lieu of the tax credit.
  The proposal would extend the PTC for qualified facilities that begin construction before January 1, 2034.
 
The credit would be 100% of the PTC rate through December 31, 2031 if the prevailing wage and apprenticeship requirements are met, with phase-downs thereafter.
 
The proposal would provide for an increased credit rate of 10% of the credit amount for projects that meet domestic content requirements.
 
The taxpayer would be able to elect a cash payment in lieu of the tax credit.
The proposal would extend the PTC for qualified facilities that begin construction before January 1, 2027.
 
The credit would be 100% of the PTC rate for wind and solar facilities if the prevailing wage and apprenticeship requirements are met and would apply to facilities placed in service after December 31, 2021.
 
The proposal would provide for an increased credit rate of 10% of the credit amount for projects that meet domestic content requirements.
 
The taxpayer would be able to elect a cash payment in lieu of the tax credit.
Renewable Energy Investment Tax Credit (ITC)  Qualified energy facilities that begin construction before January 1, 2023 are eligible for a 26% ITC. The credit is 22% for projects that begin construction after December 31, 2022 and before January 1, 2024 and placed in service before 2026; thereafter, the credit is 10%.  The proposal would increase the ITC to 30% for solar and geothermal electric energy property and other qualified facilities that begin construction after December 31, 2021 and before January 1, 2027. Starting in 2027, the credit rate would begin to phase down to zero over a five-year period.

The proposal would expand the ITC to include stand-alone energy storage facilities with a capacity of at least 5 kWh. 

The taxpayer would be able to elect a cash payment in lieu of the tax credit.
  The proposal would extend the ITC for wind and solar projects that begin construction before January 1, 2034.
 
For projects that begin construction after December 31, 2021 and before January 1, 2032, the ITC rate for wind and solar projects would increase to 30%, subject to the prevailing wage and apprenticeship requirements, with a phase-down thereafter.
 
The proposal would provide for an increased credit rate of 10% of the credit amount for projects that meet domestic content requirements.
 
The proposal would expand the ITC to stand-alone energy storage projects.
 
The taxpayer would be able to elect a cash payment in lieu of the tax credit.
The proposal would extend the ITC for projects that begin construction before January 1, 2027.

The ITC rate for wind and solar projects would increase to 30%, subject to the prevailing wage and apprenticeship requirements (would apply to facilities placed in service after December 31, 2021).

The proposal would provide for an increased credit rate of 10% of the credit amount for projects that meet domestic content requirements.

The proposal would expand the ITC to energy storage technology, linear generators, microgrid controllers, dynamic glass and biogas property.

The ITC rate would be reduced to 0% for qualified fuel cell property, qualified small wind property, waste energy property, waste energy property and certain solar property, the construction of which begins before January 1, 2027 and that is not placed in service before January 1, 2029.

The taxpayer would be able to elect a cash payment in lieu of the tax credit.
Increased ITC for solar and wind facilities connected to low-income housing communities N/A N/A   The proposal would create an additional 10% ITC for projects located in qualified low-income communities or an additional 20% credit if the project is a qualifying low-income residential building project or a low-income economic benefit project.
 
The taxpayer would be able to elect a cash payment in lieu of the tax credit.
The proposal would create an additional 10% ITC for projects located in qualified low-income communities or on Indian land or an additional 20% credit if the project is a qualifying low-income residential building project or a low-income economic benefit project.
 
The taxpayer would be able to elect a cash payment in lieu of the tax credit.
New Transmission Credits N/A The proposal would introduce a new ITC equal to 30% of a taxpayer’s investment in qualifying electric power transmission property placed in service after December 31, 2021 and before January 1, 2032.
 
The taxpayer would be able to elect a cash payment in lieu of the tax credit.
  The proposal would create a new 30% ITC for qualified electric transmission property subject to the prevailing wage and apprenticeship requirements.
 
Qualified property would have to be placed in service before January 1, 2032.
 
The taxpayer would be able to elect a cash payment in lieu of the tax credit.
The proposal would create a new 30% ITC for qualified electric transmission property subject to the prevailing wage and apprenticeship requirements.

Qualified property would have to be placed in service before January 1, 2032.

The taxpayer would be able to elect a cash payment in lieu of the tax credit.
Expand and enhance the carbon oxide sequestration credit A tax credit is available for the capture and sequestration of qualified carbon oxide using carbon capture equipment that is placed in service at a qualified facility on or after February 9, 2018. 
 
Qualified facilities must begin construction by January 1, 2016 and can claim credits for a 12-year period after the facility is placed in service.
The proposal would provide an enhanced credit for certain sectors and extend the commence construction date by five years to January 31, 2031.
 
The taxpayer would be able to elect a cash payment in lieu of the tax credit.
  The proposal would increase the IRC Sec. 45Q carbon capture tax credit for “direct air capture facilities” and extend the credit to facilities that begin construction before December 31, 2031.
 
To qualify, direct air capture facilities would have to capture no less than 1,000 metric tons of carbon oxide per year and electricity generating facilities would have to capture no less than 18,750 tons and not less than 75% of the carbon oxide emissions. Other facilities would need to capture no less than 12,500 metric tons, and not less than 50% of the carbon oxide emissions.
 
The prevailing wage and apprenticeship requirements would need to be met to claim the credit at the bonus rate.
 
The taxpayer would be able to elect a cash payment in lieu of the tax credit.
The proposal would extend the credit to facilities that began construction before December 31, 2031.
 
To qualify, direct air capture facilities would have to capture no less than 1,000 metric tons of carbon oxide per year and electricity generating facilities would have to capture no less than 18,750 metric tons and no less than 75% of the total carbon emissions. Other facilities would need to capture no less than 12,500 metric tons of carbon oxide.
 
The proposal would provide a base credit rate of $17 or a bonus credit rate of $85 per metric ton of carbon oxide captured for geological storage and a base credit rate of $12 or a bonus credit rate of $60 per metric ton of carbon captured and utilized for an allowable use.
 
The prevailing wage and apprenticeship requirements would need to be met to claim the credit at the bonus rate.
 
The taxpayer would be able to elect a cash payment in lieu of the tax credit.
Credit for electricity generation from existing nuclear power facilities N/A The proposal would create an allocated production credit for electricity generation from eligible
existing nuclear power facilities that bid for the credits.

The first bid window would commence on January 1, 2022 and the last window would commence on January 1, 2030. 

The taxpayer would be able to elect a cash payment in lieu of the tax credit.
  The proposal would add IRC Sec. 45W that would provide a credit for the production of electricity from a qualified nuclear power facility of 1.5 cents per kw hour if the prevailing wage and apprenticeship requirements are met.
 
The taxpayer would be able to elect a cash payment in lieu of the tax credit.
The proposal would add IRC Sec. 45W that would provide a credit for the production of electricity from a qualified nuclear power facility of 1.5 cents per kw hour if the prevailing wage and apprenticeship requirements are met.

The taxpayer would be able to elect a cash payment in lieu of the tax credit.
Tax credits for qualifying advanced energy manufacturing IRC Sec. 48C authorized the Department of the Treasury to
award $2.3 billion in tax credits to promote investment and job creation in
clean energy manufacturing. The tax credit is equal to 30% of the eligible investment in
qualifying advanced energy projects.  

The entire $2.3 billion has been awarded and Congress has not authorized additional funding.
The proposal would modify and expand IRC Sec. 48C. The proposal would authorize another $10 billion of Sec. 48C credits for investments in eligible property.  
The proposal would be effective after December 31, 2021.

The taxpayer would be able to elect a cash payment in lieu of the tax credit.
  The proposal would revive the IRC Sec. 48C 30% qualified advanced energy property credit. 

The prevailing wage and apprenticeship requirements would have to be met to qualify for the credit.

The taxpayer would be able to elect a cash payment in lieu of the tax credit.
The proposal would revive the IRC Sec. 48C qualified advanced energy property credit. 

Projects would receive a base credit rate of 6% or a bonus rate of 30%.  In order to qualify for the 30% bonus rate, the prevailing wage and apprenticeship requirements would have to be met. 

The taxpayer would be able to elect a cash payment in lieu of the tax credit.
Advanced Manufacturing Investment Credit N/A       The proposal would add new IRC Sec. 48E that would provide an ITC up to 25% for advanced manufacturing facilities. 

The credit would be available for qualified property that begins construction before January 1, 2027.

The prevailing wage and apprenticeship requirements would have to be met to qualify for the credit rate of 25%.

The taxpayer would be able to elect a cash payment in lieu of the tax credit.
Advanced Manufacturing Production Credit N/A       The provision would add new IRC Sec. 45AA that provides a production credit for each eligible component that is produced and sold. 

Eligible components would include solar polysilicon, wafers, cells and modules, and wind blades, nacelles, towers and offshore foundations. 

The credit generally would be provided on a mass or watt capacity basis. 

The credit allowed for eligible components would be increased by 10% if the final assembly of the components is at a facility in the U.S. that operates under a union-negotiated collective bargaining agreement.

The credit would be provided for eligible components produced and sold before January 1, 2027. For components sold after that date, the credit would be reduced by 25% annually and would be unavailable for components sold in 2030 and thereafter.

The taxpayer would be able to elect a cash payment in lieu of the tax credit.
Establish tax credits for heavy and medium-duty zero emission vehicles A nonrefundable tax credit is available for vehicles and light trucks weighing less than 14,000 pounds that are propelled by an electric motor. The proposal would provide a business tax credit for new medium- and heavy-duty zero emission vehicles.
 
The credit would be based on the vehicle class and be reduced over time based on the purchase date.
 
The taxpayer would be able to elect a cash payment in lieu of the tax credit.
  The proposal would provide: (1) a refundable new qualified plug-in electric drive vehicle credit for individuals; (2) a credit for previously-owned qualified plug-in electric drive motor vehicles; (3) a credit for qualified commercial vehicles; and (4) a credit for qualified fuel cell motor vehicles. The proposal would provide: (1) a refundable new qualified plug-in electric drive vehicle credit for individuals; (2) a credit for previously-owned qualified plug-in electric drive motor vehicles; (3) a credit for qualified commercial vehicles; and (4) a credit for qualified fuel cell motor vehicles.
 
For the refundable new qualified plug-in vehicle credit, the taxpayer would be able to elect to transfer the credit to the vehicle dealer if the dealer meets certain requirements.
Extend and enhance the Electric Vehicle Charging Station Credit An investment tax credit equal to 30% of the cost of alternative fuel vehicle refueling property is available. It is capped at $1,000 for refueling property installed at a taxpayer’s residence and at $30,000 for refueling property installed for commercial use. The credit is set to expire on December 31, 2021. The proposal would allow taxpayers to claim the tax credit on a per-device basis, increase the tax credit limit on individual devices to $200,000 and extend the tax credit for five years through December 31, 2026. 

The $1,000 tax credit for refueling property installed at a taxpayer’s residence
would not increase but would be extended for five years.

Taxpayers would have the option to elect a cash payment in lieu of the general business
tax credit (i.e., a direct pay option). 
  The proposal would extend the existing IRC Sec. 30C credit for alternative fuel refueling property through December 31, 2031.   The proposal would extend the alternative fuel vehicle refueling property credit to December 31, 2031.

The credit for zero-emissions charging and refueling would provide a base credit of 6% for expenses up to $100,000 and 4% for allowable expenses in excess of $100,000. It also would provide an alternative bonus credit level of 30% for expenses up to $100,000 and 20% thereafter if the prevailing wage and apprenticeship requirements are met.

The taxpayer would be able to elect a cash payment in lieu of the tax credit.
Sustainable Aviation Fuel Credit N/A The proposal would introduce a production tax credit of $1.50 per gallon for sustainable aviation.
fuel that achieves at least a 50% reduction in emissions relative to conventional jet fuel.
 
The credit would be offered for fuel produced after December 31, 2021 and before January 1, 2028.
  The proposal would add IRC Sec. 40B, establishing a refundable blenders tax credit for each gallon of sustainable aviation fuel sold as part of a qualified fuel mixture. 

The credit would be determined on a sliding scale from $1.25 to $1.75 per gallon, depending on the reduction in the lifecycle emissions of the fuel. 

The taxpayer would be able to elect to claim this credit against its excise tax liability under IRC Sec. 4041.

The credit would apply to fuel sold or used after December 31, 2022 and before January 1, 2032.
The proposal would extend the existing IRC Sec. 30C credit for alternative fuel refueling property through December 31, 2031.  
The proposal would extend the alternative fuel vehicle refueling property credit to December 31, 2031.

The credit for zero-emissions charging and refueling would provide a base credit of 6% for expenses up to $100,000 and 4% for allowable expenses in excess of $100,000. It also would provide an alternative bonus credit level of 30% for expenses up to $100,000 and 20% thereafter if the prevailing wage and apprenticeship requirements are met.

The taxpayer would be able to elect a cash payment in lieu of the tax credit.
Extension of incentives for biodiesel, renewable diesel and alternative fuels The credit for biodiesel and renewable diesel under IRC Sec. 40(A) is scheduled to expire on December 31, 2022.     The proposal would extend the income and excise tax credits for biodiesel and biodiesel mixtures at $1 per gallon to December 31, 2031.

The proposal would extend the $.10 per gallon small agri-biodiesel producer credit to December 31, 2031.  

It also would extend the $.50 per gallon excise tax credit for alternative fuels and alternative fuel mixtures to December 31, 2031.
The proposal would extend the income and excise tax credits for biodiesel and biodiesel mixtures at $1 per gallon to December 31, 2026.

The proposal would extend the $.10 per gallon small agri-biodiesel producer credit to December 31, 2031.  

It also would extend the $.50 per gallon excise tax credit for alternative fuels and alternative fuel mixtures to December 31, 2026.
Clean Hydrogen
Credit
N/A The proposal would introduce a low-carbon hydrogen production credit.   
 
The credit would be indexed annually for inflation measured after the facility is placed into service, based on the initial amount of $3 per kilogram of hydrogen between 2022 and 2024 and $2 per kilogram between 2025 and 2027.
 
The taxpayer would be able to elect a cash payment in lieu of the tax credit.
  The proposal would add IRC Sec. 45X, which would provide a credit for the production of clean hydrogen at a qualified facility.
 
The credit would be available beginning in 2022 for a 10-year period starting on the date the facility was placed in service. This credit does not apply to any facility the construction of which begins after December 31, 2028.
 
The amount of the credit would depend on the reduction in the lifecycle greenhouse gas emissions as compared with hydrogen produced by steam-methane reforming, with the credit per kilogram of clean hydrogen equal to $3 multiplied by an applicable percentage.
 
The prevailing wage and apprenticeship requirements would have to be met to qualify for the credit.
The proposal would create new IRC Sec. 45X, which would provide a tax credit for the production of clean hydrogen produced at a qualified facility.

The credit would be available beginning in 2022 for a 10-year period starting on the date the facility was placed in service.

The credit would be equal to the applicable percentage of $.60 or the bonus rate of $3 multiplied by the volume (in kilograms) of clean hydrogen produced.

The applicable percentage would range from 8.4% to 100% of the rates referenced above, depending on emission specifications.

The taxpayer would be able to elect to claim the 30% ITC in lieu of the hydrogen production credit if the prevailing wage and apprenticeship requirements are met.

The taxpayer would be able to elect a cash payment in lieu of the tax credit.
Extension, increase and modifications of Nonbusiness Energy Property Credit Taxpayers can claim deductions and tax credits for investments in energy efficiency property and improvements for their homes and businesses. The proposal would extend the IRC Sec. 25C tax credit for five years and increase the lifetime limit to $1,200 for property placed in service after December 31, 2021 and before January 1, 2027.
 
The credit rate would be increased to 15% for qualified energy efficiency improvements, and the credit amounts for certain types of residential energy property expenditure would be increased.
  The proposal would extend the energy property credit for nonbusiness energy property under IRC Sec. 25C to property placed in service before January 1, 2032. Other changes to the credit would apply as from January 1, 2022, including: (1) limiting the overall credit to $1,200 annually; (2) increasing the percentage of the credit for installing qualified energy efficiency improvements to 30% of the cost; and (3) expanding the credit to cover the costs of home energy audits, allowing a 30% credit of such costs up to $150. The proposal would extend the nonbusiness energy property credit to property placed in service before January 1, 2032. The provision would modify and expand the credit by: (1) increasing the credit for installing qualified energy efficiency improvements from 10% of cost to 30%; (2) replacing the lifetime cap on credits with a $1,200 annual credit limitation (excluding expenditure for geothermal and air source heat pumps and biomass stoves); (3) updating various standards; (4) requiring manufacturers and taxpayers to comply with reporting requirements; and (5) expanding the credit to cover the costs of home energy audits, allowing a credit of 30% of such costs up to a maximum credit of $150.
Residential energy-efficient property The credit for residential energy-efficient property does not apply to property placed in service after December 31, 2023. The proposal would grant a full 30% credit for property placed in service after 2021 and before 2027, phasing down over a five-year period.   The proposal would extend the full 30% credit for the cost of qualified residential energy-efficient property expenditure through December 31, 2031. The provision would phase down to 26% in 2032 and to 22% in 2033. The proposal would extend the full 30% credit for the cost of qualified residential energy efficiency property expenditure to December 31, 2031.

The credit would phase down to 26% in 2032 and 22% in 2033 and would expire on December 31, 2033.

The provision also would expand the definition of eligible property to include battery storage technology and make the credit refundable starting on January 1, 2023.
Extension, increase and modification of new energy- efficient home credit IRC Sec. 45L provides a tax credit for the construction of new energy-efficient homes
that are purchased on or before December 31, 2021. IRC Sec. 45L expires on December 31, 2021.
The proposal would extend IRC Sec. 45L for five years to December 31, 2026 and increase the credit from $2,000 to $2,500.   The proposal would extend the IRC Sec. 45L new energy-efficient home credit through December 31, 2031. The proposal would extend current law to December 31, 2031 and enhance the provisions.
Green energy publicly traded partnerships Publicly traded partnerships are treated as corporations and taxed as such unless at least 90% of their gross income consists of qualifying income, which includes certain passive income and income and gains from the exploration, development, mining, production, processing, refining or transportation and marketing of any mineral or natural resource.     The proposal would expand the definition of qualified income for publicly traded partnerships to include income derived from green and renewable energy, including certain activities relating to energy production eligible for the PTC, property eligible for the ITC, renewable fuels and energy and fuel from carbon sequestration projects eligible for credits under IRC Sec. 45Q. The proposal would expand the definition of qualified income for publicly traded partnerships to include income derived from green and renewable energy, including certain activities relating to energy production eligible for the PTC, property eligible for the ITC, renewable fuels and energy and fuel from carbon sequestration projects eligible for credits under IRC Sec. 45Q.
Clean electricity production and investment credits       The proposal would add IRC Sec. 48E, which would provide a 30% ITC for qualified “zero emissions facilities.”

The credit would be subject to an annual credit limitation of $250 million for each of calendar years 2022 through 2031 and would expire thereafter.

The Secretary of the Treasury, in consultation with the Secretary of Energy and the Administrator of the Environmental Protection Agency, would select which facilities are allocated these credits based on certain criteria.

Unused credit amounts would be available for carryover until the credit expires after December 31, 2031.

No credit would be allocated if the prevailing wage and apprenticeship requirements are not met.
The proposal would create an emissions-based incentive that would be neutral and flexible between clean electricity technologies. 

The taxpayer would be able to choose between a PTC under IRC Sec. 45BB or an ITC under Sec. 48F, which would be based on the carbon emissions of the electricity generated, measured as grams of carbon dioxide equivalents (CO2e) emitted per KWh generated. Any power facility of any technology would qualify for the credits, provided the facility’s carbon emissions are at or below zero.

The prevailing wage and apprenticeship requirements would have to be met to qualify for the credit.

The taxpayer would be able to elect a cash payment in lieu of the tax credit.