The House has passed the Build Back Better Plan. The Bill now goes to the Senate, where additional compromises and changes could be made. Here are the Plan’s tax provisions and how they could affect you.
The Democratic Majority of the House Ways and Means Committee has released tax proposals to be included in proposed budget reconciliation legislation. These proposals present several new spending initiatives in the areas of infrastructure, green energy, social safety net, and prescription drugs. To raise revenue, the tax proposals include additional tax law changes.
The American Rescue Plan Act changed the way that the Child Tax Credit is paid to eligible parents for 2021. Instead of being claimed as a credit on your income tax return as was previously the case, starting this month, one-half of the amount of the credit will be paid monthly via a direct deposit to your checking account or a physical check mailed to you. The amount of the credit will also increase to $3,600 for children under the age of 6 and $3,000 for children ages 6 to 17. The credit was only $2,000 prior to this change.
President Biden recently proposed the American Families Plan which calls for an increased audit rate and higher income taxes. The proposed changes could require proactive tax planning now to determine the best timing of income recognition. The Plan includes several new spending initiatives in the areas of education, childcare, paid leave, nutrition, unemployment insurance, and tax credits.
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