Tax Provisions in the “Build Back Better Act:” The House Ways and Means Committee’s Legislative Recommendations

Tax Provisions in the “Build Back Better Act:” The House Ways and Means Committee’s Legislative Recommendations

Tax Provisions in the “Build Back Better Act:”
The House Ways and Means Committee’s
Legislative Recommendations
September 28, 2021
Congressional Research Service
https://crsreports.congress.gov
R46923

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Tax Provisions in the “Build Back Better Act"

Contents
Tables
Table 1. Subtitle B: Retirement ....................................................................................................... 3
Table 2. Subtitle F: Infrastructure Finance and Community Development ..................................... 5
Table 3. Subtitle G: Green Energy ................................................................................................. 13
Table 4. Subtitle H: Social Safety Net ........................................................................................... 28
Table 5. Subtitle I: Responsibly Funding our Priorities ................................................................ 45
Table 6. Subtitle J: Drug Pricing ................................................................................................... 63
Table 7. Estimated Budgetary Effects of Tax Provisions in Subtitle F “Infrastructure
Financing and Community Development” of the “Build Back Better Act” ............................... 65
Table 8. Estimated Budgetary Effects of Tax Provisions in Subtitle G “Green Energy” of
the “Build Back Better Act” ....................................................................................................... 68
Table 9. Estimated Budgetary Effects of Tax Provisions in Subtitle H “Social Safety Net”
of the “Build Back Better Act” ................................................................................................... 71
Table 10. Estimated Budgetary Effects of Tax Provisions in Subtitle I “Responsibly
Funding our Priorities” of the “Build Back Better Act” ............................................................. 73
Table 11. Estimated Budgetary Effects of Tax Provisions in Subtitle J “Drug Pricing” of
the “Build Back Better Act” ....................................................................................................... 81
Table 12. Summary Estimated Budgetary Effects of Tax Provisions in the “Build Back
Better Act,” by Subtitle .............................................................................................................. 81

Contacts
Author Information ........................................................................................................................ 83

Tax Provisions in the “Build Back Better Act"

n September 14-15, 2021, the House Ways and Means Committee marked up and
approved legislative recommendations for the budget reconciliation legislation, also
O known as the “Build Back Better Act.”1 These recommendations were provided pursuant
to the reconciliation instructions included in S.Con.Res. 14, the Concurrent Budget Resolution for
FY2022.2 Subtitles B, F, G, H, I, and J of the Title XIII Build Back Better Act contain tax
provisions, and are hereby identified as the “tax provisions in the Build Back Better Act,”
pursuant to the reconciliation instructions provided in S.Con.Res. 14, the Concurrent Budget
Resolution for FY2022.3
This report summarizes the tax provisions in the Build Back Better Act, including
 modifications to individual income taxes levied on high-income individuals that
would increase revenues, including
 an increase in the top individual marginal tax rate to 39.6% for tax years
before 2026;
 modifications to the taxes on long-term capital gains and qualified dividends,
including an increase in the top tax rate to 25%;
 the application of the net investment income tax to trade or business income
for certain filers;
 making permanent limitations on excess business losses of noncorporate
taxpayers; and
 establishing a surcharge on high-income individuals, trusts, and estates;
 an increase in the corporate income tax rate to 26.5%;
 modifications to the treatment of international taxes that would generally increase
revenues, including changes to
 the deduction for foreign-derived intangible income;
 foreign tax credit limitations; and
 the tax on global intangible low-taxed income;
 a temporary extension of and modifications to the enhancements made to the
child tax credit in the American Rescue Plan Act of 2021 (ARPA; P.L. 117-2),
with a permanent extension of full refundability beginning in 2026;
 a permanent extension of enhancements to the child and dependent care tax credit
and earned income tax credit in the American Rescue Plan Act of 2021 (ARPA;
P.L. 117-2); and
 modifications to the tax treatment of the energy sector that would generally
reduce revenues; including
 extension and modification of the credit for electricity produced from certain
renewable resources;

1 Legislative text for the Build Back Better Act is available at
https://docs.house.gov/meetings/BU/BU00/20210925/114090/BILLS-117pih-BuildBackBetterAct.pdf.
2 For more information on the FY2022 budget resolution, see CRS Report R46893, S.Con.Res. 14: The Budget
Resolution for FY2022, by Megan S. Lynch.
3 Legislative text and staff summaries for Subtitles F, G, H, I, and J can be found at
https://waysandmeans.house.gov/media-center/press-releases/chairman-neal-announces-additional-days-markup-build-
back-better-act. Text for Subtitle B is available at https://waysandmeans.house.gov/media-center/press-
releases/chairman-neal-announces-markup-build-back-better-act.
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 extension and modification of the energy credit; and
 extension of excise tax credits for alternative fuels, biodiesel, and renewable
diesel.
References to relevant CRS reports are included where applicable. A series of tables in this report
summarize the tax provisions in the Build Back Better Act and provide links to CRS resources
containing background or additional information.
 Table 1 summarizes the provisions included in Subtitle B;
 Table 2 discusses provisions included in Subtitle F;
 Table 3 describes provisions included in Subtitle G;
 Table 4 summarizes provisions included in Subtitle H;
 Table 5 discusses provisions included in Subtitle I; and
 Table 6 describes provisions included in Subtitle J of the proposal.
The effective date for most of the proposed tax provisions would be after December 31,
2021. This is the case unless otherwise noted in the description of the provision.
Additionally, provisions would be permanent changes unless otherwise noted.
The Joint Committee on Taxation (JCT) released technical descriptions for all subtitles; revenue
estimates for Subtitles F, G, H, I, and J (see Table 7 through Table 11); and estimated
distributional effects for the tax provisions.4 Table 12 summarizes the overall revenue effects of
the tax provisions in the Build Back Better Act.

4 These documents can be found at https://www.jct.gov/publications/.
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Table 1. Subtitle B: Retirement
Section Title
Description
CRS Resources
Part 1—Automatic Contribution Plans and Arrangements
Tax Imposed on
This provision would impose an excise tax on
For background, see
Employers Failing
employers of $10 per participant per day for deferred

CRS Report R46441, Saving
to Maintain
contribution retirement plans (e.g., 401(k) plans) that
for Retirement: Household
Automatic
do not have an automatic enrol ment. In automatic
Decisionmaking and Policy
Contribution Plan
enrol ment, the employee participates in a plan unless
Options, by Cheryl R.
or Arrangement
he or she makes an election not to participate. The tax
Cooper and Zhe Li.
would not apply to employers with five or fewer
employees and would exclude government plans and

CRS Report R43439, Worker
church plans. It would not apply to employers in
Participation in Employer-
existence less than two years.
Sponsored Pensions: Data in
Brief, by John J. Topoleski
This provision would apply beginning in 2023.
and Elizabeth A. Myers.


CRS Insight IN11721, Data
on Retirement Contributions to
Defined Contribution (DC)
Plans, by John J. Topoleski
and Elizabeth A. Myers.
Deferral-Only
A Section 401(k) plan (one form of a defined
For background, see
Arrangements
contribution retirement plan) is required to satisfy a

CRS Report R43439, Worker
nondiscrimination test to ensure a broad range of
Participation in Employer-
workers (and not just highly compensated workers)
Sponsored Pensions: Data in
participate in the plan. The nondiscrimination test is
Brief, by John J. Topoleski
deemed satisfied if the employer contributes to the
and Elizabeth A. Myers.
plan, as specified, and notice requirements are met.

This provision would create a new defined contribution

CRS Insight IN11721, Data
on Retirement Contributions to
(i.e., 401(k)) plan that involves only employee
Defined Contribution (DC)
contributions (no employer contributions) and could be
Plans, by John J. Topoleski
deemed as satisfying the nondiscrimination test. To
and Elizabeth A. Myers.
qualify the plan would need to have automatic
enrol ment (i.e., an employee is automatically enrol ed

in the plan and must make an election not to
participate). The contributions would be limited to the
Individual Retirement Account (IRA) limits (currently
$6,000 per year with a catch-up contribution of $1,000
per year for individuals 50 and over). The plan would
need to satisfy notice requirements.
This provision would apply beginning in 2023.
Increase in Credit
Under current law, small employers with no more than

Limitation for
100 employees earning $5,000 or more are eligible for
Small Employer
a start-up credit for retirement plans (excluding
Pension Plan
individual retirement accounts). The credit is equal to
Startup Costs
50% of start-up costs for up to three years, limited to
Including for
the greater of (1) $500; or (2) the lesser of $250 for
Automatic
each non-highly compensated employee or a flat
Contribution Plans $5,000.
or Arrangements
This provision would increase the credit to 100% for
employers with no more than 25 employees earning
$5,000 or more (with no change in the dol ar limits).
The credit would be available for up to five years. The
employer credit would not be available for the deferral-
only 401(k) described above and would only be allowed
for plans with automatic enrol ment.
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Section Title
Description
CRS Resources
Credit for Certain
This provision would provide a $500 credit per

Small Employer
employer for the first four years for small employer
Automatic
individual retirement accounts and deferral-only plans
Retirement
with automatic enrol ment. Eligible employers would be
Arrangement
those with no more than 100 employees earning
$5,000 or more who did not maintain a qualified plan in
the previous three years.
Part 2—Saver’s Match
Matching
Current law allows a saver’s credit for up to 50% of the For background, see
Payments for
first $2,000 of contributions to an IRA or employer-

CRS In Focus IF11159, The
Elective Deferral
sponsored retirement plan. The credit rate declines
Retirement Savings
and IRA
with adjusted gross income: 50% for income up to
Contribution Credit, by Mol y
Contributions by
$39,500, 20% for income between $39,501 and
F. Sherlock.
Certain Individuals
$43,000, and 10% for income from $43,001 to $66,000.
Head of household returns have limits of 75% of these

levels, and single returns have limits of 50%. As with
most nonrefundable credits, taxpayers with little or no
income tax liability might not receive the ful benefit (or
any benefit) from the credit.
This provision would add a refundable credit (i.e., that
is not limited by income tax liability) of up to $500 per
taxpayer. The credit would equal 50% of the first
$1,000 of qualifying retirement contributions. This 50%
credit rate would phase out for married taxpayers filing
jointly for income between $50,000 and $70,000, with
phaseout rates of 75% of those amounts for head of
household returns and 50% for single returns.
Individuals qualifying for a credit of less than $100
would receive $100. The credit would be paid directly
to the individual’s retirement account and would
function as a form of matching contribution.
The provision would direct the Secretary of the
Treasury to make payments to each territory for the
total cost of providing the refundable saver’s credit to
their territorial residents.
This provision would apply beginning with 2025.
Deadline to Fund
Taxpayers would be able to elect on their return to

IRA with Tax
have all or part of their tax refunds contributed to an
Refund
individual retirement account with the amount counting
as a contribution for that tax year. This rule would
apply to returns timely filed. This provision would apply
beginning with 2023.
Source: CRS based on Subtitle B, Budget Reconciliation Legislative Recommendations Relating to Retirement.
Note: Provisions are effective in 2022 unless otherwise noted. The changes that would be made by the
provision are permanent, unless otherwise noted. “Section” citations refer to the section within the Internal
Revenue Code (IRC), 26 U.S.C., unless otherwise noted.
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Table 2. Subtitle F: Infrastructure Finance and Community Development
Section Title
Description
CRS Resources
Part 1—Infrastructure Financing
Subpart A—Bond Financing
Credit to Issuer
This provision would reinstate federal authority to
For background, see
for Certain
issue tax credit bonds (TCBs) and permanently

CRS Report R40523, Tax
Infrastructure
establish a TCB for certain infrastructure activities
Credit Bonds: Overview and
Bonds
beginning in tax year 2022. (TCBs provide bondholders
Analysis, by Grant A.
with a tax credit or issuers a direct payment in lieu of a
Driessen.
federal income tax exemption.) Eligible activities include
capital expenditures, operations or maintenance related
to capital expenditures, or public purchases or leasing
of rail corridor that meet the public purpose
qualifications specified in Section 141.
The tax credit available would equal the bond’s annual
interest payment multiplied by a rate of
(a) 35% for bonds issued in tax years 2022 through
2024;
(b) 32% for bonds issued in tax year 2025;
(c) 30% for bonds issued in tax year 2026; and
(d) 28% for bonds issued in tax year 2027 and all
subsequent years.
Authority to issue TCBs was repealed by P.L. 115-97
(commonly referred to as the “Tax Cuts and Jobs Act”
or TCJA), though TCBs issued prior to 2018 may stil
be active. Past TCBs included Build America Bonds,
which were established by the American Recovery and
Reinvestment Act (ARRA; P.L. 111-5). Build America
Bonds provided a 35% tax credit available to public
purpose bonds issued in 2009 and 2010.
Advance Refunding This provision would allow the interest income from
For background, see
Bonds
advance refunding bonds for certain activities to be

CRS Insight IN11079,
exempt from federal income taxation. Activities that
Advance Refunding Bonds and
qualify either meet (a) the public purpose qualifications
P.L. 115-97, by Grant A.
specified in Section 141, or (b) the qualified 501(c)(3)
Driessen.
private activity bond criteria specified in Section 145 to
be exempt from federal income taxation. Bonds
originally issued after 1985 would not be eligible for the
exemption if they had previously been advance
refunded.
Refunding bonds are bonds that are issued to replace
existing (outstanding) bonds previously issued for a
given purpose, typically to take advantage of more
favorable borrowing terms. Advance refunding
describes cases where the existing bond and refunding
bond are both outstanding for a period of longer than
90 days.
The TCJA (P.L. 115-97) eliminated the ability to issue
federally tax-exempt advance refunding bonds.
Permanent
This provision would expand the definition of a
For background, see
Modification of
qualified small issuer financial institution, as defined by

CRS Report RL31457,
Small Issuer
Section 265(b)(3), to include issuers who reasonably
Private Activity Bonds: An
Exception to Tax-
anticipate issuing no more than $30 mil ion (increased
Introduction, by Steven
Exempt Interest
from $10 mil ion) in tax-exempt obligations in tax year
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Section Title
Description
CRS Resources
Expense
2021. The small issuer obligation limit would be subject
Maguire and Joseph S.
Allocation Rules
to inflation-related increases in tax years after 2021.
Hughes.
for Financial
Qualified small issuer financial institutions are excepted
Institutions
from the general rule disallowing deductions for
interest expenses related to tax-exempt issuances
provided in Section 265.
The proposal would also permanently reclassify
qualified 501(c)(3) bonds so that they would be treated
as issued by exempt organizations for the deduction
rules provided in Section 265. ARRA previously
provided for identical treatment of qualified 501(c)(3)
bonds issued in 2009 and 2010.
Modifications to
This provision would expand the definition of qualified
For background, see
Qualified Small
small issue bonds to include facilities that produce

CRS Report RL31457,
Issue Bonds
intangible property and functionally related facilities. It
Private Activity Bonds: An
would also expand the small loan limitation to $30
Introduction, by Steven
mil ion in tax year 2022 (with increases indexed to
Maguire and Joseph S.
inflation in future years) in cases where the aggregate
Hughes.
amount of related capital expenditures (including those
financed with tax-exempt bond proceeds) made over a
six-year period would not be expected to exceed that
amount.
Previously ARRA expanded the definition of small issue
bonds to include producers of tangible and intangible
property for bonds issued in 2009 and 2010.
Expansion of
This provision would increase the first-time farmer
For background, see
Certain
expenditures exception to qualified private activity

CRS Report RL31457,
Exceptions to the
bond land use restriction from $450,000 to $552,500
Private Activity Bonds: An
Private Activity
for tax year 2021, with increases indexed to inflation in
Introduction, by Steven
Bond Rules for
future years.
Maguire and Joseph S.
First-Time
Hughes.
Farmers
Certain Water
This provision would remove certain qualified exempt
For background, see
and Sewer Facility
facility bonds used to provide facilities for the furnishing  CRS Report RL31457,
Bonds Exempt
of water or sewage facilities (as defined in Section 142)
Private Activity Bonds: An
from Volume Cap
from the annual volume cap on private activity bonds
Introduction, by Steven
on Private Activity
established in Section 146.
Maguire and Joseph S.
Bonds
Hughes.
Exempt Facility
This provision would add a category of qualified
For background, see
Bonds for Zero-
exempt facility (private activity) bonds (as specified in

CRS Report RL31457,
Emission Vehicle
Section 142) to include certain bonds financing certain
Private Activity Bonds: An
Infrastructure
facilities that would charge or fuel zero-emission
Introduction, by Steven
vehicles.
Maguire and Joseph S.
Hughes.

CRS Report R46864,
Alternative Fuels and Vehicles:
Legislative Proposals, by
Melissa N. Diaz.
Application of
This provision would require issuers of qualified
For background, see
Davis-Bacon Act
exempt facility bonds, a category of qualified private

CRS Report RL31457,
Requirements with activity bonds, to pay project workers at least locally
Private Activity Bonds: An
Respect to Certain prevailing wages plus fringe benefits, consistent with the
Introduction, by Steven
Exempt-Facility
Davis-Bacon Act, as amended.
Bonds
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Section Title
Description
CRS Resources
Maguire and Joseph S.
Hughes.

CRS Report R41469, Davis-
Bacon Prevailing Wages and
State Revolving Loan Programs
Under the Clean Water Act
and the Safe Drinking Water
Act.

CRS In Focus IF11927,
Federally Funded Construction
and the Payment of Locally
Prevailing Wages, by David H.
Bradley and Jon O.
Shimabukuro.
Subtitle B—Other Provisions Related to Infrastructure Financing
Credit for
This provision would create a 30% credit that state,

Operations and
local, and tribal governments could claim for the
Maintenance Costs operations and maintenance costs of qualified
of Government-
government-owned broadband systems. Expenses
Owned Broadband eligible for the credit would be capped at $400 per new
subscriber per year within a low-income community.
The credit rate would be reduced to 26% in 2027 and
24% in 2028, before expiring in 2029.
Part 2—New Markets Tax Credit
Permanent
This provision would permanently extend the New
For background, see
Extension of New
Markets Tax Credit (NMTC) with allocation amounts

CRS Report RL34402, New
Markets Tax
of $5 bil ion per year, indexed for inflation beginning in
Markets Tax Credit: An
Credit
2024. For 2022 and 2023, there would be additional
Introduction, by Donald J.
allocations of $2 bil ion and $1 bil ion, respectively.
Marples and Sean Lowry.
Part 3—Rehabilitation Tax Credit
Determination of
Under current law, the rehabilitation tax credit for
For background, see
Credit Percentage
historic structures is equal to 20% of qualified

CRS Committee Print
rehabilitation expenditures. This provision would set
CP10004, Tax Expenditures:
the tax credit percentage according to the taxable year
Compendium of Background
in which qualified rehabilitation expenditures were
Material on Individual
incurred. Specifically, the credit percentage would be
Provisions — A Committee
20% for expenditures incurred before 2020; 30% for
Print Prepared for the Senate
expenditures incurred in 2020 through 2025; 26% for
Committee on the Budget,
expenditures incurred in 2026; 23% for expenditures
2020, by Jane G. Gravelle et
incurred in 2027; and 20% for expenditures incurred
al. (pp. 363-368).
after 2027.
This provision would apply to property placed in
service after March 31, 2021.
Increase in the
This provision would increase the rehabilitation tax
For background, see
Rehabilitation
credit from 20% to 30% for certain smaller projects. A

CRS Committee Print
Credit for Certain
small project would be a project with qualified
CP10004, Tax Expenditures:
Small Projects
rehabilitation expenditures that do not exceed $3.75
Compendium of Background
mil ion. No more than $2.5 mil ion in qualified
Material on Individual
rehabilitation expenditures would qualify for the
Provisions — A Committee
increased credit.
Print Prepared for the Senate
Committee on the Budget,
2020, by Jane G. Gravelle et
al. (pp. 363-368).
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Section Title
Description
CRS Resources
Modification of
Under current law, a property must be “substantially
For background, see
Definition of
rehabilitated” to qualify for the rehabilitation tax credit.

CRS Committee Print
Substantially
A property is substantially rehabilitated if qualified
CP10004, Tax Expenditures:
Rehabilitated
rehabilitation expenditures made within a 24-month
Compendium of Background
period (60-month in certain cases) exceed the greater
Material on Individual
of 100% of the adjusted basis of such building, or
Provisions — A Committee
$5,000. This provision would reduce the 100% adjusted
Print Prepared for the Senate
basis threshold to 50% (the $5,000 threshold would
Committee on the Budget,
remain).
2020, by Jane G. Gravelle et
This provision would apply to 24-month and 60-month
al. (pp. 363-368).
periods ending after December 31, 2021.
Elimination of
This provision would eliminate the requirement that
For background, see
Rehabilitation
the basis of the property be reduced by the amount of

CRS Committee Print
Credit Basis
the rehabilitation credit.
CP10004, Tax Expenditures:
Adjustment

Compendium of Background
Material on Individual
Provisions — A Committee
Print Prepared for the Senate
Committee on the Budget,
2020, by Jane G. Gravelle et
al. (pp. 363-368).
Modification
Under current law, expenditures incurred in the
For background, see
Regarding Certain
rehabilitation of a property (or portion of) expected to

CRS Committee Print
Tax-Exempt Use
be leased to a tax-exempt entity do not qualify for the
CP10004, Tax Expenditures:
Property
tax credit. This proposal would, among other changes,
Compendium of Background
modify the definition of tax-exempt use to exclude
Material on Individual
nonresidential property leased to a tax-exempt entity
Provisions — A Committee
under a disqualified lease (as defined under Section
Print Prepared for the Senate
168(h)), except in cases where the tax-exempt entity is
Committee on the Budget,
a government entity.
2020, by Jane G. Gravelle et
al. (pp. 363-368).
Qualification of
This provision would allow the rehabilitation tax credit
For background, see
Rehabilitation
to be used to rehabilitate public school buildings that

CRS Committee Print
Expenditures for
were operated as a qualified public educational facility
CP10004, Tax Expenditures:
Public School
(as defined in Section 142(k)(1)) at any time during the
Compendium of Background
Buildings for
five-year period ending on the date of such
Material on Individual
Rehabilitation
rehabilitation and which continued to operate as a
Provisions — A Committee
Credit
qualified public educational facility.
Print Prepared for the Senate
The Department of the Treasury would be required to
Committee on the Budget,
report to Congress certain data pertaining to the
2020, by Jane G. Gravelle et
effects of this proposal within five years of enactment.
al. (pp. 363-368).
Part 4—Disaster and Resiliency
Exclusion of
Current law excludes qualified disaster relief and
For background, see
Amounts Received qualified disaster mitigation payments from gross

CRS Report R45864, Tax
from State-Based
income (Section 139). Starting in 2021, this provision
Policy and Disaster Recovery,
Catastrophe Loss
would allow qualified catastrophe mitigation payments
by Mol y F. Sherlock and
Mitigation
made by state or local government programs to be
Jennifer Teefy.
Programs
excluded from gross income. Qualified catastrophe
mitigation payments are amounts received by
individuals to make improvements to the individual’s
residence that would reduce the damage that would be
done to the residence by a windstorm, earthquake, or
wildfire. Taxpayers receiving these payments would not
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Section Title
Description
CRS Resources
be required to adjust their basis in property for which
payment is received.
Repeal of
The TCJA (P.L. 115-97) temporarily limited, from 2018
For background, see
Temporary
through 2025, personal casualty losses to those

CRS Report R45864, Tax
Limitation on
attributable to a federally declared disaster. This
Policy and Disaster Recovery,
Personal Casualty
provision would retroactively repeal this limit, al owing
by Mol y F. Sherlock and
Losses
a deduction for any casualty loss, not just disaster-
Jennifer Teefy.
related losses, after 2017.
This provision would direct the Treasury Secretary to
issue regulations or guidance (consistent with Revenue
Procedure 2017-60, as modified) to provide relief to
certain homeowners whose personal residences were
affected by deteriorating concrete foundations caused
by the presence of the mineral pyrrhotite.
Credit for
This provision would create a tax credit for 30% of
For background, see
Qualified Wildfire
qualified wildfire mitigation expenditures made after the  CRS In Focus IF10244,
Mitigation
date of enactment. Qualified wildfire mitigation
Wildfire Statistics, by Katie
Expenditures
expenditures would be specified wildfire mitigation
Hoover and Laura A.
expenditures made under a state wildfire mitigation
Hanson.
program that requires wildfire mitigation expenditures
be paid by the taxpayer and the state, for property

CRS In Focus IF10732,
owned or leased by the taxpayer. The credit amount
Federal Assistance for Wildfire
would be reduced below 30% if the taxpayer’s
Response and Recovery, by
percentage of the wildfire mitigation expenditure (as
Katie Hoover.
opposed to the state’s share) were to fall below 30%.
For business expenditures, the credit would be part of
the general business credit. For nonbusiness
expenditures, the credit would be a nonrefundable
individual income tax credit. If basis of property
includes qualified wildfire mitigation expenditures, the
property’s basis would be reduced by the amount of
any tax credits claimed.
Part 5—Housing
Subpart A—Low-Income Housing Tax Credit
Increase in State
This provision would increase state low-income
For background, see
Allocations
housing credit allocation authority for calendar years

CRS Report RS22389, An
2022 through 2028. States would receive $3.22 per
Introduction to the Low-Income
person in 2022, with a small population state allocation
Housing Tax Credit, by Mark
of $3,711,575; $3.70 per person in 2023, with a small
P. Keightley.
population state allocation of $4,269,471; $4.25 per
person in 2024, with a small population state allocation

CRS In Focus IF11335, The
of $4,901,620; and $4.88 per person in 2025, with a
Low-Income Housing Tax
small population state allocation of $5,632,880.
Credit: Policy Issues, by Mark
P. Keightley.
The allocation amounts for calendar years 2026, 2027,
and 2028 would be the 2025 allocation amount,
adjusted for inflation.
Tax-Exempt Bond
This provision would reduce the 50% tax-exempt bond
For background, see
Financing
financing requirement to 25% for bond obligations

CRS Report RS22389, An
Requirement
issued in calendar years 2022 through 2028. Credits
Introduction to the Low-Income
awarded to projects where the bond financing
Housing Tax Credit, by Mark
threshold is met do not reduce a state’s annual housing
P. Keightley.
credit allocation authority.

CRS In Focus IF11335, The
Low-Income Housing Tax
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Section Title
Description
CRS Resources
Credit: Policy Issues, by Mark
P. Keightley.
Buildings
This provision would require that at least 10% of a
For background, see
Designated to
state’s annual low-income housing credit allocation

CRS Report RS22389, An
Serve Extremely
authority be set-aside for projects that serve extremely
Introduction to the Low-Income
Low-Income
low-income households. The set-aside would apply to
Housing Tax Credit, by Mark
Households
projects where at least 20% of the units are rent-
P. Keightley.
restricted and occupied by households whose income
does not exceed the greater of 30% of area median

CRS In Focus IF11335, The
income, or 100% of the federal poverty line.
Low-Income Housing Tax
Credit: Policy Issues, by Mark
Projects requiring an increase in credits to be financially
P. Keightley.
feasible would receive a 50% basis boost. A state could
not award more than 15% of its credit authority to
such projects, and, if such a project utilizes tax-exempt
bond financing (and meets the bond financing
threshold), a state could not award more than 10% of
its private activity bond authority.
This provision would apply to allocations made after
December 31, 2021, and before January 1, 2032.
Inclusion of Rural
This provision would modify the definition of difficult
For background, see
Areas as Difficult
development areas (DDAs) to include “rural areas.”

CRS Report RS22389, An
Development
Projects in DDAs are eligible for a 30% basis boost. A
Introduction to the Low-Income
Areas
rural area would be defined as any nonmetropolitan
Housing Tax Credit, by Mark
area, or any rural area as defined in Section 520 of the
P. Keightley.
Housing Act of 1949. Section 42 of the IRC, which
applies to the LIHTC program, defines a

CRS In Focus IF11335, The
nonmetropolitan area as any county (or portion
Low-Income Housing Tax
thereof) which is not within a metropolitan statistical
Credit: Policy Issues, by Mark
area.
P. Keightley.
Repeal of Qualified This provision would repeal the qualified contract
For background, see
Contract Option
option, and thus limit the ability of a property owner to  CRS Report RS22389, An
exit the low-income housing tax credit (LIHTC)
Introduction to the Low-Income
program after the first 15 years. The qualified contract
Housing Tax Credit, by Mark
option allows a property owner to sell a LIHTC
P. Keightley.
property after 15 years. To exercise this option, a
property owner must request that the state housing

CRS In Focus IF11335, The
credit authority locate a buyer who wil purchase the
Low-Income Housing Tax
property and keep it in the program for another 15
Credit: Policy Issues, by Mark
years. The purchase price is determined by statute. If
P. Keightley.
the housing credit authority cannot locate a qualified
buyer, the affordability restrictions on the property are
phased out over three years.
This provision would apply to buildings that received a
credit allocation before January 1, 2022, or, in the case
of properties utilizing tax-exempt bonds, that received
a determination that the building was eligible to receive
tax credits.
Modification and
Under current law, a property may exit the low-
For background, see
Clarification of
income housing tax credit program after 15 years if a

CRS Report RS22389, An
Rights Relating to
right of first refusal option is exercised whereby the
Introduction to the Low-Income
Building Purchase
holder of the right (typically, a nonprofit organization
Housing Tax Credit, by Mark
who helped develop the property) purchases the
P. Keightley.
property. There appears to be a lack of clarity under
current law over whether a third-party offer to

CRS In Focus IF11335, The
purchase the property is a necessary prerequisite to
Low-Income Housing Tax
the authority to exercise the right of first refusal. This
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Section Title
Description
CRS Resources
provision would clarify that a third party offer is not
Credit: Policy Issues, by Mark
needed by changing the right of first refusal to a
P. Keightley.
purchase option. Among other changes, the provision
would also clarify that establishing a qualified purchase
option would not disallow any of the federal tax
benefits of the low-income housing tax credit.
Increase in Credit
This provision would give state low-income housing
For background, see
for Bond-Financed
credit authorities the discretion to provide a 30% basis

CRS Report RS22389, An
Projects
boost to properties utilizing tax-exempt bond financing
Introduction to the Low-Income
Designated by
if deemed necessary for financial feasibility.
Housing Tax Credit, by Mark
Housing Credit
This provision would apply to properties determined to
P. Keightley.
Agency
need a basis boost if such determination was made

before January 1, 2029.

CRS In Focus IF11335, The
Low-Income Housing Tax
Credit: Policy Issues, by Mark
P. Keightley.
Subpart B—Neighborhood Homes Investment Act
Neighborhood
This provision would provide new federal tax credits to For background, see
Homes Credit
offset the cost of constructing or rehabilitating owner-

CRS In Focus IF11335, The
occupied homes. The credits would be awarded to
Low-Income Housing Tax
project sponsors (e.g., developers), which would either
Credit: Policy Issues, by Mark
use the credits directly to offset development and
P. Keightley.
rehabilitation costs or sell the credits to investors to
raise capital for home construction. Each state would

be allowed to annually award an amount of credits
equal to the greater of $6 multiplied by its population,
or $8 mil ion. Annual allocation authority would be
adjusted for inflation. The credit amount would be
limited to no more than 35% of the lesser of qualified
development costs, or 80% of the national median sales
price for new homes as determined by the most recent
census data. Credits would be restricted to properties
with occupants whose income did not exceed 140% of
an area’s or state’s median income.
Part 6—Investment in Tribal Infrastructure
Treatment of
This provision would modify the treatment of Indian
For background, see
Indian Tribes as
tribes so that they are generally treated as states for

CRS Report RL31457,
States with
the purposes of issuing qualified private activity bonds.
Private Activity Bonds: An
Respect to Bond
This provision would direct the Secretary of the
Introduction, by Steven
Issuance
Treasury to establish a national bond volume cap based
Maguire and Joseph S.
on tribal population data for qualifying bonds issued in
Hughes.
tribal areas.
New Markets Tax
This provision would create a permanent New Markets
For background, see
Credit for Tribal
Tax Credit (NMTC) allocation for low-income tribal

CRS Report RL34402, New
Statistical Areas
areas and for projects that serve or employ tribal
Markets Tax Credit: An
members. The annual allocation amount would be $175
Introduction, by Donald J.
mil ion per year and would be adjusted for inflation
Marples and Sean Lowry.
beginning in 2024.
Inclusion of Indian
This provision would modify the definition of difficult
For background, see
Areas as Difficult
development areas (DDAs) for purposes of the low-

CRS Report RS22389, An
Development
income housing tax credit to include “Indian areas.”
Introduction to the Low-Income
Areas for
Projects in DDAs would be eligible for a 30% basis
Housing Tax Credit, by Mark
Purposes of
boost. An Indian area would be any Indian area as
P. Keightley.
Certain Buildings
defined in Section 4(11) of the Native American
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Section Title
Description
CRS Resources
Housing Assistance and Self Determination Act of

CRS In Focus IF11335, The
1996.
Low-Income Housing Tax
If an area were to be a DDA solely because it is an
Credit: Policy Issues, by Mark
Indian area, then a project would not be treated as
P. Keightley.
being located in a DDA unless it were assisted or
financed under the Native American Housing
Assistance and Self Determination Act of 1996, or the
project sponsor were an Indian tribe, or whol y owned
or control ed by an Indian tribe or a tribally designated
housing entity.
This provision would apply to buildings placed in
service after December 31, 2021.
Part 7—Investments in the Territories
Possessions
This provision would create a new tax credit for

Economic Activity
certain domestic corporations actively conducting
Credit
business in specified possessions. For these
corporations, the credit amount would be equal to 20%
of wage and benefit expenses in the possessions. The
amount of creditable wages and benefits would be
capped at $50,000 per ful time equivalent employee
per year.
Additional New
This provision would create a permanent New Markets
For background, see
Markets Tax
Tax Credit allocation for low-income communities in

CRS Report RL34402, New
Credit Allocations
U.S. territories. The annual allocation amount would be
Markets Tax Credit: An
for the Territories
$100 mil ion per year and would be adjusted for
Introduction, by Donald J.
inflation beginning in 2024. 80% of the allocation would
Marples and Sean Lowry.
be directed toward projects in Puerto Rico, and the
remaining 20% would be directed toward the other
U.S. territories.
Source: CRS based on Subtitle F, Budget Reconciliation Legislative Recommendations Relating to Infrastructure
Financing and Community Development.
Note: Provisions are effective in 2022 unless otherwise noted. The changes that would be made by the
provision are permanent, unless otherwise noted. “Section” citations refer to the section within the Internal
Revenue Code (IRC), 26 U.S.C., unless otherwise noted.

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Table 3. Subtitle G: Green Energy
Section Title
Description
CRS Resources
Part 1—Renewable Electricity and Reducing Carbon Emissions
Extension and
Current law provides a production tax credit (PTC), at
For background, see
Modification of
a rate of 2.5 cents or 1.3 cents per kilowatt hour

CRS Report R43453, The
Credit for
(kWh) depending on the technology used, for the first
Renewable Electricity
Electricity
10 years of production at qualifying renewable
Production Tax Credit: In Brief,
Produced from
electricity production facilities that begin construction
by Mol y F. Sherlock.
Certain
before 2022. The credit amount is adjusted for
Renewable
inflation. This provision would extend the PTC for

CRS Report R46865, Energy
Resources
wind, biomass, geothermal, solar (which previously
Tax Provisions: Overview and
expired at the end of 2005), landfil gas, trash, qualified
Budgetary Cost, by Mol y F.
hydropower, and marine and hydrokinetic resources
Sherlock.
through 2031, with the credit scheduled to phase down 
CRS Report R46451, Energy
by 20% in 2032 and 40% in 2033.
Tax Provisions Expiring in
For large facilities (facilities with a maximum output of
2020, 2021, 2022, and 2023
at least one megawatt of electricity), the credit is
(“Tax Extenders”), by Mol y F.
extended at a rate equal to 20% of the otherwise
Sherlock, Margot L.
applicable rate (i.e., extended at 0.5 cents per kWh if
Crandall-Hol ick, and
the tax credit was 2.5 cents per kWh or extended at
Donald J. Marples.
0.26 cents per kWh if the tax credit was 1.3 cents per

CRS Report R45171,
kWh). Large facilities may be eligible for the ful credit
Registered Apprenticeship:
amount if they pay prevailing wages during the
Federal Role and Recent
construction phase and during the first 10 years of
Federal Efforts, by Benjamin
operation and if registered apprenticeship requirements
Col ins.
are met.

CRS In Focus IF11927,
A “bonus credit” amount would be provided for
Federally Funded Construction
projects that meet domestic content requirements to
and the Payment of Locally
certify that the steel, iron, and manufactured products
Prevailing Wages, by David H.
used in the facility were domestically produced. The
Bradley and Jon O.
bonus credit amount would be 2% of the credit
Shimabukuro.
amount, or 10% for projects that meet wage and
workforce requirements.
Large facilities not meeting domestic content
requirements would be limited in the amount of the
credit that could be received as direct pay (see
“Elective Payment for Energy Property and Electricity
Produced from Certain Renewable Resources, Etc.”).
The limit would be 90% in 2024, 85% in 2025, and zero
afterward. This limit can be waived if materials are not
available domestically or if including domestic materials
would increase the facility’s construction cost by more
than 25%.
The proposal also extends the option to claim the
energy investment tax credit (ITC) in lieu of the PTC.
Extension and
Current law provides a temporary investment tax
For background, see
Modification of
credit (ITC) for investments in certain energy property.  CRS In Focus IF10479, The
Energy Credit
This provision would extend and modify the ITC. The
Energy Credit or Energy
credit would be extended at the ful rate (30% for
Investment Tax Credit (ITC),
solar, fuel cells, small wind, and waste energy recovery
by Mol y F. Sherlock.
property; 10% for combined heat and power,
microturbine, and geothermal heat pumps) through

CRS Report R46865, Energy
2031. The 30% rate would be reduced to 26% in 2032
Tax Provisions: Overview and
and 22% in 2033. Property must be placed in service by
Budgetary Cost, by Mol y F.
the end of 2035. This list of qualifying property is
Sherlock.
expanded to include energy storage technology,
qualified biogas property, electrochromic glass, and
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Section Title
Description
CRS Resources
microgrid control ers at the 30% rate. Linear generator

CRS Report R46451, Energy
assemblies would be added to the definition of
Tax Provisions Expiring in
qualifying fuel cells.
2020, 2021, 2022, and 2023
For large facilities (facilities with a maximum output of
(“Tax Extenders”), by Mol y F.
at least one megawatt of electricity) the credit would
Sherlock, Margot L.
be extended at a rate equal to 20% of the otherwise
Crandall-Hol ick, and
applicable rate (e.g., if the tax credit was 30%, the
Donald J. Marples.
credit for a large facility would be 6%). Large facilities

CRS Report R45171,
may be eligible for the ful credit amount if they pay
Registered Apprenticeship:
prevailing wages during the construction phase and
Federal Role and Recent
during the first five years of operation and if registered
Federal Efforts, by Benjamin
apprenticeship requirements are met.
Col ins.
A “bonus credit” amount would be provided for

CRS In Focus IF11927,
projects that meet domestic content requirements to
Federally Funded Construction
certify that the steel, iron, and manufactured products
and the Payment of Locally
used in the facility were domestically produced. The
Prevailing Wages, by David H.
bonus credit amount would be 2% of the credit
Bradley and Jon O.
amount, or 10% for projects that meet wage and
Shimabukuro.
workforce requirements.
Large facilities not meeting domestic content
requirements would be limited in the amount of the
credit that could be received as direct pay (see
“Elective Payment for Energy Property and Electricity
Produced from Certain Renewable Resources, Etc.”).
The limit would be 90% in 2024, 85% in 2025, and zero
afterward. This limit can be waived if materials are not
available domestically or if including domestic materials
would increase the facility’s construction cost by more
than 25%.
Increase in Energy
This provision would allow for the allocation of 1.8
For background on the ITC, see
Credit for Solar
gigawatts for “environmental justice solar capacity”

CRS In Focus IF10479, The
Facilities Placed in
credits annually from 2022 through 2031. Taxpayers
Energy Credit or Energy
Service in
receiving a capacity allocation may be entitled to tax
Investment Tax Credit (ITC),
Connection with
credits. Specifically, projects receiving an allocation that
by Mol y F. Sherlock.
Low-Income
are located in a low-income community would be
Communities
eligible for a 10% bonus investment tax credit, while
For background on housing
projects that are part of a low-income residential
assistance programs, see
building project or qualified low-income economic

CRS Report RL34591,
benefit project would be eligible for a 20% bonus
Overview of Federal Housing
investment credit. No facility can receive more than a
Assistance Programs and
maximum 20% bonus investment credit under this
Policy, by Maggie McCarty,
provision.
Libby Perl, and Katie Jones.
Qualifying solar facilities would include those with a

nameplate capacity of 5 megawatts or less, and
qualifying property would include energy storage
property installed in connection with the solar
property and interconnection property.
The Secretary of the Treasury would consult with the
Secretary of Energy and EPA Administrator in
determining allocations. Facilities selected for
allocations would be facilities that would result in the
greatest health and economic benefits for individuals in
low-income communities, including the ability to
withstand extreme weather events; the greatest
employment and wages for individuals in low-income
communities; and the greatest engagement with,
outreach to, or ownership by, individuals in low-income
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Section Title
Description
CRS Resources
communities. Facilities receiving an allocation wil have
certain information disclosed to the public and be
required to have the facility placed in service within
four years.
Elective Payment
This provision would allow taxpayers to treat certain
For background, see
for Energy
tax credit amounts as payments of tax. Excess

CRS Report R45693, Tax
Property and
payments can be refunded to the taxpayer, allowing the
Equity Financing: An
Electricity
credits to be received as “direct pay.” This direct
Introduction and Policy
Produced from
payment would be allowed for the Section 30C credit
Considerations, by Mark P.
Certain
for alternative fuel refueling property, the Section 45
Keightley, Donald J. Marples,
Renewable
renewable electricity production credit, the Section
and Mol y F. Sherlock.
Resources, Etc.
45Q carbon oxide sequestration credit, the Section 48
energy investment tax credit, and the Section 48C
qualifying advanced energy project credit. The direct
pay election would also be available to the new Section
48D investment credit for electric transmission
property; new Section 48E zero emission facility credit;
new Section 45X clean hydrogen production credit;
and new Section 45W zero-emission nuclear power
production credit.
Tax-exempt entities, including state and local
governments and Indian tribal governments, would be
treated as taxpayers eligible to elect a direct payment.
Special rules provide that in the case of U.S. territories,
for non-mirror code jurisdictions, Treasury would
reimburse territorial governments for any direct
payments made under similar programs. The provision
would only apply to mirror-code jurisdictions upon
election.
Investment Credit
This provision would create a new ITC for qualifying
For background, see
for Electric
electric transmission property, which includes property

CRS Report R45171,
Transmission
capable of transmitting at least 275 kilovolts, with a
Registered Apprenticeship:
Property
capacity of not less than 500 megawatts. Upgrades of
Federal Role and Recent
existing lines are treated as replacements. The new ITC
Federal Efforts, by Benjamin
would be 6% of qualifying investments, with a 30% ITC
Col ins.
available for projects that pay prevailing wages during
the construction phase and during the first five years of

CRS In Focus IF11927,
operation and for which registered apprenticeship
Federally Funded Construction
requirements are met.
and the Payment of Locally
Prevailing Wages, by David H.
“Bonus credit” amounts for domestic content and
Bradley and Jon O.
limits on direct pay related to domestic content, similar
Shimabukuro.
to those applying to the ITC (see “Extension and
Modification of Energy Credit”), would apply to this
new ITC as well.
The credit would be available for property placed in
service before December 31, 2031.
Zero Emissions
This provision would allow for the allocation of $250
For background, see
Facility Credit
mil ion in zero emissions facility credits annually from

CRS Report R45171,
2022 through 2031. The zero emission facility credit
Registered Apprenticeship:
would be a 30% ITC for a facility that (1) generates
Federal Role and Recent
electricity; (2) does not generate greenhouse gases; (3)
Federal Efforts, by Benjamin
uses a technology or process which in the previous
Col ins.
year had a market penetration level of less than 3% for
the commercial generation of electricity; and (4) is not

CRS In Focus IF11927,
eligible for the PTC, ITC, Section 45Q carbon oxide
Federally Funded Construction
sequestration credit, or advanced nuclear PTC. To be
and the Payment of Locally
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Section Title
Description
CRS Resources
eligible for allocations, facilities would be required to
Prevailing Wages, by David H.
pay prevailing wages and meet registered
Bradley and Jon O.
apprenticeship requirements. Allocation recipients
Shimabukuro.
would be publicly disclosed.
The Secretary of the Treasury would consult with the
Secretary of Energy and EPA Administrator in
determining allocations. Facilities selected for
allocations would be facilities that would result in the
greatest reduction of greenhouse gas emissions, have
the greatest potential for technological innovation and
deployment, and would result in the greatest reduction
of local environmental effects that are harmful to
human health.
Taxpayers could elect to receive the credit as “direct
pay,” and limits related to domestic content for direct
pay are similar to those applying to the ITC (discussed
above).
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Section Title
Description
CRS Resources
Extension and
Under current law, industrial carbon capture or direct
For background, see
Modification of
air capture facilities that begin construction by

CRS In Focus IF11455, The
Credit for Carbon
December 31, 2025, can qualify for the Section 45Q
Tax Credit for Carbon
Oxide
tax credit for carbon oxide sequestration. This tax
Sequestration (Section 45Q),
Sequestration
credit can be claimed for carbon oxide captured during
by Angela C. Jones and
the 12-year period fol owing a qualifying facility’s being
Mol y F. Sherlock.
placed in service. Currently, the per metric ton tax
credit for geological y sequestered carbon oxide is set

CRS Insight IN11710, Carbon
to increase to $50 per ton by 2026 ($35 per ton for
Capture and Sequestration
carbon oxide that is reused, such as for enhanced oil
Tax Credit (“Section 45Q”)
recovery) and adjusted for inflation thereafter. This
Legislation in the 117th
provision would extend the start of construction
Congress, by Mol y F.
deadline to December 31, 2031.
Sherlock and Angela C.
Jones.
The amount of carbon oxide that must be captured at a
qualifying facility would be reduced to 1,000 metric

CRS Report R46451, Energy
tons annually for a direct air capture (DAC) facility,
Tax Provisions Expiring in
18,750 metric tons annually (not less than 75% of which
2020, 2021, 2022, and 2023
would otherwise have been released into the
(“Tax Extenders”), by Mol y F.
atmosphere) for an electricity generating facility, and
Sherlock, Margot L.
12,500 metric tons for any other facility (not less than
Crandall-Hol ick, and
50% of which would otherwise have been released into
Donald J. Marples.
the atmosphere).

CRS Report R45171,
For large facilities (facilities with a maximum output of
Registered Apprenticeship:
at least one megawatt of electricity), the credit would
Federal Role and Recent
be extended at a rate equal to 20% of the otherwise
Federal Efforts, by Benjamin
applicable rate (i.e., if the tax credit was $50 per metric
Col ins.
ton, the credit for a large facility would be $10 per

CRS In Focus IF11927,
metric ton). Large facilities may be eligible for the ful
Federally Funded Construction
credit amount if they pay prevailing wages during the
and the Payment of Locally
construction phase and during the first 12 years of
Prevailing Wages, by David H.
operation and if registered apprenticeship requirements
Bradley and Jon O.
are met.
Shimabukuro.
The credit amount for DAC would be increased to a
base rate of $36 per metric ton, meaning the credit
would be $180 per metric ton if wage and workforce
requirements were met. These amounts would be $26
and $130 per metric ton for carbon oxide captured
using DAC that is beneficially reused.
Green Energy
If 90% of a business’s gross income is qualifying income,
For background, see
Publicly Traded
the business can elect to be treated as a master limited

CRS Report R41893, Master
Partnerships
partnership (MLP), allowing the business to be taxed as
Limited Partnerships: A Policy
a partnership while ownership interests are tradable in
Option for the Renewable
financial markets. Qualifying income currently includes
Energy Industry, by Mol y F.
mining and natural resource income. This provision
Sherlock and Mark P.
would expand the definition of qualifying income to
Keightley.
include income derived from green and renewable
energy. These additions include income from certain
activities related to energy production eligible for the
PTC, energy property eligible for the ITC, renewable
fuels, and carbon sequestration projects eligible for
credits under Section 45Q.
Zero-Emission
This provision would create a new 1.5 cent per kWh
For background, see
Nuclear Power
tax credit for qualifying zero-emission nuclear power

CRS Report R42853,
Production Credit
produced and sold after December 31, 2021. Qualified
Nuclear Energy: Overview of
nuclear power facilities are taxpayer-owned facilities
Congressional Issues, by Mark
that use nuclear power to generate electricity that did
Holt.
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Section Title
Description
CRS Resources
not receive an advanced nuclear production tax credit

CRS Insight IN10725, The
allocation under Section 45J, and are placed in service
Advanced Nuclear Production
before the date of enactment (i.e., are existing nuclear
Tax Credit, by Mol y F.
power plants).
Sherlock and Mark Holt.
For large facilities (facilities with a maximum output of

CRS Report R45171,
at least one megawatt of electricity) the credit would
Registered Apprenticeship:
be extended at a rate equal to 20% of the otherwise
Federal Role and Recent
applicable rate (i.e., extended at 0.3 cents per kWh if
Federal Efforts, by Benjamin
the tax credit was 1.5 cents per kWh). Large facilities
Col ins.
may be eligible for the ful credit amount if they pay

prevailing wages and registered apprenticeship

CRS In Focus IF11927,
Federally Funded Construction
requirements are met.
and the Payment of Locally
The credit would be reduced when the price of
Prevailing Wages, by David H.
electricity increases. Credits would be reduced by a
Bradley and Jon O.
“reduction amount,” which is 80% of gross receipts
Shimabukuro.
(excluding certain state and local zero-emissions grants)
from electricity produced by the facility and sold over
the product of 0.5 cents (2.5 cents for projects that
qualify for the ful credit amount) times the amount of
electricity sold during the taxable year.
Credit amounts and amounts in the phaseout formula
are adjusted for inflation. Taxpayers could elect to
receive the credit as direct pay (discussed above).
The credit would terminate on December 31, 2026.
Part 2—Renewable Fuels
Extension of
Current law provides a 50-cents-per-gallon tax credit
For background, see
Incentives for
for alternative fuels and alternative fuel mixtures

CRS Report R46865, Energy
Biodiesel,
through 2021 and a $1.00-per-gallon tax credit for
Tax Provisions: Overview and
Renewable Diesel,
biodiesel and renewable diesel (with an additional
Budgetary Cost, by Mol y F.
and Alternative
$0.10-per-gallon tax credit for agri-biodiesel) through
Sherlock.
Fuels
2022. The biodiesel and renewable diesel mixtures tax
credit may be claimed as an instant excise tax credit

CRS Report R46451, Energy
against the blender’s motor and aviation fuels excise
Tax Provisions Expiring in
taxes. Credits in excess of excise tax liability may be
2020, 2021, 2022, and 2023
refunded. The biodiesel and small agri-biodiesel credits
(“Tax Extenders”), by Mol y F.
may be claimed as income tax credits. The alternative
Sherlock, Margot L.
fuels credit can be claimed as an excise tax credit or
Crandall-Hol ick, and
received as an outlay. The alternative fuels mixture
Donald J. Marples.
credit is an excise tax credit.
This provision would extend the existing tax credits for
alternative fuels and alternative fuel mixtures and
biodiesel and renewable diesel through December 31,
2031.
Extension of
Current law provides a $1.01-per-gallon income tax
For background, see
Second-
credit for second-generation biofuel production

CRS Report R46865, Energy
Generation Biofuel through 2021. This provision would extend the second-
Tax Provisions: Overview and
Incentives
generation biofuel producer tax credit through
Budgetary Cost, by Mol y F.
December 31, 2031.
Sherlock.

CRS Report R46451, Energy
Tax Provisions Expiring in
2020, 2021, 2022, and 2023
(“Tax Extenders”), by Mol y F.
Sherlock, Margot L.
Crandall-Hol ick, and
Donald J. Marples.
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Section Title
Description
CRS Resources
Sustainable
This provision would create a new tax credit for the
For background, see
Aviation Fuel
sale or mixture of sustainable aviation fuel starting in

CRS In Focus IF11696,
Credit
2023. The tax credit would have a base amount of
Aviation and Climate Change,
$1.25 per gallon, with a supplemental credit amount of
by Richard K. Lattanzio.
$0.01 per gallon for each percentage point by which the
lifecycle greenhouse gas emissions reduction
percentage for the fuel exceeds 50% (with a maximum
supplemental credit of $0.50 per gallon). Sustainable
aviation fuel is defined as liquid fuel that (1) meets the
requirements of either ASTM International Standard
D7566 or the Fischer Tropsch provisions of ASTM
International Standard D1655, Annex; (2) is not derived
from palm fatty acid distil ates or petroleum; and (3)
has been certified to achieve at least a 50% lifecycle
greenhouse gas reduction percentage as compared to
petroleum-based jet fuel.
The sustainable aviation fuel credit may be used to
offset fuel excise tax liability or, in the case of
insufficient fuel excise tax liability, be received as a
payment. Like the tax credit for biodiesel and
renewable diesel, there would be a coordinated income
tax credit. Credit amounts would be included in a
taxpayer’s gross income for income tax purposes.
The credit would expire after December 31, 2031.
Clean Hydrogen
This provision would create a new credit for the
For background, see
qualified production of clean hydrogen. The credit

CRS Report R45171,
would be available for qualified clean hydrogen
Registered Apprenticeship:
produced at a qualifying facility during the facility’s first
Federal Role and Recent
10 years of operation. The maximum credit amount
Federal Efforts, by Benjamin
would be $3.00 per kilogram (indexed for inflation) for
Col ins.
hydrogen that is produced through a process that, as
compared to hydrogen produced by steam methane

CRS In Focus IF11927,
reforming, achieves a percentage reduction in lifecycle
Federally Funded Construction
greenhouse gas emissions which is at least 95% and, in
and the Payment of Locally
the case of a large facility (defined below), meets wage
Prevailing Wages, by David H.
and workforce requirements. Reduced tax credits
Bradley and Jon O.
would be available for qualified clean hydrogen that
Shimabukuro.
achieves lower levels of emissions reduction (20% of
the regular credit amount for emissions reduction of
40% to 75%; 25% for an emissions reduction of 75% to
85%; and 34% for an emissions reduction of 85% to
95%).
For large facilities (facilities with a maximum output of
at least one megawatt), the credit would be available at
a rate equal to 20% of the otherwise applicable rate
(i.e., if the tax credit was $3.00 per kilogram, the credit
for a large facility would be $0.60 per kilogram). Large
facilities may be eligible for the ful credit amount if
they pay prevailing wages during the construction phase
and during the first 10 years of operation and if
registered apprenticeship requirements are met.
Taxpayers could elect to receive the credit as direct
pay (see “Elective Payment for Energy Property and
Electricity Produced from Certain Renewable
Resources, Etc.”). Taxpayers cannot claim credits for
clean hydrogen produced at facilities that claimed
credits under Section 45Q. Taxpayers could elect to
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Tax Provisions in the “Build Back Better Act"

Section Title
Description
CRS Resources
claim the energy investment tax credit (ITC) in lieu of
the clean hydrogen production credit.
The provision would terminate the alternative fuel
excise tax credit for hydrogen after December 31,
2021.
The credit would not be available to facilities that start
construction after December 31, 2028.
Part 3—Green Energy and Efficiency Incentives for Individuals
Extension,
Current law provides a 10% tax credit for qualified
For background, see
Increase, and
energy-efficiency improvements and expenditures for

CRS Report R42089,
Modifications of
residential energy property on a taxpayer’s primary
Residential Energy Tax Credits:
Nonbusiness
residence through 2021. The credit is subject to a $500
Overview and Analysis, by
Energy Property
per taxpayer lifetime limit. This provision would extend
Margot L. Crandall-Hol ick
Credit
the tax credit through December 31, 2031, and make
and Mol y F. Sherlock.
additional modifications.

CRS Report R46451, Energy
The proposed modifications would increase the credit
Tax Provisions Expiring in
rate to 30% with an annual per-taxpayer limit of $1,200.
2020, 2021, 2022, and 2023
The credit would be allowed for expenditures made on
(“Tax Extenders”), by Mol y F.
any dwelling unit used by the taxpayer (not limited to
Sherlock, Margot L.
primary residences). Limits for expenditures on
Crandall-Hol ick, and
windows and doors would also be increased. Required
Donald J. Marples.
energy efficiency standards would be modified, and
changed to update over time without additional
legislative action. Qualifying building envelope
components would no longer include roofs, but would
include air barrier insulation. A 30% credit, up to $150,
would be allowed for home energy audits. Treasury
would be given the authority to treat errors related to
this section as mathematical or clerical errors. Starting
in 2024, product identification numbers would be
required to claim the tax credit.
Residential Energy-
Current law provides a tax credit for the purchase of
For background, see
Efficient Property
solar electric property, solar water heating property,

CRS Report R42089,
fuel cells, geothermal heat pump property, small wind
Residential Energy Tax Credits:
energy property, and qualified biomass fuel property.
Overview and Analysis, by
The credit rate is 26% through 2022 (it was 30%
Margot L. Crandall-Hol ick
through 2019), and is scheduled to be reduced to 22%
and Mol y F. Sherlock.
in 2023 before expiring. This provision would extend
the credit through December 31, 2033, restoring the

CRS Report R46451, Energy
30% credit rate after 2021 and through 2031, and then
Tax Provisions Expiring in
reducing the credit rate to 26% in 2032 and 22% in
2020, 2021, 2022, and 2023
2033. Qualified battery storage technology would be
(“Tax Extenders”), by Mol y F.
added to the list of eligible property.
Sherlock, Margot L.
Crandall-Hol ick, and
Donald J. Marples.
Energy-Efficient
Under current law, a permanent deduction of up to
For background, see
Commercial
$1.80 per square foot is allowed for certain energy-

CRS Committee Print
Buildings
saving commercial building property installed as part of
CP10004, Tax Expenditures:
Deduction
(1) the interior lighting system; (2) the heating, cooling,
Compendium of Background
ventilation, or hot water system; or (3) the building
Material on Individual
envelope.
Provisions — A Committee
This provision would temporarily modify the energy-
Print Prepared for the Senate
efficient commercial building deduction, with the
Committee on the Budget,
modifications effective through 2031.
2020, by Jane G. Gravelle et
al. (pp. 99-104).
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Section Title
Description
CRS Resources
The temporary modifications would reduce the amount 
CRS Report R45171,
by which a building must increase its efficiency relative
Registered Apprenticeship:
to a reference building, from 50% to 25%. They would
Federal Role and Recent
further provide that the per-square-foot deduction of
Federal Efforts, by Benjamin
$0.50 be increased by $0.02 for each percentage point
Col ins.
by which the certified efficiency improvements reduce

energy and power costs, with a maximum amount of

CRS In Focus IF11927,
Federally Funded Construction
$1.00 per square foot. For projects that meet prevailing
and the Payment of Locally
wage requirements and registered apprenticeship
Prevailing Wages, by David H.
requirements, the base credit is $2.50, which is
Bradley and Jon O.
increased by $0.10 for each percentage point increase
Shimabukuro.
in energy efficiency, with a maximum credit amount of
$5.00 per square foot. The maximum credit amount is
the total deduction a building can claim over a four-
year period (the current tax year plus the three
preceding tax years). Taxpayers making energy-
efficiency retrofits that are part of a qualified retrofit
plan on a building that is at least five years old may be
able to deduct their adjusted basis in the retrofit
property (so long as that amount does not exceed a
per-square foot value determined on the basis of
energy usage intensity).
Extension,
Under current law, through 2021, a tax credit is
For background, see
Increase, and
available for eligible contractors for building and selling

CRS Report R46451, Energy
Modifications of
qualifying energy-efficient new homes. The credit is
Tax Provisions Expiring in
New Energy-
equal to $2,000, with certain manufactured homes
2020, 2021, 2022, and 2023
Efficient Homes
qualifying for a $1,000 credit. This provision would
(“Tax Extenders”), by Mol y F.
Credit
extend the energy-efficient new home credit through
Sherlock, Margot L.
December 31, 2031, and increase and modify the credit
Crandall-Hol ick, and
amount. For homes acquired after 2021, a $2,500
Donald J. Marples.
credit would be available for new homes that meet
certain Energy Star efficiency standards, and a $5,000

CRS In Focus IF11927,
credit would be available for new homes that are
Federally Funded Construction
certified as zero-energy ready homes. Multifamily
and the Payment of Locally
dwellings that meet certain Energy Star efficiency
Prevailing Wages, by David H.
standards may be eligible for a $500 credit per unit,
Bradley and Jon O.
with a $1,000 per unit credit available for eligible zero-
Shimabukuro.
energy ready multifamily dwellings. The credits for
multifamily dwelling units are increased to $2,500 and
$5,000, respectively, if the taxpayer ensures that the
laborers and mechanics employed by contractors and
subcontractors in the construction of the residence are
paid prevailing wages.
Modification to
Under current law, subsidies provided by public utilities
For background, see
Income Exclusion
to customers for the purchase or installation of energy

CRS Committee Print
for Conservation
conservation measures are excluded from taxable
CP10004, Tax Expenditures:
Subsidies
income. This provision would provide that amounts
Compendium of Background
provided for water conservation or efficiency, storm
Material on Individual
water management, or wastewater management could
Provisions — A Committee
also be excluded. For wastewater management, the
Print Prepared for the Senate
property purchased or installed must be on the
Committee on the Budget,
taxpayer’s principal residence. The provision would be
2020, by Jane G. Gravelle et
effective for amounts received after December 31,
al. (pp. 121-124).
2018.
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Section Title
Description
CRS Resources
Part 4—Greening the Fleet and Alternative Vehicles
Refundable New
This provision would create a new refundable tax
For background, see
Qualified Plug-In
credit to replace the existing nonrefundable tax credit

CRS In Focus IF11017, The
Electric Drive
for plug-in electric vehicles (EVs), effective for 2022.
Plug-In Electric Vehicle Tax
Motor Vehicles
The credit would be $4,000 for vehicles with a battery
Credit, by Mol y F. Sherlock.
Credit for
capacity of 7 kilowatt hours (10 kilowatt hours after
Individuals
2023), plus $3,500 for vehicles with a battery capacity

CRS Report R46864,
of at least 40 kilowatt hours (50 kilowatt hours after
Alternative Fuels and Vehicles:
2026). An additional amount of $4,500 would be
Legislative Proposals, by
available for domestically assembled vehicles, and an
Melissa N. Diaz.
additional amount of $500 would be available for

CRS Report R46231, Electric
vehicles meeting domestic content requirements. The
Vehicles: A Primer on
maximum per-vehicle credit would be up to $12,500,
Technology and Selected Policy
not to exceed 50% of the vehicle purchase price.
Issues, by Melissa N. Diaz.
Vehicles subject to depreciation are ineligible.
The credit would phase out for married taxpayers filing
a joint return with modified AGI above $800,000
($600,000 in the case of head of household filers;
$400,000 in the case of other filers). The credit is
reduced by $200 for each $1,000 (or fraction thereof)
by which the taxpayer’s modified AGI exceeds the
threshold amount.
Credits would only be allowed for vehicles that have a
manufacturer’s suggested retail price of less than
$55,000 for sedans, $64,000 for vans, $69,000 for
SUVs, and $74,000 for pickup trucks.
Starting in 2027, the $4,000 plus $3,500 base credit
would be available only for EVs with final assembly
occurring in the United States.
Two- and three-wheeled electric vehicles would be
allowed a 10% tax credit, up to $2,500.
Starting in 2022, taxpayers purchasing or leasing eligible
vehicles can elect to transfer the tax credit to the
dealer, so long as the dealer meets registration,
disclosure, and other requirements.
Taxpayers would be required to include the vehicle
identification number (VIN) on their tax return to claim
a tax credit.
Payments would be made to territories for the revenue
loss associated with the EV credit.
The existing nonrefundable tax credit for plug-in
electric vehicles under Section 30D would be repealed.
The credit would not apply to vehicles acquired after
December 31, 2031.
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Section Title
Description
CRS Resources
Credit for
This provision would create a new refundable tax
For background, see
Previously Owned
credit for previously owned qualified plug-in electric

CRS In Focus IF11017, The
Qualified Plug-In
vehicles. The credit would be up to $2,500 (a base
Plug-In Electric Vehicle Tax
Electric Drive
credit of $1,250 for a vehicle with a battery capacity of
Credit, by Mol y F. Sherlock.
Motor Vehicles
4 kilowatt hours, plus $208.50 for each additional
kilowatt hour of capacity), not to exceed 30% of the

CRS Report R46864,
vehicle purchase price.
Alternative Fuels and Vehicles:
Legislative Proposals, by
The credit would phase out for married taxpayers filing
Melissa N. Diaz.
a joint return with modified AGI above $150,000
($112,500 in the case of head of household filers;

CRS Report R46231, Electric
$75,000 in the case of other filers). The credit is
Vehicles: A Primer on
reduced by $200 for each $1,000 (or fraction thereof)
Technology and Selected Policy
by which the taxpayer’s modified AGI exceeds the
Issues, by Melissa N. Diaz.
threshold amount.
Credits would only be allowed for vehicles with a sale
price of $25,000 or less. This credit can only be claimed
one time per vehicle. Taxpayers would be required to
include the vehicle identification number (VIN) on their
tax return to claim a tax credit.
Payments would be made to territories for the revenue
loss associated with the EV credit.
The credit would not apply to vehicles acquired after
December 31, 2031.
Qualified
This provision would create a new 30% tax credit for

Commercial
qualified commercial electric vehicles. Eligible vehicles
Electric Vehicles
would have a battery capacity of not less than 30
kilowatt hours. Mobile machinery and qualified
commercial fuel cell vehicles would also be eligible for
this credit. Qualifying vehicles would be depreciable
property.
In the case of vehicles used by certain tax-exempt
entities (if the vehicle is not subject to a lease), the
seller can be treated as the taxpayer for the purposes
of claiming the credit.
Taxpayers would be required to include the vehicle
identification number (VIN) on their tax return to claim
a tax credit.
The credit would not apply to vehicles acquired after
December 31, 2031.
Qualified Fuel Cell
Current law allows, through 2021, a tax credit of up to
For background, see
Motor Vehicles
$8,000 for fuel cell vehicles (the base credit amount is

CRS Report R46451, Energy
$4,000, with up to an additional $4,000 available based
Tax Provisions Expiring in
on fuel economy). Heavier vehicles qualify for up to a
2020, 2021, 2022, and 2023
$40,000 credit. This provision would modify the
(“Tax Extenders”), by Mol y F.
definition of qualified fuel cell motor vehicles to exclude
Sherlock, Margot L.
vehicles subject to depreciation (commercial vehicles),
Crandall-Hol ick, and
and extend the credit through December 31, 2031.
Donald J. Marples.
Commercial fuel cell vehicles would be eligible for the
new credit for qualified commercial electric vehicles.

CRS Report R46864,
Alternative Fuels and Vehicles:
Legislative Proposals, by
Melissa N. Diaz.
Alternative Fuel
Current law allows, through 2021, a tax credit for the
For background, see
Refueling Property cost of any qualified alternative fuel vehicle refueling

CRS Report R46451, Energy
Credit
property instal ed by a business or at a taxpayer’s
Tax Provisions Expiring in
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Section Title
Description
CRS Resources
principal residence. The credit is equal to 30% of these
2020, 2021, 2022, and 2023
costs, limited to $30,000 for businesses at each
(“Tax Extenders”), by Mol y
separate location with qualifying property, and $1,000
F. Sherlock, Margot L.
for residences. This provision would extend the credit
Crandall-Hol ick, and
through December 31, 2031, and make additional
Donald J. Marples.
modifications. For residential property, the credit

CRS Report R46864,
would be extended at the 30% rate, with the credit
Alternative Fuels and Vehicles:
limit increased to $3,333.33. For business property
Legislative Proposals, by
(property subject to depreciation), the credit would be
Melissa N. Diaz.
extended at a rate of 6% (30% if prevailing wage and
registered apprenticeship requirements were met),

CRS Report R46231, Electric
with the credit limit increased to $100,000.
Vehicles: A Primer on
Technology and Selected Policy
A supplemental 5% (20% if prevailing wage and
Issues, by Melissa N. Diaz.
registered apprenticeship requirements are met) credit
would be available for costs above the $100,000 limit

CRS Report R45171,
for business property that refuels using only electricity
Registered Apprenticeship:
or fuel consisting of at least 85% hydrogen by volume.
Federal Role and Recent
To qualify for the supplemental credit, the property
Federal Efforts, by Benjamin
must be intended for general public use (i.e., no fee or
Col ins.
payment arrangement required) and accept payments

CRS In Focus IF11927,
via a credit card reader (including contactless
Federally Funded Construction
technology) or be exclusively used by fleets of
and the Payment of Locally
commercial or government vehicles.
Prevailing Wages, by David H.
The definition of qualifying property is modified to
Bradley and Jon O.
include bidirectional charging equipment.
Shimabukuro.
The credit would not apply to property placed in
service after December 31, 2031.
Reinstatement and Before 2018, up to $20 per month in employer

Expansion of
reimbursements for qualifying bicycle commuting
Employer-
expenses were excludable from an employee’s income
Provided Fringe
and wages and hence not subject to income or
Benefits for
employment taxes. The TCJA (P.L. 115-97) temporarily
Bicycle
suspended, through 2025, the exclusion for employer-
Commuting
provided bicycle commuter fringe benefits. This
provision would repeal the suspension and expand the
exclusion for bicycle commuting benefits to include
employer provision or reimbursement for purchase,
lease or rental (including bikeshare), improvement,
repair, or storage of bikes or scooters for commuting
purposes. The amount excluded could be up to 30% of
the monthly dol ar limit on qualified transportation
fringe benefits ($270 in 2021). This provision would
allow employees to elect a salary contribution for
bicycle commuting benefits (similar to other qualified
transportation fringe benefits).
Credit for Certain
This provision would create a new refundable 15% tax

New Electric
credit for qualified electric bicycles. The maximum
Bicycles
credit amount would be $750. The credit can be
claimed for one bike per three-year period per
taxpayer (two bikes in the case of a joint return).
Qualified electric bicycles include those made by a
qualified manufacturer and that include a VIN, cost no
more than $8,000, have an electric motor of less than
750 watts, and where the motor does not provide
assistance at higher speeds. Qualified manufacturers are
those that assign a VIN to electric bicycles produced
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Section Title
Description
CRS Resources
and provide that information to the Secretary of the
Treasury.
The credit would phase out for married taxpayers filing
a joint return with modified AGI above $150,000
($112,500 in the case of head of household filers;
$75,000 in the case of other filers). The credit is
reduced by $200 for each $1,000 (or fraction thereof)
by which the taxpayer’s modified AGI exceeds the
threshold amount. Prior-year modified AGI can be used
for the purposes of determining the phaseout if it was
less than current-year modified AGI.
Taxpayers would be required to include the vehicle
identification number (VIN) on their tax return to claim
a tax credit.
Payments would be made to territories for the revenue
loss associated with this credit.
The credit would not apply to bicycles acquired after
December 31, 2031.
Part 5—Investment in the Green Workforce
Extension of the
This provision would provide additional allocations of
For background, see
Advanced Energy
the qualified advanced energy manufacturing tax credit,

CRS Committee Print
Project Credit
which is a 30% tax credit for investments in projects
CP10004, Tax Expenditures:
that reequip, expand, or establish certain energy
Compendium of Background
manufacturing facilities. The American Recovery and
Material on Individual
Reinvestment Act (P.L. 111-5) provided $2.3 bil ion in
Provisions — A Committee
allocations, which have been ful y allocated. An
Print Prepared for the Senate
additional $2.5 bil ion in allocations would be provided
Committee on the Budget,
in each year from 2022 to 2031. $400 mil ion in annual
2020, by Jane G. Gravelle et
allocations would be for projects in automotive
al. (pp. 221-224).
communities. Only projects where prevailing wages are
paid and registered apprenticeship requirements are

CRS Report R45171,
met can be allocated credits. The Secretary would be
Registered Apprenticeship:
directed to consider which projects wil have the
Federal Role and Recent
greatest net impact on avoiding or reducing emissions;
Federal Efforts, by Benjamin
wil provide the greatest domestic job creation; wil
Col ins.
provide the greatest job creation in the vicinity of

CRS In Focus IF11927,
projects in low-income communities and communities
Federally Funded Construction
with dislocated manufacturing or coal-industry
and the Payment of Locally
workers; and wil provide the greatest job creation in
Prevailing Wages, by David H.
areas with populations more at risk for adverse health
Bradley and Jon O.
or environmental effects, where a significant portion of
Shimabukuro.
such population is comprised of communities of color,
low-income communities, tribal and Indigenous
communities, or individuals formerly employed in the
fossil fuel industry, and give the highest priority to
projects that manufacture (rather than assemble)
products and have the greatest potential for
commercial deployment. Recipients of tax credit
allocations wil be publicly disclosed.
Labor Costs of
This provision would create a new tax credit for 10%

Installing
of the labor cost of installing mechanical insulation.
Mechanical
The credit would not apply to costs incurred after
Insulation
December 31, 2031.
Property
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Section Title
Description
CRS Resources
Part 6—Environmental Justice
Qualified
This provision would create a new refundable tax

Environmental
credit for eligible educational institutions that received
Justice Program
an allocation from the Treasury and incur costs
Credit
associated with a qualified environmental justice
program. The credit is 30% for a program involving
material participation of faculty and students of an
institution described in Section 371(a) of the Higher
Education Act of 1965, and 20% otherwise. The
Secretary would be directed to select programs for
allocations from (1) institutions with high participation
in Section 371(a) of the Higher Education Act of 1965;
(2) programs where expected health and economic
outcomes would benefit low-income areas or areas
that experience or are at risk for environmental
stressors; and (3) applicants that would create or
significantly expand qualified environmental justice
programs. Applications must be made public and the
Secretary wil disclose al ocation recipients.
Up to $1 bil ion per year could be allocated from 2022
through 2031. The program would be effective upon
the date of enactment.
Part 7—Superfund
Reinstatement of
This provision would permanently reinstate the
For background, see
Superfund
Hazardous Substance Superfund financing rate for

CRS Report R41039,
certain excise taxes starting in 2022, but would not
Comprehensive Environmental
reauthorize the Superfund special environmental tax on
Response, Compensation, and
corporate income that also once financed this trust
Liability Act: A Summary of
fund.
Superfund Cleanup Authorities
This provision would permanently reinstate Superfund
and Related Provisions of the
excise taxes on domestic crude oil and imported
Act, by David M. Bearden.
petroleum products at the rate of 16.4 cents per barrel
in 2022, with adjustments for inflation annually
thereafter. The previous tax rate was 9.7 cents per
barrel when this tax last expired at the end of 1995.
This provision also would permanently reinstate the
Superfund excise tax rates on domestically produced
chemical feedstocks and imported chemical derivatives
at the same rates that applied when these taxes last
expired at the end of 1995. The date of the applicability
of these tax rates is tied in current law to the
applicability of the Superfund excise tax rates for
domestic crude oil and imported petroleum products.
Therefore, these taxes would also be reinstated
starting in 2022.
Generally, the tax is paid by refineries that receive
crude oil or by the person using or importing a
petroleum product.
Revenues from the excise tax finance the Hazardous
Substance Superfund Trust Fund. Borrowing would be
authorized through repayable advances from the
General Fund of the U.S. Treasury until the end of
2031.
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Tax Provisions in the “Build Back Better Act"

Source: CRS based on Subtitle G, Budget Reconciliation Legislative Recommendations Relating to Green
Energy.
Note: Provisions are effective in 2022 unless otherwise noted. The changes that would be made by the
provision are permanent, unless otherwise noted. “Section” citations refer to the section within the Internal
Revenue Code (IRC), 26 U.S.C., unless otherwise noted.

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Table 4. Subtitle H: Social Safety Net
Section Title
Description
CRS Resources
Part 1—Child Tax Credit
Modifications
The bil would make several changes to current law
For more information, see
Applicable
applicable to 2021 (and 2022 as described below),

CRS Insight IN11757, The
Beginning in 2021 including:
Child Tax Credit Under the
Safe Harbor
House Ways and Means
Under current law, low- and moderate-income
Committee “Build Back Better”
taxpayers who receive excess advance child credit
Reconciliation Language:
payments may, in certain situations, be protected from
Summary Table of Changes,
repayment as a result of a safe harbor provision. Excess
by Margot L. Crandall-
advance payments are equal to the value of the credit a
Hol ick.
taxpayer is eligible to claim on their tax return minus
For background, see
amounts received as advance payments.

CRS Report R46900, The
The safe harbor applies in cases where there is a change
Child Tax Credit: Frequently
in the number of qualifying children used to estimate the
Asked Questions (FAQs) About
advance payment in comparison to the number of
the Child Credit for 2021 as
children taken into consideration when claiming the
Expanded by the American
credit on an income tax return. For example, the
Rescue Plan Act of 2021
advance payments of the 2021 credit wil be based on an
(ARPA; P.L. 117-2), by Margot
estimate of the 2021 credit amount generally using 2020
L. Crandall-Hol ick.
tax data. Differences in the number of qualifying children

between 2021 and 2020 may occur when children move

CRS Insight IN11752, The
Impact of a “Fully Refundable”
between taxpayers from year to year (and this
Child Tax Credit, by Margot L.
information is not provided to the IRS during 2021).
Crandall-Hol ick.
This provision would amend the existing safe harbor
such that the safe harbor would not apply in cases where 
CRS Insight IN11656, The
the qualifying child taken into account in determining the
Child Tax Credit: How Would
advance payment amount was done so either
the Biden Administration’s
fraudulently or due to intentional disregard of the rules
Proposed American Families
and regulations. This provision would apply in cases
Plan Change the Child Tax
where two taxpayers knowingly set up an arrangement
Credit?, by Margot L.
whereby one taxpayer receives advance payments
Crandall-Hol ick.
(equaling up to 50% of the 2021 credit), while the other
claims the ful amount of the credit on their 2021 return.
Joint Returns
Under current law, to determine the amount of the
credit a taxpayer wil receive with their 2021 tax return,
the taxpayer first calculates the total amount of the 2021
child credit they are eligible for. The taxpayer then
subtracts from this amount the sum of all the advance
payments of the 2021 credit they received. The
difference is the amount they wil receive with their
2021 return (generally filed in 2022).
For the purposes of calculating the amount of the credit
a taxpayer wil receive with their 2021 return, the
provision would provide that each spouse would be
assumed to have received half of the advance amount.
This may be relevant, for example, in cases where the
taxpayer’s marital status differs between the year used
to calculate the advance payments (2020 or 2019) and
2021.
Information Used to Determine Advance
Payment Amounts
The provision would clarify that the data available to the
IRS to calculate advance payments of the 2021 credit
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Section Title
Description
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include “any information known to the [Treasury]
Secretary.”
These provisions would apply to the child credit claimed
on 2021 and 2022 returns, and advance payments of
these credits issued in 2021 and 2022.
Extension and
The American Rescue Plan Act of 2021 (ARPA; P.L. 117-
For more information, see
Modification of
2) temporarily increased (for 2021) the child credit for

CRS Insight IN11757, The
Child Tax Credit
many taxpayers with children. Specifically, the law
Child Tax Credit Under the
and Advance
increased the maximum child credit from $2,000 per
House Ways and Means
Payment for 2022 child to $3,000 per child ($3,600 for children under 6
Committee “Build Back Better”
years old); expanded the eligibility age for children to
Reconciliation Language:
include 17 year olds; and made the credit “ful y
Summary Table of Changes,
refundable.”
by Margot L. Crandall-
The bil would extend the 2021 ARPA-expanded child
Hol ick.
credit to 2022 (as modified above), with additional

CRS Insight IN11759, The
changes to the 2021 credit in effect for 2022
Child Tax Credit Under the
summarized below.
House Ways and Means
Modification of Advance Payment Program
Committee “Build Back Better”
Under current law, the advance payment program for
Reconciliation Language:
the 2021 child credit advances up to 50% of the
Calculating the Monthly Credit
estimated 2021 credit amount in equal periodic
Amount, by Margot L.
payments between July 1, 2021, and December 31, 2021.
Crandall-Hol ick.
(The IRS is issuing advance payments in six monthly
For background, see
payments between July 15, 2021, and December 15,

2021.)

CRS Report R46900, The
Child Tax Credit: Frequently
The provision would advance all (i.e., 100%) of the
Asked Questions (FAQs) About
estimated 2022 child credit through the end of
the Child Credit for 2021 as
December 31, 2022, in equal periodic payments.
Expanded by the American
Repeal of SSN Requirement for Qualifying
Rescue Plan Act of 2021
Children
(ARPA; P.L. 117-2), by Margot
Under current law (in effect from 2018 to 2025), a
L. Crandall-Hol ick.
taxpayer can only receive the child credit for an

CRS Insight IN11752, The
otherwise-eligible child if they provide the child’s Social
Impact of a “Fully Refundable”
Security Number (SSN). This SSN must be associated
Child Tax Credit, by Margot L.
with work authorization, meaning an SSN issued solely
Crandall-Hol ick.
to receive a public benefit does not qualify. These types

CRS Insight IN11656, The
of work-authorized SSNs are generally provided to all
Child Tax Credit: How Would
U.S. citizen children and certain noncitizen children,
the Biden Administration’s
including legal permanent residents (i.e., “green card
Proposed American Families
holders”), refugees, and asylees. As a result of this
Plan Change the Child Tax
provision, for example, taxpayers cannot claim the child
Credit?, by Margot L.
credit for otherwise-eligible children with individual
Crandall-Hol ick.
taxpayer identification numbers (ITINs).

CRS Report R43840, Federal
The provision would repeal this “work-authorized” SSN
Income Taxes and
requirement for qualifying children. Hence, eligible
Noncitizens: Frequently Asked
taxpayers with “ITIN children” (i.e., children with
Questions, by Erika K. Lunder
individual taxpayer identification numbers or ITINs)
and Margot L. Crandall-
could claim the credit for those children (assuming those
Hol ick.
children meet all the other eligibility requirements).
(Other provisions of this bil , discussed subsequently,
would effectively permanently repeal the work-
authorized SSN requirement for children.)
Income Lookback
Under current law, when a taxpayer claims the credit for
a given year, they use the income for that year to
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determine whether and to what extent the credit is
subject to phaseout. For example, a taxpayer would use
their annual 2022 income to calculate their 2022 child
credit amount, if subject to the phaseout.
The provision would allow taxpayers to use the
preceding year’s income to determine their current
year’s credit amount, if subject to the phaseout.
Specifically, under this provision a taxpayer could use
their 2021 income to calculate their 2022 credit for
purposes of the phaseout. This provision would limit the
amount taxpayers would need to pay back due to annual
fluctuations in their income.
Inflation Adjustments
Under current law, most provisions of the child tax
credit are not annually adjusted for inflation.a
Under the provision, for 2022 the fol owing parameters
would be adjusted for inflation occurring between 2020
and 2021: the $500 credit for “other dependents,” that
is, dependents who were not eligible for the child credit
(rounded to the nearest multiple of $10); the $3,000 and
$3,600 maximum credit amounts for older and young
children (rounded to the nearest multiple of $100); the
$3,000 and $3,600 maximum safe harbor amounts
(rounded to the nearest multiple of $100); the
$75,000/$112,500/$150,000 thresholds above which the
credit begins to phase down (rounded to the nearest
multiple of $5,000).
Modification of Safe Harbor
Under current law, low- and moderate-income
taxpayers who receive excess advance payments may, in
certain situations, be protected from repayment as a
result of a safe harbor provision. The safe harbor applies
in cases where there is a change in the number of
qualifying children used to estimate the advance payment
in comparison to the number of children taken into
consideration when claiming the credit on an income tax
return. For example, the advance payments of the 2022
credit would generally be based on an estimate of the
2022 credit amount using 2021 tax data. Differences in
the number of qualifying children between 2022 and
2021 could occur when children move between
taxpayers from year to year (and this information is not
provided to the IRS during the year). The safe harbor
would not apply in cases of fraud or reckless disregard of
the rules and regulations of the credit.
The maximum amount of the safe harbor for 2021 is
$2,000 multiplied by the difference in the number of
qualifying children between 2021 and 2020 (2019, if 2020
data are unavailable). This amount then gradually phases
out as income rises. The prior-year data—in this case
2020 data, or if they are unavailable 2019 data—used to
administer the advance payments is generally referred to
as the “reference year” data.
For 2022, the maximum safe harbor would be larger.
Specifically, the maximum safe harbor would be
calculated as $3,600 times the number of young children
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taken into consideration during the reference year (to
determine the advance payment amounts) who are not
claimed on 2022 returns plus $3,000 times the number
of older children taken into consideration during the
reference year (to determine the advance payment
amounts) who are not claimed on 2022 returns. (In this
case, the reference year would be 2021, or if those data
are unavailable, 2020.) The age of the children for this
calculation would be based on their age at the end of
2022. The phaseout of the safe harbor would be
unchanged under the law in effect for 2021.
These provisions would apply to the child credit claimed
on 2022 returns, and advance payments issued in 2022.
Establishment of
The bil would temporarily suspend the child credit as

Monthly Child
amended under Section 24 (including the changes above)
Tax Credit with
and temporarily replace it for 2023-2025 with a new
Advance Payment monthly child credit under Section 24A and a new advance
Through 2025
payment program.b
Broadly, these changes would result in a monthly credit
amount that for many taxpayers would be similar to the
benefit they could receive in 2021, all else being equal.
Many of the major changes described below would affect
the administration of the benefit, allowing eligibility to be
determined based on who could claim a child on a
month-by-month basis (as opposed to an annual basis
under current law).
Credit Amount
The credit amount that a taxpayer would be eligible for
in a given year would equal the sum of their monthly
credit allowances for that year. Specifically, the total
benefit a taxpayer would be eligible to receive in a given
year would generally be based on the number of months
a taxpayer had a “specified child” (defined subsequently),
their annual income (subject to a lookback, defined
subsequently), and their filing status.
The maximum monthly credit allowance per child would
be $300 for a specified child 0-5 years old (a young child)
and $250 for a specified child 6-17 years old (an older
child).c
The monthly credit allowance would be phased out
based on annual income in a similar manner as the annual
child credit is in 2021, except the phaseout amount
would be allocated on a monthly basis. In other words,
based on annual income, an annual phaseout amount
would first be calculated and then divided by 12 to
determine a monthly phaseout amount. This monthly
amount would then be subtracted from the maximum
monthly credit allowance amount.
As with the child credit in 2021 (and in 2022 under this
bil ), the monthly benefit amount would be subject to up
to two phaseouts, depending on the taxpayer’s annual
income. Specifically, the maximum monthly credit
allowance would be subject to an initial phaseout if a
taxpayer’s annual income was above an initial threshold.
For taxpayers with income above a secondary threshold,
the credit would be subject to an additional phaseout.
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The initial threshold would be $112,500 for single and
head of household filers and $150,000 for married joint
filers. The secondary threshold would be $200,000 for
single filers, $300,000 for head of household filers, and
$400,000 for married joint filers. For taxpayers with
income between the initial and secondary threshold, the
credit amount could not be reduced below $167 per
month per child (annualized, this amount equals $2,000).
For both the initial and secondary phaseouts, annual
income would be defined as the lowest income of the
current year and the preceding two years. For most
taxpayers, income for the phaseouts would equal their
adjusted gross income (AGI).d
The maximum monthly credit allowance amount and the
initial threshold would be annually adjusted for inflation
(occurring since 2020), rounded to the nearest $10 and
$5,000, respectively.
Eligibility
Taxpayers would be eligible for a monthly credit
allowance for each “specified child” they had for that
month. A specified child with respect to a taxpayer for a
given month would need to fulfil various eligibility
requirements, including (1) sharing the same principal
place of abode as the taxpayer for more than half the
month; (2) being under 18 as of the end of the year; (3)
receiving uncompensated care from the taxpayer in that
month; and (4) being a U.S. citizen, national, or resident
alien for tax purposes. In cases where a child would be
the specified child of more than one taxpayer, tiebreaker
rules would apply. Broadly, these rules would prioritize
the claim of parents over nonparents and relatives over
nonrelatives.
Taxpayers would need to furnish taxpayer identification
numbers (e.g., SSNs and ITINs) for themselves and any
specified children.
Advance Payments
The monthly credit allowances would be advanced based
on the most recent data available to the Treasury
Secretary, including data from the most recent tax
return or, if unavailable, data from the prior-year return.
The provision would also allow the use of data that had
been provided via an “alternative mechanism” (e.g., a
nonfiler portal).
Presumptive Eligibility
In cases where a taxpayer had established a “period of
presumptive eligibility” with respect to a specified child,
the child would be considered the specified child of the
taxpayer for any month during this period. (A taxpayer
who elected to receive their payment as a lump sum
with their tax return would not be prevented from
establishing a period of presumptive eligibility.)
As a result of presumptive eligibility, taxpayers generally
would not need to repay any monthly child credit
allowances received during this period (except in cases
of fraud or reckless and intentional disregard of rules
and regulations).e
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A period of presumptive eligibility for a specified child
would be established in a manner prescribed by the
Secretary.f (To the extent practicable, a period of
presumptive eligibility would automatically be established
for a parent upon the birth of the child.)
A taxpayer who established presumptive eligibility for a
specified child under the guidelines established by the
Secretary would need to express a reasonable
expectation that the child would be their specified child
for at least three consecutive months.
Once a period of presumptive eligibility began, it would
end generally at the earliest of (1) the Secretary
determining the taxpayer committed fraud or
intentionally disregarded the rules when establishing
presumptive eligibility; (2) upon notice from the
Secretary that the period was suspended or ended
(including if there was a dispute between taxpayers over
who could claim the child for a given month—i.e.,
“competing claims”); or (3) a year after the period was
established. The Secretary would provide notice to the
taxpayer when the period of presumptive eligibility was
ending.
In cases where a specified child of a taxpayer was taken
into account by more than one taxpayer for any given
month, the child would be the specified child with
respect to the taxpayer with the most recent
information on file except in cases where a taxpayer
submits information through the “specified alternative
mechanism.” When another taxpayer submitted such
information, the Secretary would be required to
establish procedures under which the Secretary
“expeditiously adjudicates the taxpayer’s competing
claims of presumptive eligibility with respect to the same
child.”
Grace Period/Hardship
In cases where there was failure or delay in establishing a
period of presumptive eligibility, there would be a “grace
period” payment of up to three months of credit
allowances (except in cases of fraud or intentional
disregard). There would be only one automatic grace
period allowed per taxpayer every 36 months.
In cases where there was failure or delay in establishing a
period of presumptive eligibility “due to domestic
violence, serious il ness, natural disaster, or any other
hardship,” there would be a hardship payment of up to
six months of credit allowances. There would no
limitation on how often a taxpayer could claim a
hardship payment.
Offset
The advance payments of the child credit would
generally be exempt from offset for certain past-due
debts the recipient owes (including past-due child
support). However, the portion of the payments claimed
on income tax returns would be subject to offset.
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Online Portal
The Secretary would establish an online portal where
taxpayers could elect to begin or end advance payments,
and provide information relevant in determining eligibility
for and the amount of advance payments.
Territories
The provision would direct the Secretary of the
Treasury to make payments to each territory, with the
exception of Puerto Rico, for the total cost of providing
the child tax for 2023 through 2025 to their territorial
residents. Residents of Puerto Rico would generally
claim the credit directly from the IRS.
Refundable Child
Under current law, beginning in 2026 the child credit is
For background, see
Tax Credit After
scheduled to revert to levels in effect prior to P.L. 115-

CRS Report R46900, The
2025
97. (The most recent year these levels were in effect
Child Tax Credit: Frequently
was in 2017.) In other words, beginning in 2026 the
Asked Questions (FAQs) About
credit is scheduled to equal a maximum of $1,000 per
the Child Credit for 2021 as
qualifying child. A qualifying child in 2026 would generally
Expanded by the American
be a dependent child 0-16 years old.
Rescue Plan Act of 2021
The maximum amount of the refundable portion of the
(ARPA; P.L. 117-2), by Margot
credit—the amount that can exceed income taxes owed
L. Crandall-Hol ick.
and which is often referred to as the additional child tax

CRS Report R45124, The
credit or ACTC—is scheduled to be $1,000 per
Child Tax Credit: Legislative
qualifying child beginning in 2026. The ACTC would
History, by Margot L.
generally phase in based on earned income for taxpayers
Crandall-Hol ick.
with more than $3,000 of earned income.g Specifically,
for every dol ar of earned income over $3,000 the credit 
CRS Insight IN11752, The
amount would increase by 15 cents (a 15% phase-in rate)
Impact of a “Fully Refundable”
up to the maximum ACTC of $1,000 per qualifying child.
Child Tax Credit, by Margot L.
The credit would begin to phase out when income
Crandall-Hol ick.
exceeded $110,000 for married joint filers and $75,000

CRS Insight IN11656, The
for unmarried taxpayers (e.g., head of household).
Child Tax Credit: How Would
Taxpayers would need to provide a taxpayer
the Biden Administration’s
identification number (e.g., an SSN or ITIN) for their
Proposed American Families
qualifying children in order to claim the credit.
Plan Change the Child Tax
This provision would modify current law beginning in
Credit?, by Margot L.
2026 by making the credit “ful y refundable.” Specifically,
Crandall-Hol ick.
for taxpayers with a principal place of abode of the
United States for more than half the year, the formula(s)
for calculating the child credit amount would be
eliminated.g Hence, the credit would be the same
amount per child for low- and moderate-income
taxpayers, irrespective of their income. (Higher-income
taxpayers would stil be subject to a phaseout of the
credit, as scheduled to be in effect beginning in 2026.)
Ful refundability would also be available to taxpayers
who are residents of Puerto Rico.
Under this provision, the advance payment program of
the credit would no longer be in effect beginning in 2026.
Part 2—Child and Dependent Care Tax Credit
Certain
ARPA (P.L. 117-2) temporarily increased (for 2021) the
For background, see
Improvements to
child and dependent care tax credit (CDCTC) for many

CRS Insight IN11645, The
the Child and
taxpayers with qualifying child and dependent care
Child and Dependent Care Tax
Dependent Care
expenses. Specifically, the law increased the maximum
Credit (CDCTC): Temporary
credit rate and maximum amount of qualifying expenses
Expansion for 2021 Under the
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Section Title
Description
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Credit Made
used to calculate the credit amount. In combination,
American Rescue Plan Act of
Permanent
these changes increased the maximum amount of the
2021 (ARPA; P.L. 117-2), by
CDCTC in 2021 from a pre-ARPA level of $2,100 to
Margot L. Crandall-Hol ick.
$8,000, depending on expenses and income.

CRS Report R44993, Child
The bil would permanently extend the changes to the
and Dependent Care Tax
child and dependent care credit enacted on a temporary
Benefits: How They Work and
basis for 2021 by the ARPA (P.L. 117-2).
Who Receives Them, by
Specifically, the provision would permanently expand the
Margot L. Crandall-Hol ick.
child and dependent care credit by (1) modifying the

credit formula and (2) making the credit refundable.
With respect to the credit formula, the CDCTC credit
amount is calculated by multiplying a credit rate by a
taxpayer’s amount of qualifying expenses (subject to a
cap). Qualifying expenses include expenses for the care
of a child under 13 years old or other dependent who is
not able to care for themselves (i.e., “a qualifying
individual”) that are incurred so the taxpayer can work
(or look for work).
Under the provision, taxpayers with less than $125,000
of income (an increase from the pre-ARPA level of
$15,000) would have a credit rate of 50% (an increase
from the pre-ARPA level of 35%) of expenses. This 50%
credit rate would gradually phase down as a taxpayer’s
income increased, reaching 20% for a taxpayer with
$183,000 of income. For those with more than $183,000
of income and up to $400,000 of income, the credit rate
would then remain at 20%, gradually falling to zero when
income exceeds $438,000. As a result, those taxpayers
with income over $438,000 would not be eligible for the
credit. These thresholds are the same across all tax filing
statuses.
The bil would also increase the cap on qualifying
expenses to $8,000 for taxpayers with one qualifying
individual and $16,000 for taxpayers with two qualifying
individuals (an increase from the pre-ARPA levels of
$3,000 and $6,000, respectively). (Note that the existing-
law earned income limitation, which caps qualifying
expenses at a taxpayer’s earned income [or the earned
income of the lower-earning spouse], is unchanged by
ARPA.)
In combination, these changes would increase the
maximum amount of the CDCTC from a pre-ARPA level
of $2,100 to $8,000, depending on expenses and income.
The $8,000 and $16,000 qualifying expense caps and the
$125,000 threshold at which the credit rate begins to
phase out would be annually adjusted for inflation
beginning in 2022.
The provision would also make the credit refundable for
taxpayers with a principal place of abode of the United
States for more than half the year. (Taxpayers who did
not meet this requirement would be eligible to claim this
benefit as a nonrefundable credit.) By making the credit
refundable, the law would effectively expand eligibility to
many lower-income taxpayers who have little to no
income tax liability.
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The provision would direct the Treasury to make
payments to Puerto Rico, American Samoa, and mirror-
code territories for the cost of providing the CDCTC
(or analogous benefit) to their territorial residents.
Increase in
The bil would permanently extend the temporary
For background, see
Exclusion for
changes to the exclusion for employer-provided

CRS In Focus IF11597,
Employer-
dependent care assistance that were originally enacted
Potential Impact of COVID-19
Provided
on a temporary basis for 2021 by the ARPA (P.L. 117-2).
on Dependent Care Flexible
Dependent Care
Specifically, the provision would permanently increase
Spending Arrangements
Assistance Made
the maximum amount of qualifying child care expenses
(FSAs), by Conor F. Boyle
Permanent
that eligible taxpayers could exclude from their income
and Margot L. Crandall-
to $10,500 (from a pre-ARPA level of $5,000). This
Hol ick.
amount would be annually adjusted for inflation
beginning in 2022.
Part 3—Supporting Caregivers
Payrol Credit for This provision would create a new refundable payrol tax
Certain Wages
credit for eligible child care employers. The credit would
Paid to Child
equal 50% of up to $2,500 of qualified child care wages
Care Workers
per employee per quarter. Qualified child care wages are
wages above a minimum rate determined by the salary
for the federal government GS-3 Step 1 (including
locality pay) for the location where the services are
provided. Employees must provide either child care or
support services to the employer. Additionally,
employees cannot meet the definition of a highly
compensated employee (in 2021, receive compensation
above $130,000 annually or $32,500 per quarter). The
$2,500 quarterly cap would be adjusted for inflation
starting in 2023.
Eligible child care employers would be employers who
operate eligible child care facilities, which are facilities
that have been certified as a Department of Health and
Human Services Participating Child Care Provider. Tax-
exempt employers would be eligible for the credit;
government employers generally would not. Employers
could not receive a double benefit, meaning wages used
to compute this credit generally could not be taken into
account for the purposes of determining other tax
credits or in connection with other COVID-19 pandemic
relief measures.
The credit would be claimed against the employer’s
share of Medicare payrol taxes (1.45% of wages paid)
and the equivalent amount of Railroad Retirement Tax
Act (RRTA) taxes. The credit would be refundable for
taxpayers whose credit amount exceeds their payrol tax
liability, and can be advanced.
Credit for
The provision would create a new temporary

Caregiver
nonrefundable tax credit of up to $2,000 for eligible
Expenses
taxpayers with qualifying caregiving expenses. With
respect to the credit formula, the caregiver credit
amount would be calculated by multiplying a credit rate
by the amount of qualifying expenses (subject to a cap).
The credit rate would be 50% for taxpayers with income
of $75,000 or less. The credit rate would be reduced by
one percentage point for every $2,500 (or fraction
thereof) above $75,000. Hence, the credit rate (and the
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Description
CRS Resources
credit amount) would be zero for taxpayers with more
than $197,500 of income. Caregiver expenses would be
subject to a $4,000 per taxpayer cap.
Eligible taxpayers would include taxpayers with one or
more qualified care recipients. A qualified care recipient
would include the taxpayer’s spouse or other relative of
the taxpayer who has been certified by a medical
professional as having long-term care needs (as specified
for given age ranges) and who lives in a personal
residence (not an institutional care facility). Individuals
with long-term care needs generally would include those
who cannot independently engage in, or require
substantial supervision for certain activities of daily living.
Qualifying caregiving expenses would include expenses
the taxpayer incurs for goods, services, and supports
that assist the qualified care recipient with accomplishing
activities of daily living, as specified.
Amounts claimed as qualifying caregiving expenses would
exclude amounts claimed for other tax benefits, including
the child and dependent care credit, the exclusion for
child and dependent care expenses, the medical expense
deduction (an itemized deduction), and health savings
accounts (HSAs).
This temporary tax provision would be in effect from
2022 through 2025.
Part 4—Earned Income Tax Credit
Certain
ARPA (P.L. 117-2) temporarily increased (for 2021) the
For background, see
Improvements to
earned income tax credit (EITC) for workers without

CRS Insight IN11610, The
the Earned
qualifying children (often referred to as the “childless
“Childless” EITC: Temporary
Income Tax
EITC”). Specifically, the law modified several parameters
Expansion for 2021 Under the
Credit Made
of the credit that in combination would triple the
American Rescue Plan Act of
Permanent
maximum amount of the childless EITC from about $500
2021 (ARPA; P.L. 117-2), by
to about $1,500 per taxpayer. The law also temporarily
Margot L. Crandall-Hol ick.
reduced the eligibility age for young workers and
eliminated the age limit for older workers.

CRS Report R43805, The
Earned Income Tax Credit
The bil would permanently extend the changes to the
(EITC): How It Works and
childless EITC enacted on a temporary basis for 2021 by
Who Receives It, by Margot L.
the ARPA.
Crandall-Hol ick, Gene Falk,
Regarding eligibility age, the provision would expand
and Conor F. Boyle.
eligibility for the EITC for individuals with no qualifying
children—sometimes referred to as the “childless”
EITC—by reducing the minimum eligibility age from 25
to 19 for most workers. In other words, this change
would allow most eligible workers ages 19 to 24 to claim
the childless EITC. For students who are attending
school at least part-time, the age limit would be reduced
from 25 to 24.h For former foster children and youth
who are homeless, the minimum age would be reduced
from 25 to 18. The provision would also eliminate the
upper age limit, so workers aged 65 and older would be
eligible.
Regarding the credit amount, the provision would
increase the childless EITC by increasing the earned
income amount (the minimum earned income necessary
to receive the maximum credit amount) and phaseout
threshold amount (the highest income level at which
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Description
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taxpayers receive the maximum credit amount before it
begins to phase out) to $9,820 and $11,610, respectively,
while also doubling the phase-in and phaseout rates from
7.65% to 15.3%. Combined, these changes would
effectively triple the maximum EITC for childless
workers. (Like other aspects of the EITC under current
law, these dol ar amounts would be indexed for
inflation.)
The provision also includes a permanent earned income
lookback (a similar provision was temporarily enacted
for 2021 under ARPA). Under this provision, if a
taxpayer’s earned income in a given year was less than
their earned income in the preceding year, the taxpayer
could elect to use the preceding year’s earned income in
calculating their EITC.
Funds for
Under current law, residents of the territories may be

Administration of eligible to receive an EITC under their own territorial
Earned Income
tax law. (These territories include Puerto Rico,
Credits in the
American Samoa, the Commonwealth of the Northern
Territories
Mariana Islands [CNMI], the United States Virgin Islands
[USVI], and Guam.)
These territorial EITCs are paid by the local territorial
government, with the Treasury making aggregate
payments for the total cost of these benefits. (Territorial
residents are generally ineligible for the federal EITC.)
From 2021 to 2025, the Treasury is also required to pay
to territorial governments amounts that these
governments spend on education efforts regarding the
EITC—up to $1 mil ion per year for Puerto Rico, and up
to $50,000 per year for the other territories.
The provision would permanently provide additional
funding for territorial governments to cover
administrative expenses of their territorial EITCs—up to
$4 mil ion per year for Puerto Rico and up to $200,000
per year for the other territories.
This provision would apply to administrative expenses
incurred beginning in 2021.
Part 5—Expanding Access to Health Coverage and Lowering Costs
Improve
The provision would expand eligibility for and the
For background, see
Affordability and
amount of the premium tax credit (PTC) by modifying

CRS Report R44425, Health
Reduce Premium
the income eligibility criteria and credit formula.
Insurance Premium Tax Credit
Costs of Health
Regarding income eligibility, the provision would
and Cost-Sharing Reductions,
Insurance for
permanently eliminate the phaseout for households with
by Bernadette Fernandez.
Consumers
annual incomes above 400% of the federal poverty level

(FPL).
Regarding the formula, the provisions would
permanently establish the percentage of annual income
that eligible households may be required to contribute
toward the premium. The percentages would range from
0.0% to 8.5% of household income, with higher-income
groups subject to larger percentages, as specified.
Modification of
Under current law, individuals who are eligible for
For background, see
Employer-
minimum eligible coverage from their employer are

CRS Report R44425, Health
Sponsored
generally ineligible for the PTC. An exception is provided
Insurance Premium Tax Credit
Coverage
to an individual whose employer-provided health
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Description
CRS Resources
Affordability Test
benefits are unaffordable or inadequate. In 2021,
and Cost-Sharing Reductions,
in Health
coverage is considered unaffordable if an employee’s
by Bernadette Fernandez.
Insurance
share of the premium for self-only coverage under the

Premium Tax
plan exceeds 9.83% of the employee’s household
Credit
income.
This provision would reduce the percentage of
household income used to determine affordability of
eligible employer-sponsored plans and qualified small
employer health reimbursement arrangements from
9.83% to 8.5%.
Hence, more households with unaffordable employer
health benefits could be eligible for the PTC.
Treatment of
The provision would exclude from household income—
For background, see
Lump-Sum Social
for purposes of determining PTC eligibility and amount

CRS Report R44425, Health
Security Benefits
for a given year—any lump-sum Social Security benefit
Insurance Premium Tax Credit
in Determining
payment attributable to a prior year. This provision
and Cost-Sharing Reductions,
Household
would allow taxpayers to elect to include as part of their
by Bernadette Fernandez.
Income
income the excludable amount, as specified.

Temporary
For taxable years beginning in 2022 through the
For background, see
Expansion of
termination date, the provision would expand PTC

CRS Report R44425, Health
Health Insurance
eligibility for lower-income households and make other
Insurance Premium Tax Credit
Premium Tax
temporary changes. The termination date would be the
and Cost-Sharing Reductions,
Credits for
later of (i) January 1, 2025, or (ii) the date on which the
by Bernadette Fernandez.
Certain Low-
Secretary of Health and Human Services makes a written
Income
certification that the Secretary of Health and Human

CRS Report R45455, The
Populations
Services has ful y implemented the program described in
Affordable Care Act’s (ACA’s)
Section 1948 of the Social Security Act (relating to the
Employer Shared Responsibility
Federal Medicaid program), if this program was enacted
Provisions (ESRP), by Ryan J.
(Section 1948 of the Social Security Act is part of
Rosso.
another reconciliation proposal and is not in effect under
current law).
The provision would temporarily disallow income
criteria to be used to determine PTC eligibility. For
households with incomes not exceeding 138% of FPL,
the provision would temporarily disregard the
affordability test applicable to eligible employer-
sponsored plans and qualified small employer health
reimbursement arrangements for PTC eligibility
purposes.
For households with incomes less than 200% of FPL, the
provision would temporarily cap the dol ar amount such
households would pay back in advanced PTC (APTC)
payments that were provided in excess.
For a household that would not be required to file a tax
return except to reconcile APTC payments, the
provision would temporarily disallow the requirements
to file a return and pay back excess APTC if an exchange
projected such household’s income would not exceed
138% of FPL.
For applicable large employers of employees with
household incomes projected to not (or that do not)
exceed 138% of FPL, the provision would temporarily
disallow the requirement that such employers pay a
penalty if at least one ful -time employee enrol s in an
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exchange plan and is eligible for a PTC or cost-sharing
reduction (CSR).
Ensuring
For plan years 2023 and 2024, the provision would
For background, see
Affordability of
establish a maximum income eligibility threshold at 400%

CRS Report R44425, Health
Coverage for
of FPL applicable to CSRs.
Insurance Premium Tax Credit
Certain Low-
For applicable months in 2022, the provision would treat
and Cost-Sharing Reductions,
Income
households with incomes below 138% of FPL as having
by Bernadette Fernandez.
Populationsi
income at 100% of FPL for CSR eligibility and subsidy
CRS Report R44065,
purposes.
Overview of Health Insurance
For households with incomes below 138% of FPL who
Exchanges, by Vanessa C.
are eligible for CSRs during plan years 2023 and 2024,
Forsberg.
the provision would reduce cost-sharing requirements
to increase the actuarial value to 99% of the exchange
plans in which such households enrol . The Secretary of
Health and Human Services (HHS Secretary) would
make payments to plans that provide additional cost-
sharing assistance.
For households with incomes below 138% of FPL who
are not otherwise eligible for specified government-
sponsored minimum essential coverage, the provision
would establish a special enrol ment period (SEP) to
allow such households to enrol in exchange plans to
which CSRs apply. The SEP would apply to applicable
months occurring during the period beginning on January
1, 2022, and ending on December 31, 2024.
For households with incomes below 138% of FPL who
are eligible for CSRs, exchange plans would provide
enhanced benefits to such households during plan year
2024. Applicable plans would provide essential health
benefits (EHBs) offered through silver-tier plans and
additional benefits without cost-sharing (which are not
otherwise provided as part of EHBs): non-emergency
medical transportation services and Medicaid family
planning services and supplies. The HHS Secretary would
make payments to plans that provide the additional
benefits.
For federally administered exchanges, the provision
would require the HHS Secretary to conduct consumer
outreach and education activities to inform specified
individuals about the availability of exchange plans and
financial assistance for such coverage.
Establishing a
This provision would establish the Improve Health
For background, see
Health Insurance
Insurance Affordability Fund (“Fund”) to provide funding
CRS Report R44760, State
Affordability
to the 50 states and the District of Columbia beginning
Innovation Waivers: Frequently
Fundi
on January 1, 2023. States would be required to use
Asked Questions, by Ryan J.
Fund allocations to provide reinsurance payments to
Rosso.
individual health insurance plans, or provide other
assistance to reduce out-of-pocket costs for individuals
enrol ed in individual exchange plans and Basic Health
Program (BHP) plans. The provision specifies the
processes for Fund applications, approvals, oversight
including approval revocations, and calculation of state
allocations. For 2023 and 2024, states that have not
implemented the ACA Medicaid expansion could not
apply for a Fund allocation. Instead, the Administrator
would provide reinsurance payments to individual health
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insurance plans in non-expansion states during those two
years.
As a condition of establishing a BHP for plan years
beginning on or after January 1, 2023, states would be
required to submit to the HHS Secretary information
related to plans receiving reinsurance payments provided
through the Fund. The HHS Secretary would
incorporate such information in the calculation of BHP
payments to states.
Special Rule for
For taxable years 2021 through 2025, the provision
For background, see
Individuals
would deem individuals who receive unemployment

CRS Report R44425, Health
Receiving
compensation for any week during a given year to have
Insurance Premium Tax Credit
Unemployment
met the PTC income eligibility criteria. The provision
and Cost-Sharing Reductions,
Compensation
would temporarily disregard any household income
by Bernadette Fernandez.
above 150% of FPL.

Permanent
For the health coverage tax credit (HCTC), the
For background, see
Credit for Health provision would strike the sunset date of January 1,
CRS Report R44392, The
Insurance Costs
2022, to authorize it on a permanent basis. The
Health Coverage Tax Credit
provision would increase the HCTC’s subsidy rate to
(HCTC): In Brief, by
80% of the premium for qualifying health plans, for
Bernadette Fernandez.
coverage months beginning after December 31, 2021.
Part 6—Pathways to Practice Training Programsj
Establishing Rural
The bil would establish a new “Rural and Underserved
For background, see
and Underserved
Pathway to Practice Training Program for Post-

CRS Infographic IG10015,
Pathway to
Baccalaureate and Medical Students.”
Health Professional Shortage
Practice Training
Under the provision, the Secretary of Health and Human
Areas (HPSAs), by Elayne J.
Programs for
Services (HHS Secretary) would award not later than
Heisler.
Post-
October 1, 2023, “Pathway to Practice” medical
Baccalaureate

scholarship vouchers to qualified students, as specified,

CRS Report R44970, The
Students and
National Health Service Corps,
for the purpose of increasing the number of physicians
Medical Students
by Elayne J. Heisler.
from disadvantaged backgrounds practicing in rural and
underserved communities. The new section would

CRS Report R43571, Federal
authorize the HHS Secretary to award, on an annual
Student Loan Forgiveness and
basis, vouchers to not more than 1,000 qualifying
Loan Repayment Programs,
students. Various eligibility requirements for students
coordinated by Alexandra
and educational institutions would apply.
Hegji.
HHS could begin making annual awards in 2023.
Funding for the
The bil would create a new refundable tax credit for

Rural and
qualifying educational institutions—certain medical
Underserved
schools or providers of a post-baccalaureate medical
Pathway to
education and training—to offset amounts “paid or
Practice Training
incurred” by the institution for each eligible student who
Programs for
receives a Rural and Underserved Pathway to Practice
Post-
medical scholarship voucher.
Baccalaureate
This credit would be a financing mechanism to fund
Students and
these scholarships—qualifying educational institutions
Medical Students
provide these scholarships and the federal government

reimburses them with a tax credit or, if they have little
to no income tax liability, as in the case of a qualifying
educational institution that is federally tax-exempt, a
direct payment (in the form of a tax refund).
This provision would go into effect for the taxable year
ending after the date of enactment.
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Section Title
Description
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Establishing Rural
Under current law, Medicare pays hospitals with an
For background, see
and Underserved
approved medical residency program for the direct and

CRS In Focus IF10960,
Pathway to
indirect costs of a medical residency training program.
Medicare Graduate Medical
Practice Training
Medicare payments to hospitals are not open-ended.
Education Payments: An
Programs for
Rather, Medicare’s Graduate Medical Education (GME)
Overview, by Marco A.
Medical
payments to a hospital in a given year are subject to a
Vil agrana.
Residents
hospital-specific ful -time equivalent (FTE) limit or “cap.”


The provision would increase the GME FTE cap by the

CRS Report R44376, Federal
Support for Graduate Medical
number of FTEs an applicable hospital trains under the
Education: An Overview,
Rural and Underserved Pathway to Practice Training
coordinated by Elayne J.
Programs for Medical Residents during a cost-reporting
Heisler.
year beginning on or after October 1, 2026.

Administrative
The provision would transfer $6 mil ion in equal

Funding of the
amounts from the Hospital Insurance (HI) Trust Fund,
Rural and
which finances Medicare Part A, and the Supplementary
Underserved
Medical Insurance (SMI) Trust Fund, which finances
Pathway to
Medicare Parts B and D, to administer the (1) Rural and
Practice Training
Underserved Pathway to Practice Training Program for
Programs for
Post-Baccalaureate and Medical Students, and (2) Rural
Post-
and Underserved Pathway to Practice Training Programs
Baccalaureate
for Medical Residents.
Students, Medical
Students, and
Medical
Residents
Part 7—Higher Education
Credit for Public
The provision would create a new tax credit for
For background, see
University
donations to public educational institutions for research

CRS Report R45922, Tax
Research
infrastructure, in lieu of claiming the charitable
Issues Relating to Charitable
Infrastructure
contribution deduction for these amounts.
Contributions and
Specifically, taxpayers would be able to claim a credit
Organizations, by Jane G.
equal to 40% of cash contributions for a qualifying project
Gravelle, Donald J. Marples,
of a certified educational institution, subject to credit
and Mol y F. Sherlock.
allocation limits. This tax credit would be part of the
general business credit.
The Secretary of the Treasury, in consultation with the
Secretary of Education, would establish a program to
designate a group of certified educational institutions and
allocate credit amounts for their qualifying projects.
These designations would be based on the institution’s
expected expansion in science, technology, engineering
and math (STEM) research, ensuring consideration for
smaller institutions (those with fewer than 12,000 ful
time students). A qualifying project would be defined as a
project to purchase, construct, or improve research
infrastructure property. Eligible institutions would
generally be limited to state col eges and universities
(i.e., “public universities”).
Certified educational institutions would be awarded a
credit allocation, with qualified cash contributions not to
exceed 250% of this allocation. A certified educational
institution’s annual allocation could not exceed $50
mil ion per year. Total allocations would be limited to
$500 mil ion per year for 2022 through 2026 (inclusive).
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For example, a certified educational institution could be
allocated $20 mil ion in credits for a qualifying project.
The institution could then designate up to $50 mil ion
(250% of $20 mil ion) in qualifying cash contributions for
that project. These qualifying cash contributions would
then generate up to $20 mil ion (40% of $50 mil ion) in
credits for taxpayers.
The Treasury Secretary would be required to publicly
disclose credit applicants (i.e., certified institutions) and
their associated credit allocations. Certified institutions
would be required to publicly disclose donors and the
amount of their contributions designated for qualifying
projects for this tax credit.
No new credits could be allocated after 2026.
Modification of
Under current law, col eges and universities with
For background, see
Excise Tax on
endowments of at least $500,000 per student are subject  CRS Report R44293, College
Investment
to a 1.4% excise tax on net investment income (Section
and University Endowments:
Income of Private 4968). This provision would phase out this excise tax for
Overview and Tax Policy
Col eges and
institutions providing qualifying aid awards, starting in
Options, by Mol y F. Sherlock
Universities
2022. The excise tax would be reduced by the fol owing
et al.
amount: [(qualified aid awards provided to first-time, ful
time undergraduate students - 20% of tuition and fees
from first-time, ful time undergraduate students) / 13%
of aggregate undergraduate tuition and fees], but not
reduced below zero. Taxpayers seeking an excise tax
reduction would be required to meet certain reporting
requirements to provide information on student loans.
The provision would also modify the $500,000 per
student threshold to be adjusted for inflation after 2022.
Treatment of
Under current law, the portion of a scholarship
For background, see
Federal Pell
(including a Pell Grant) that pays for qualified tuition and

CRS Report R45418, Federal
Grants for
fees is generally excludable from income and hence not
Pell Grant Program of the
Income Tax
taxable.j In contrast, the portion of a scholarship that
Higher Education Act: Primer,
Purposes
pays for room and board and other living expenses is
by Cassandria Dortch.
taxable. Pell Grants may be used to pay for tuition and
fees, room and board, and other educational expenses.

CRS Report R41967, Higher
Education Tax Benefits: Brief
In addition, under current law, when calculating an
Overview and Budgetary
education tax credit, taxpayers must reduce their credit-
Effects, by Margot L.
eligible education expenses by any amounts received as
Crandall-Hol ick.
tax-free scholarships. Since the amount of an education
tax credit depends on expenses incurred for tuition and

CRS Report R42561, The
fees, then all else being equal, receipt of a tax-free
American Opportunity Tax
scholarship reduces the amount of credit-eligible
Credit: Overview, Analysis, and
expenses, and may reduce the amount of their education
Policy Options, by Margot L.
credit.k
Crandall-Hol ick.
This provision would modify the current exclusion for

scholarship income such that any amount of a Pell
Grant—not just the portion that pays for qualified
tuition and fees—would be excluded from income, and
hence not be taxable. In addition, under this provision,
expenses eligible for education tax credits would not be
reduced by any amount of a Pell Grant.
Repeal of Denial
Under current law, the American Opportunity Tax
For background, see
of American
Credit (AOTC) cannot be claimed for a student

CRS Report R42561, The
Opportunity Tax
convicted of a federal or state felony drug possession or
American Opportunity Tax
Credit on Basis
distribution offense. This lifetime prohibition generally
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Description
CRS Resources
of Felony Drug
applies beginning with the year in which the conviction
Credit: Overview, Analysis, and
Conviction
occurs.
Policy Options, by Margot L.
The provision would repeal this ban, allowing the AOTC
Crandall-Hol ick.
to be claimed for an otherwise eligible student convicted
of a felony drug offense.
Source: CRS based on Subtitle H, Budget Reconciliation Legislative Recommendations Relating to Social Safety
Net.
Notes: Provisions are effective in 2022 unless otherwise noted. The changes that would be made by the
provision are permanent, unless otherwise noted. “Section” citations refer to the section within the Internal
Revenue Code (IRC), 26 U.S.C., unless otherwise noted.
a. The one exception is the maximum amount of the refundable portion of the credit that was originally
included in P.L. 115-97 (but is not in effect in 2021). The maximum amount of the refundable portion of the
child credit as enacted under P.L. 115-97 was $1,400 per child, rounded to the next lowest multiple of
$100. While this provision was in effect (2018-2020), inflation did not trigger an adjustment.
b. Under Section 24, taxpayers with a non-child credit eligible dependent (including older dependent children
and adult dependents) may claim a $500 nonrefundable tax credit for each of these other dependents. For
2023-2025, the proposal would create a similar benefit for taxpayers with non-child credit eligible
dependents under Section 24B. Unlike the $500 credit for other dependents under current law, the credit
under Section 24B would not be combined with the child credit when being phased out. In addition, it
would begin to phase out at a higher income level for head of household filers ($300,000 versus $200,000).
The $500 amount would be adjusted for inflation beginning in 2023, and taxpayers would be required to
furnish the taxpayer identification number of the dependent for whom they would claim the benefit.
c. The age of the child would generally be based on their age on the last day of the calendar year.
d. Income for purposes of phasing out the child credit is equal to Adjusted Gross Income (AGI) increased by
foreign earned income of U.S. citizens abroad, including income earned in Guam, American Samoa, the
Northern Mariana Islands, and Puerto Rico.
e. Other circumstances in which a taxpayer may need to pay back amounts include due to changes in income,
changes in marital status, change of principal place of abode, or other circumstances as described in
regulations or other guidance by the Secretary.
f.
A taxpayer could establish presumptive eligibility with the immediately preceding year’s tax return, or via
the online portal, or any other manner provided by the Secretary.
g. Under Section 24(d)(1)(B)(i ), taxpayers with three or more qualifying children can calculate the refundable
portion of the child credit—the additional child tax credit or ACTC—using an alternative formula. Under
this formula, the ACTC equals the difference in the employee’s share of Social Security taxes and Medicare
taxes (i.e., 7.65% of earned income) and their EITC, up to the maximum ACTC. The maximum ACTC in
2021 before ARPA was $1,400 per qualifying child and is currently scheduled to remain at that level from
2022 to 2025. Beginning in 2026, the maximum ACTC is scheduled to be $1,000 per qualifying child. In
most cases, the ACTC calculated under the earned income formula is greater than the ACTC calculated
under the alternative formula.
h. The law includes as part of the definition of a student someone carrying half or more of the normal ful -time
workload for their program of study, as defined under Section 25A(b)(3).
i.
This provision is not identified as a revenue provision by the Joint Committee on Taxation. The description
is included here so as to have a complete description of provisions in “Part 5—Expanding Access to Health
Coverage and Lowering Costs.”
j.
JCT provides a combined revenue estimate for all Part 6-Pathway to Practice Training Program provisions.
Under current law, taxpayers are generally subject to tax on scholarship or fellowship income that is
considered compensation for services generally, unless specifically excluded by law. Statutory exceptions
include amounts received under the National Health Service Corps Scholarship Program and the Armed
Forces Health Professions Scholarship and Financial Assistance program. See Section 117(c)(2).
k. Under current law, taxpayers may elect to have a tax-free scholarship (including a Pell Grant) included in
income and hence subject to tax. This may increase a taxpayer’s education credit and lower their total tax
(or increase their refund).
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Table 5. Subtitle I: Responsibly Funding our Priorities
Section Title
Description
CRS Resources
Part 1—Corporate and International Tax Reforms
Subpart A—Increase in Corporate Tax Rate
Increase in
Prior to P.L. 115-97 (commonly referred to as the
For background, see
Corporate Rate
“Tax Cuts and Jobs Act” or TCJA) corporate taxable

CRS Report RL34229,
income was subject to a graduated rate structure with
Corporate Tax Reform: Issues
a maximum rate of 35%. The TCJA enacted a flat 21%
for Congress, by Jane G.
corporate tax.
Gravelle.
This provision would reintroduce a graduated rate

CRS In Focus IF11809, Trends
structure. The first $400,000 of taxable income would
and Proposals for Corporate Tax
be taxed at 18%; taxable income over $400,000 but
Revenue, by Donald J. Marples
not over $5 mil ion would be taxed at 21%; and
and Jane G. Gravelle.
taxable income over $5 mil ion would be taxed at
26.5%. Taxable income over $10 mil ion would be

subject to an additional tax equal to 3% of the amount
over $10 mil ion. The additional tax would be capped
at $287,000.
Qualified personal service corporate income would
not qualify for the graduated rate structure and would
be taxed at 26.5%.
Special rules would apply to certain taxpayers, such as
public utilities.
The provision would increase the 50% (for dividends
received from corporations that are less than 20%
owned by the recipient corporation) and 65% (for
corporations that are at least 20% owned and less
than 80% owned by the recipient corporation)
dividends-received deductions to 60% and 72.5%,
respectively.
Subpart B—Limitations on Deduction for Interest Expense
Limitations on
Section 163(j) of the IRC limits interest deductions to
For background see
Deduction for
30% of earnings before interest and taxes (EBIT).

CRS Report R45186, Issues in
Interest Expense
Before 2022, the income base is earnings before
International Corporate
interest, taxes, depreciation, and amortization
Taxation: The 2017 Revision
(EBITDA). Excess interest is carried forward. The
(P.L. 115-97), by Jane G.
limit applies at the partnership or corporate level for
Gravelle and Donald J.
partnerships and Subchapter S corporations.
Marples.
This provision adds an additional interest limitation

CRS In Focus IF11809, Trends
under Section 163(n). The share of interest deducted
and Proposals for Corporate Tax
by firms with operations in other countries is limited
Revenue, by Donald J. Marples
to 110% of the allocated share of worldwide interest;
and Jane G. Gravelle.
the allocated share is the same as the U.S. firm’s share
of worldwide EBITDA. This provision applies to firms

with an average excess interest of $12 mil ion over
three years. This limit does not apply to small
businesses with average earnings over three years of
$25 mil ion, partnerships, Subchapter S corporations,
real estate investment trusts (REITs), or regulated
investment companies (RICs)
The interest carryforward under Section 163(j) or
163(o), whichever applies the smaller limit, can be
carried forward for five years. The section 163(j) limit
applies at the partner or shareholder level for
partnerships and Subchapter S corporations.
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Subpart C—Outbound International Provisions
Modifications to
Current law imposes a minimum tax on global
For background see
Deduction for
intangible low taxed income (GILTI) of control ed

CRS Report R45186, Issues in
Foreign-Derived
foreign corporations (CFCs), after allowing a
International Corporate
Intangible Income
deduction for 10% of tangible assets and 50% of the
Taxation: The 2017 Revision
and Global
remainder. A deduction is also allowed for foreign-
(P.L. 115-97), by Jane G.
Intangible Low-
derived intangible income (FDII) for 10% of tangible
Gravelle and Donald J.
Taxed Income
assets and 37.5% of the remainder. These deduction
Marples.
amounts for the remainder are scheduled to fall to
37.5% for GILTI and 21.875% for FDII after 2025.

CRS In Focus IF11809, Trends
With the current 21% tax rate, these deductions
and Proposals for Corporate Tax
result in a rate of 10.5% (13.125% after 2025) for
Revenue, by Donald J. Marples
GILTI and 13.125% (16.4% after 2025) for FDII.
and Jane G. Gravelle.
The combined GILTI and FDII deductions are limited

to taxable income and any unused deduction cannot
be carried back or forward.
This provision would accelerate the 37.5% deduction
for GILTI and a 21.875% deduction for FDII to 2022.
Given the new proposed corporate tax rate of 26.5%,
these deductions would result in a tax rate of
16.5625% for GILTI and 20.7% for FDII. The proposal
would allow amounts in excess of taxable income to
be deducted and increases net operating losses,
effectively allowing them to be carried forward.
Repeal of Election
Under current law, control ed foreign corporations

for One-Month
are generally required to have the same tax year as
Deferral in
the U.S. parent, but there is an election to begin the
Determination of
tax year one month earlier. This provision would
Taxable Year of
repeal that election. It would apply to tax years
Specified
beginning after November 30, 2021.
Corporations
Modifications of
Under current law, a credit for foreign taxes paid

Foreign Tax
offsets U.S. tax on foreign-source income dol ar for
Credit Rules
dol ar, whereas a deduction is less valuable. Dual-
Applicable to
capacity taxpayers are taxpayers who receive a benefit
Certain Taxpayers
from a foreign government (such as a right to extract
Receiving Specific
oil). These taxpayers also sometimes pay higher taxes
Economic Benefits
that may not be distinguishable from payments for
benefits (such as royalties) that would be deductible.
Under this provision, taxes would only be creditable
up to the amount that would be paid under rules
generally applicable to corporations in that country,
and the excess would be deducted. This provision
would apply as of the date of enactment.
Modification to
Current law allows a credit for foreign taxes paid
For background see:
Foreign Tax
(80% of foreign taxes can be credited for GILTI). The

CRS Report R45186, Issues in
Credit Limitations
credit is limited to U.S. tax on foreign-source income.
International Corporate
The code allocates a share of interest and head office
Taxation: The 2017 Revision
expenses of the U.S. parent company to foreign-
(P.L. 115-97), by Jane G.
source income, which reduces the limit. Any excess
Gravelle and Donald J.
credits are carried back one year and carried forward
Marples.
10 years. This limit applies on an overall basis for all
countries (within separate overall limits, or baskets,

CRS In Focus IF11809, Trends
for GILTI, branch, passive, and general income). This
and Proposals for Corporate Tax
overall limit allows taxes in excess of the U.S. tax in
Revenue, by Donald J. Marples
and Jane G. Gravelle.
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Section Title
Description
CRS Resources
high-tax countries to offset U.S. tax due in low- or no-
tax countries.
This provision would impose the limit separately in
each county (referred to as a per-country limit). The
provision would also eliminate the branch basket,
eliminate allocation of interest and head office
expenses to foreign-source income, and allow excess
credits to be carried forward five years (with no
carryback). It would also modify the treatment of
certain foreign asset dispositions.
Foreign Oil and
Under current law, foreign oil and gas extraction
For background, see
Gas Extraction
income is not taxed (although another section would

CRS Report R43128, Oil
Income and
include this income in GILTI), and foreign oil-related
Sands and the Oil Spill Liability
Foreign Oil-
income (such as distribution) is included in GILTI. This
Trust Fund: The Definition of
Related Income to
provision would amend the definition of these
“Oil” and Related Issues for
Include Oil Shale
incomes to include oil shale and tar sands.
Congress, by Jonathan L.
and Tar Sands
Ramseur.
Modifications to
Current law imposes a minimum tax on global
For background, see
Inclusion of Global intangible low taxed income (GILTI) of CFCs, after

CRS Report R45186, Issues in
Intangible Low-
allowing a deduction for 10% of tangible assets and
International Corporate
Taxed Income
50% of the remainder (this percentage would be
Taxation: The 2017 Revision
reduced by the section described above). GILTI
(P.L. 115-97), by Jane G.
(including profits and losses) is measured on an overall
Gravelle and Donald J.
basis, so that losses in one jurisdiction can offset
Marples.
income in another. Any overall losses cannot be
carried forward. Foreign oil and gas extraction income 
CRS In Focus IF11809, Trends
is not included in GILTI and not taxed.
and Proposals for Corporate Tax
Revenue, by Donald J. Marples
This provision would provide for a per-country
and Jane G. Gravelle.
measure of GILTI income and loss, reduce the
deduction for tangible assets to 5%, allow losses to be

carried forward for one year, and include foreign oil
and gas extraction income in GILTI. The reduction in
the 10% deduction for tangible assets does not apply
to the territories.
Modifications to
Under current law, credits for foreign taxes paid on
For background, see
Determination of
GILTI are limited to 80% of these taxes. This

CRS Report R45186, Issues in
Deemed Paid
provision would increase the amount to 95%. It would
International Corporate
Credit for Taxes
also provide that CFCs must have direct U.S.
Taxation: The 2017 Revision
Properly
shareholders and would apply special rules to foreign-
(P.L. 115-97), by Jane G.
Attributable to
owned U.S. shareholders. The second provision would
Gravelle and Donald J.
Tested Income
be effective for tax years beginning after December
Marples.
31, 2017.

CRS In Focus IF11809, Trends
and Proposals for Corporate Tax
Revenue, by Donald J. Marples
and Jane G. Gravelle.
Deduction for
On adoption of the GILTI regime in 2017, dividends
For background, see
Foreign-Source
from foreign corporations became deductible by

CRS Report R45186, Issues in
Portion of
shareholders with a 10% interest beginning in 2018.
International Corporate
Dividends Limited
The GILTI regime and Subpart F, which taxes certain
Taxation: The 2017 Revision
to Control ed
easily shifted income at ful rates, apply only to CFCs.
(P.L. 115-97), by Jane G.
Foreign
CFCs are 50% owned by U.S. shareholders, each with
Gravelle and Donald J.
Corporations, Etc.
at least 10% ownership. This provision would limit
Marples.
dividend deductions by 10% shareholders to dividends
of CFCs. Foreign corporations that are not CFCs
could elect CFC status with the agreement of all U.S.
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Section Title
Description
CRS Resources
shareholders. The provision would also largely reverse
the elimination of downward attribution where CFC
status could result from tracing ownership by a U.S.
corporation up through a foreign parent. Currently,
these downward attribution rules apply to a U.S.
person at least 10% control ed by a foreign person;
the revision would raise that share to 50%. These
provisions would apply to tax years beginning after
December 31, 2017.
Limitation on
Under current law, subpart F imposes current taxes
For background, see
Foreign Base
on certain income that is easily shifted, including

CRS Report R45186, Issues in
Company Sales
foreign base company sales and service income. This
International Corporate
and Service
income is earned in a jurisdiction where the product
Taxation: The 2017 Revision
Income
or service is neither produced nor consumed (i.e., in
(P.L. 115-97), by Jane G.
an intermediary). It applies to transactions with
Gravelle and Donald J.
related parties. This provision would limit the
Marples.
definition of related parties to taxable units resident in
the United States. It also closes certain tax planning
techniques that allow U.S. shareholders to avoid tax.
Subpart D—Inbound International Provisions
Modification to
Under current law, the base erosion and anti-abuse
For background, see
Base Erosion and
tax (BEAT) provides for an alternative calculation of

CRS Report R45186, Issues in
Anti-Abuse Tax
tax by adding certain payments to related foreign
International Corporate
parties (such as interest and royalties) and taxing this
Taxation: The 2017 Revision
income at 10%. Payments for the cost of goods sold
(P.L. 115-97), by Jane G.
are not included. BEAT does not allow tax credits,
Gravelle and Donald J.
including the foreign tax credit, except for a
Marples.
temporary allowance of the research credit along with
80% of the low-income housing credit and two energy
credits. After 2025, the rate wil rise to 12.5% and no
credits wil be allowed.
This provision would raise the tax rate to 12.5% in
2024 and 2025, and 15% after 2025. Tax credits would
be allowed. The base would also include payments to
foreign related parties for inventory that is required
to be capitalized (such as inventory to produce
tangible property) and payments for inventory in
excess of cost.
Subpart E—Other Business Tax Provisions
Credit for Clinical
Under current law, businesses investing in the

Testing of Orphan
development of drugs to diagnose, treat, or prevent
Drugs Limited to
rare diseases and conditions—sometimes referred to
First Use or
as “orphan drugs”—have been able to claim a
Indication
nonrefundable tax credit for a portion of the qualified
clinical testing expenses they incur or pay.
This provision would modify the credit to limit the
eligibility of drugs to their first use or indication. In
addition, expenses eligible for the credit must be
incurred prior to the receipt of any other use or
indication.
Modifications to
Under this provision, a worthless security would be

Treatment of
considered a loss from the sale or exchange at the
Certain Losses
time it became worthless, as opposed to on the last
day of the taxable year. The rules relating to
worthless securities would be expanded to include
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Description
CRS Resources
partnership indebtedness so that partnership
indebtedness would be treated the same as corporate
indebtedness. A worthless partnership interest would
be considered a loss from the sale or exchange of a
capital asset and recognized at the time it became
worthless. The tax treatment of corporate subsidiary
liquidations would be modified.
Adjusted Basis
Corporations that reorganize have rules about

Limitation for
whether the corporation wil realize gain in the
Divisive
transaction. If these reorganizations only involve the
Reorganization
exchange of stock, the reorganization is tax free.
However, if money or property is transferred, the
corporation receiving the property can be subject to
tax on gain in the value of assets as long as they are
not distributed to shareholders. If the property is
transferred to creditors, it is treated as a distribution.
This provision would apply to reorganizations that
involve a corporation (the distributing corporation)
separating from its control ed corporation. In this
case, where the control ed corporation receives
property from the distributing corporation and
transfers debt securities to the creditors of the
distributing corporation, any gain on the property is
subject to tax.
Rents from Prison
A real estate investment trust (REIT) is a real estate
For background, see
Facilities not
company that would otherwise be taxed as a

CRS Report R44421, Real
Treated as
corporation, except that it meets certain tests and
Estate Investment Trusts
Qualified Income
faces a number of restrictions. Among the tests is the
(REITs) and the Foreign
for Purposes of
requirement that at least 75% of REIT income be
Investment in Real Property Tax
REIT Income Test
passively derived from real estate (e.g., rents,
Act (FIRPTA): Overview and
mortgages).
Recent Tax Revisions, by Jane
This provision would exclude prison facility rental
G. Gravelle.
income from being qualified income for the income
test.
Modification to
Under current law, an exemption for portfolio

Exemption for
interest allows foreign corporations (and
Portfolio Interest
nonresidents) to invest in certain U.S. debt without
being subject to U.S. income tax (or withholding). This
exemption is not allowed for 10% shareholders—
individuals who own 10% of the voting stock of the
corporation.
This provision would expand the definition of 10%
shareholder to also include any individual who owns
10% of the value of the corporation.
Certain
Under current law, income arising from notional

Partnership
principal contracts is generally sourced to the
Interest
residence of the recipient of the payment—unless the
Derivatives
income is effectively connected with U.S. trade or
business activity. Publically traded partnerships,
however, are not subject to the rules on effectively
connected income.
The provision would treat notional principal contract
income of publicly traded partnerships as “dividend
equivalent amounts” that would be sourced based on
the residence of the payor.
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Section Title
Description
CRS Resources
Adjustments to
Under current law, earnings and profits determine

Earnings and
whether a distribution is a dividend (which may be
Profits of
taxed), return of capital (not taxed), or capital gain
Control ed
(taxed). Earnings and profits are adjusted by various
Corporations
items, but control ed foreign corporations are not
subject to certain inventory adjustments, installment
sales, or the completed contract method of
accounting.
This change relocates this provision in the tax code
and does not include the former language that these
rules do not apply if they increase earnings and profits
above distributions.
Certain Dividends
Under current law, dividends are often exempt or

from Control ed
partially exempt from tax through domestic
Foreign
intercompany dividend deductions, and foreign
Corporations to
dividends from CFCs are exempt for 10%
United States
shareholders. When stock has been held for less than
Shareholders
two years, and an extraordinary dividend is paid, that
Treated as
dividend reduces the basis (the basis is the price paid
Extraordinary
for the stock) of the stock, and if it exceeds the basis
Dividends
it is treated as a capital gain. An extraordinary
dividend is one that exceeds 10% of the value of the
stock (5% for preferred stock).
This provision would make disqualified dividends from
CFCs subject to the rules for treatment as a
reduction of basis or capital gain regardless of holding
period. Disqualified dividends are those that arise
from earnings and profits or gains during a disqualified
period. A disqualified period is one before the
corporation became a CFC or when it was owned by
a non-U.S. shareholder.
This provision applies to distributions made after the
date of enactment.
Modification of
Under current law, partnership interest transferred to For background, see
Rules for
the taxpayer in connection with the provision of

CRS Report R46447, Taxation
Partnership
services to a trade or business (carried interest) held
of Carried Interest, by Donald
Interests Held in
for at least three years is taxed as a long-term capital
J. Marples.
Connection with
gain.
the Performance
This provision would modify the tax rules surrounding
of Services
“carried interest” by extending the holding period to
qualify for long-term capital gains to five years for
taxpayers with adjusted gross income of $400,000 or
more, broadening the definition of carried interest to
include partnership assets under the taxpayer’s direct
or indirect control, and adding additional rules for
measuring the holding period (including for tiered
partnerships).
Limitation on
Under current law, noncorporate taxpayers may

Certain Special
exclude a portion of the gain from the sale of qualified
Rules for Section
small business stock held for at least five years. The
1202 Gains
exclusion rate is determined by the date of
acquisition—50% for stock acquired on or before
February 17, 2009; 75% for stock acquired after
February 17, 2009, and before September 28, 2010;
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Description
CRS Resources
and 100% for stock acquired after September 27,
2010.
The provision would limit the 75% and 100%
exclusions to taxpayers with AGI less than $400,000.
Taxpayers with AGI greater than or equal to
$400,000, estates, and trusts would be eligible for the
50% exclusion.
Constructive Sales
Under the constructive sale rule, certain offsetting

financial assets transactions are treated as if the
transaction occurred with an unrelated party. This
rule results in the realization of any gains in the
financial assets for tax purposes as a “constructive
sale.”
The provision would extend current-law constructive
sales rules to digital assets.
Rules Relating to
Common control rules are applied in the tax code to

Common Control
treat multiple taxpayers as a single taxpayer to apply
specific tax rules. These rules apply to both corporate
and noncorporate entities that are conducting a trade
or business.
This provision would clarify the definition of trade or
business to include activities involving research and
development and investment activity.
Wash Sales by
Wash sale rules generally disallow claims of a loss

Related Parties;
related to stocks or securities if the taxpayer acquires
Wash Sales of
or contracts to acquire similar assets within 30 days of
Specified Assets
the sale of the original asset.
This provision would extend current-law wash sale
rules to the taxpayer and related parties and to
specified assets (including digital assets, currencies,
and commodities).
Part 2—Tax Increases for High-Income Individuals
Increase in Top
The top individual income tax rate was temporarily
For background, see
Marginal Individual
reduced from 39.6% to 37%, from 2018 through 2025,

CRS Insight IN11653,
Income Tax Rate
as part of the TCJA.
Taxpayers in the Top Income
This provision would increase the top marginal
Tax Bracket: Statistics and
individual income tax rate to 39.6%, starting in 2022.
Observations, by Mol y F.
This marginal rate would apply to taxable income over
Sherlock.
$400,000 for unmarried filers, $425,000 for head of
household filers, $450,000 for married taxpayers filing
jointly, $225,000 for married taxpayers filing separate
returns, and $12,500 for estates and trusts with
taxable income. These amounts would be adjusted for
inflation after 2025.
Increase in Capital
This provision would increase the top capital gains
For background, see
Gains Rate for
rate on assets held for a year or more from 20% to

CRS Report 96-769, Capital
Certain High-
25%. The 25% rate would apply only to those subject
Gains Taxes: An Overview, by
Income
to the top marginal individual income tax rate (which
Jane G. Gravelle.
Households
would be increased to 39.6%; see previous provision
entry).

CRS Report R41364, Capital
Gains Tax Options: Behavioral
This provision would apply to taxable years ending
Responses and Revenues, by
after September 13, 2021. A transition rule would
Jane G. Gravelle.
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Description
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apply to taxable years that include September 13,
2021.
Application of Net
This provision would subject the active income of
For background, see
Investment
high-income partners and S corporation owners that

CRS In Focus IF11820, The
Income Tax to
is not already subject to FICA or SECA tax to the
3.8% Net Investment Income
Trade or Business
3.8% net investment income tax. The high-income
Tax: Overview, Data, and Policy
Income of Certain
thresholds would be $250,000 (married filing
Options, by Mark P. Keightley.
High-Income
separately), $400,000 (single or head of household),
Households
and $500,000 (joint).
Limitation on
This provision would limit the dol ar amount of the
For background, see
Deduction of
20% Section 199A deduction for pass-through

CRS In Focus IF11122, Section
Qualified Business
business income. Specifically, the deduction amount
199A Deduction for Pass-
Income for
would be limited to $500,000 in the case of a joint
through Business Income: An
Certain High-
return, $250,000 in the case of a married individual
Overview, by Gary Guenther.
Income Individuals
filing a separate return, $10,000 in the case of an
estate or trust, and $400,000 in the case of any other

CRS Report R46402, The
taxpayer.
Section 199A Deduction: How It
Works and Illustrative

Examples, by Gary Guenther.

CRS Report R46650, Section
199A Deduction: Economic
Effects and Policy Options, by
Gary Guenther.
Limitation on
The TCJA (P.L. 115-97) introduced excess business
For background, see
Excess Business
loss limitations, which limit the amount of business

CRS Report R46377, The Tax
Losses of
losses that noncorporate taxpayers can use to offset
Treatment and Economics of
Noncorporate
their nonbusiness income to $500,000 for a joint
Net Operating Losses, by Mark
Taxpayers
return and $250,000 for a single return. These limits
P. Keightley.
were set to expire after 2025. In response to the
economic effects of the COVID-19 pandemic, the
Coronavirus Aid, Relief, and Economic Security
(CARES) Act (P.L. 116-136) temporarily suspended
the limits on excess business losses through 2025. The
American Rescue Plan Act of 2021 (P.L. 117-2)
extended the original TCJA limits through 2026.
This provision would make permanent the excess
business loss limitation for noncorporate taxpayers.
Surcharge on
The provision would create an additional income tax

High-Income
on individuals, estates, and trusts on modified adjusted
Individuals,
gross income (MAGI) in excess of specified
Estates, and Trusts thresholds. The tax would be applied at a flat rate of
3% and would apply to MAGI in excess of $2.5 mil ion
for married individuals filing separate returns,
$100,000 for estates and trusts, and $5 mil ion for all
other noncorporate taxpayers. Taxes paid under this
provision would not be treated as income taxes paid
for purposes of the alternative minimum tax.
Termination of
The TCJA (P.L. 115-97) temporarily increased, from
For background, see
Temporary
2018 through 2025, the basic exclusion for the estate

CRS Report R42959, Recent
Increase in Unified
and gift tax by doubling the basic exclusion from $5
Changes in the Estate and Gift
Credit
mil ion to $10 mil ion. This amount is adjusted for
Tax Provisions, by Jane G.
inflation, resulting in a basic exclusion of $11.7 mil ion
Gravelle.
for 2021.
This provision reinstates the pre-TCJA exclusion
amount to $5 mil ion.
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Section Title
Description
CRS Resources
Increase in
Estates containing active interests in farm or trade and For background, see
Limitation on
business assets are allowed to reduce the value of the

CRS Report R42959, Recent
Estate Tax
assets for the purpose of valuing the gross estate, if
Changes in the Estate and Gift
Valuation
the current use value of the assets is less than the fair
Tax Provisions, by Jane G.
Reduction for
market value of the assets, subject to a limit.
Gravelle.
Certain Real
The provision would increase the maximum valuation
Property Used in
discount for farm and trade or business property to
Farming or Other
$11.7 mil ion (from $1,190,000 in 2021).
Trades and
Businesses
Certain Rules
A grantor trust is a trust where the grantor is treated

Applicable to
as the owner of the trust and retains the rights and
Grantor Trusts
benefits of the assets in the trust. Because the grantor
and the grantor trust are treated as a single entity for
tax purposes, transactions between the grantor and
the grantor trust are disregarded.
This provision would include in a grantor’s taxable
estate the value of any assets held in a grantor’s trust
at the grantor’s death and apply any transfers from the
grantor trust to a beneficiary of the grantor trust
made during the grantor’s life as if made by the
grantor.
This provision would be effective as of the date of
enactment.
Certain Sales
A grantor trust is a trust where the grantor is treated

Between Grantor
as the owner of the trust and retains the rights and
Trust and Deemed benefits of the assets in the trust. Because the grantor
Owner
and the grantor trust are treated as a single entity for
tax purposes, transactions between the grantor and
the grantor trust are disregarded.
This provision would treat the transfer of a property
between a grantor trust and the grantor as a taxable
transaction.
This provision would be effective as of the date of
enactment.
Valuation Rules for Assets subject to the estate and gift taxes are
For background, see
Certain Transfers
generally valued at their fair market value on the date

CRS Report R42959, Recent
of Nonbusiness
of transfer. If actual prices are not available, the value
Changes in the Estate and Gift
Assets
of an interest in a closely held business is determined
Tax Provisions, by Jane G.
using a variety of factors and several types of
Gravelle.
discounts may be applied. These discounts include
minority discounts, il iquidity discounts, and
investment company discounts.
This provision would clarify that discounts are not
allowed for the transfer of assets held for the
production or col ection of income that are not
actively used by the trade or business.
This provision would be effective as of the date of
enactment.
Part 3—Modification of Rules Relating to Retirement Plans
Subpart A—Limitations on High-income Taxpayers with Large Retirement Account Balances
Contribution Limit Taxpayers can contribute to their individual
For background, see
for Individual
retirement accounts (IRAs) regardless of the balance
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Description
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Retirement Plans
in the accounts. This provision would disallow

CRS Report RL34397,
of High-Income
contributions for accounts with assets over $10
Traditional and Roth Individual
Taxpayers with
mil ion. It would apply to married couples with taxable
Retirement Accounts (IRAs): A
Large Account
income over $450,000 (singles over $400,000 and
Primer, by Elizabeth A. Myers.
Balances
heads of household over $425,000). There is also a

provision for reporting on employer defined

CRS Report R46635,
Individual Retirement Account
contribution plans for accounts with more than $2.5
(IRA) Ownership: Data and
mil ion.
Policy Issues, by Elizabeth A.
Myers.

CRS Report R43439, Worker
Participation in Employer-
Sponsored Pensions: Data in
Brief, by John J. Topoleski and
Elizabeth A. Myers.

CRS Insight IN11722, Data on
Contributions to Individual
Retirement Accounts (IRAs), by
Elizabeth A. Myers and John J.
Topoleski.

CRS Insight IN11721, Data on
Retirement Contributions to
Defined Contribution (DC)
Plans, by John J. Topoleski and
Elizabeth A. Myers.
Increase in
Under current law, taxpayers are generally required
For background, see
Minimum Required to begin making withdrawals (“required minimum

CRS Report RL34397,
Distributions for
distributions”) from traditional IRAs when they are 72
Traditional and Roth Individual
High-Income
years old (this does not apply to Roth IRAs). This
Retirement Accounts (IRAs): A
Taxpayers with
provision would require individuals with a combined
Primer, by Elizabeth A. Myers.
Large Retirement
traditional IRA, Roth IRA, and employer defined
Account Balances
contribution plan of over $10 mil ion to make

CRS Report R46635,
withdrawals of 50% of the excess over $10 mil ion.
Individual Retirement Account
This rule would apply to taxpayers with taxable
(IRA) Ownership: Data and
income in excess of the amounts listed above.
Policy Issues, by Elizabeth A.
Myers.
A traditional IRA allows a deduction of contributions
and taxation of withdrawals, while a Roth IRA does

CRS Report R43439, Worker
not allow the deduction or impose the tax on
Participation in Employer-
withdrawals, but exempts the earnings from tax.
Sponsored Pensions: Data in
Employer defined contribution plans can be in the
Brief, by John J. Topoleski and
traditional or Roth form. The provision would also
Elizabeth A. Myers.
require that when the amounts in all accounts exceed

CRS Insight IN11722, Data on
$20 mil ion, withdrawals must be made from Roth
Contributions to Individual
IRAs and employer plans to reduce the amount to
Retirement Accounts (IRAs), by
$20 mil ion up to the amounts in these plans.
Elizabeth A. Myers and John J.
Topoleski.

CRS Insight IN11721, Data on
Retirement Contributions to
Defined Contribution (DC)
Plans, by John J. Topoleski and
Elizabeth A. Myers.
Subpart B—Other Provisions Relating to Individual Retirement Plans
Tax Treatment of
Contributions to Roth IRAs and the deductibility of
For background, see
Rol overs to Roth
contributions to traditional IRAs are limited by

CRS Report RL34397,
IRAs and Accounts income, although individuals can make nondeductible
Traditional and Roth Individual
contributions to traditional IRAs regardless of income.
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Section Title
Description
CRS Resources
For a nondeductible IRA, the withdrawals are partially
Retirement Accounts (IRAs): A
exempt to recover the taxpayer’s contribution
Primer, by Elizabeth A. Myers.
proportional to the withdrawal. Current law allows

CRS Report R46635,
conversions from traditional to Roth IRAs without an
Individual Retirement Account
income limit, so that taxpayers can invest in a
(IRA) Ownership: Data and
nondeductible traditional IRA and then convert it to a
Policy Issues, by Elizabeth A.
Roth IRA (so called “back-door Roths”).
Myers.
This provision would eliminate the conversion of

nondeductible IRAs and employer plans to Roth

CRS Report R43439, Worker
Participation in Employer-
accounts.
Sponsored Pensions: Data in
For high-income taxpayers, as described above,
Brief, by John J. Topoleski and
transfers could only be made from Roth plans. This
Elizabeth A. Myers.
provision would apply beginning in 2032.

CRS Insight IN11722, Data on
Contributions to Individual
Retirement Accounts (IRAs), by
Elizabeth A. Myers and John J.
Topoleski.

CRS Insight IN11721, Data on
Retirement Contributions to
Defined Contribution (DC)
Plans, by John J. Topoleski and
Elizabeth A. Myers.
Prohibition of IRA
This provision would disallow holding of securities in
For background, see
Investments
an IRA if the issuer requires a minimum income, asset,

CRS Report RL34397,
Conditioned on
or education level or a license or credential. Holding
Traditional and Roth Individual
Account Holder’s
these assets would disqualify the account as an IRA.
Retirement Accounts (IRAs): A
Status
There would be a two-year transition period for
Primer, by Elizabeth A. Myers.
existing IRAs.

CRS Report R46635,
Individual Retirement Account
(IRA) Ownership: Data and
Policy Issues, by Elizabeth A.
Myers.

CRS Insight IN11722, Data on
Contributions to Individual
Retirement Accounts (IRAs), by
Elizabeth A. Myers and John J.
Topoleski.
Statute of
This provision would extend the statute of limitations

Limitations with
from three to six years for IRA noncompliance related
Respect to IRA
to valuation and prohibited transactions.
Noncompliance
Prohibition of
An IRA owner cannot invest in a partnership,

Investment of IRA
corporation, trust, or estate that is 50% owned. This
Assets in Entities
provision would reduce that ownership to 10% for
in which the
assets that are not publicly traded and disallow
Owner Has a
investments when the owner is an officer. Violating
Substantial
these rules would cause an account to lose IRA status.
Interest
There is a two-year transition period for existing
IRAs.
IRA Owners
Under the prohibited transaction rule, IRA owners

Treated as
cannot do business with disqualified persons (such as
Disqualified
relatives who own more than 50% of a business). This
Persons for
provision would clarify that disqualified persons
Purposes of
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Tax Provisions in the “Build Back Better Act"

Section Title
Description
CRS Resources
Prohibited
include the owner and individuals who inherit the IRA
Transaction Rules
or beneficiaries.
Part 4—Funding the Internal Revenue Service and Improving Taxpayer Compliance
Application of
This provision would make payments from third-party
For background, see
Backup
networks (such as credit card companies, electronic

CRS In Focus IF11896, Tax
Withholding with
payment processors, and some “gig economy”
Treatment of Gig Economy
Respect to Third-
platforms) subject to backup withholding. Not all
Workers, by Anthony A.
Party Network
taxpayers would be subject to backup withholding on
Cil uffo.
Transactions
these transactions. Only taxpayers who meet a
requirement in Section 3406(a)(1) would have backup

withholding from their payments. Generally, this
happens when the taxpayer does not provide a tax
identification number (such as a Social Security
number) to the network or if the taxpayer is subject
to backup withholding due to a previous
underreporting penalty.
Payments typically may be subject to backup
withholding if the aggregate payments from the third-
party network to the taxpayer are equal to or greater
than $600 in a year.
Limitation on
This provision would disallow qualified conservation
For background, see
Deduction for
contributions made by a partnership (or other pass-

CRS Insight IN11141,
Qualified
through entity) if the amount of the contribution
Charitable Conservation
Conservation
exceeds 2.5 times each partner’s basis, for property
Contributions: Potential for
Contributions
interests held for less than 3 years. This provision
Abuse?, by Mol y F. Sherlock.
Made by Pass-
would not apply to family partnerships. The provision
Through Entities,
would also make changes to accuracy-related penalties
Etc.
for conservation easements.
The provision would be effective for contributions
made after December 23, 2016 (the date of IRS
Notice 2017-10). For certified historic structure
easement contributions, the proposal would be
effective for contributions made in taxable years
beginning after December 31, 2018.
Modification of
Under current law, generally no penalty or addition to
Procedural
tax under the IRC can be assessed unless the initial
Requirements
determination of such assessment is personally
Related to
approved (in writing) by the immediate supervisor of
Assessment of
the IRS employee making such determination.
Penalties
Exceptions to supervisory preapproval apply, including
for penalties/additions to tax automatically calculated
through electronic means and associated with failure
to file or pay taxes.
This provision would repeal this requirement for
supervisory preapproval effective for
penalties/additions to tax assessed after December 31,
2000.
The provision would enact a new requirement that
each supervisor certify on a quarterly basis whether
employees have fol owed procedural requirements
with respect to issuing notices of penalties to
taxpayers. This provision would apply to notices of
penalties issued after the date of enactment.
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Section Title
Description
CRS Resources
Part 5—Other Provisions
Modifications to
The American Rescue Plan Act of 2021 (ARPA; P.L.

Limitation on
117-2) included expansion of the Section 162(m) limit
Deduction of
on excessive employee compensation, effective after
Excessive
December 31, 2026. The provision would deny
Employee
deduction of compensation in excess of $1 mil ion to
Remuneration
certain highly paid employees, plus the CEO or CFO,
at publicly traded companies. Under the ARPA
expansion, up to 10 individuals may be covered under
Section 162(m). This provision accelerates the
effective date for this provision to December 31,
2021. The provision would also modify the definition
of employee remuneration to include performance-
based compensation, commissions, post-termination
compensation, and beneficiary payments, whether or
not the compensation is paid by the corporation.
Extension of Tax
The black lung excise tax (BLET) is on sales or use of
For background, see
to Fund Black
domestically mined coal. The tax is designed to

CRS Report R45261, The
Lung Disability
support the Black Lung Disability Trust Fund for
Black Lung Program, the Black
Trust Fund
domestic miners. Currently, through 2021, coal from
Lung Disability Trust Fund, and
underground mines is taxed at a rate of $1.10 per ton
the Excise Tax on Coal:
and coal from surface mines is taxed at 55 cents per
Background and Policy Options,
ton, with the tax for both types of coal being no more
by Scott D. Szymendera and
than 4.4% of the sale price. Effective January 1, 2022,
Mol y F. Sherlock.
the tax on underground-mined coal wil be the lesser
of (1) 50 cents per ton, or (2) 2% of the sale price.
The tax on surface-mined coal wil be the lesser of (1)
25 cents per ton, or (2) 2% of the sales price. This
provision would extend the higher excise tax rates
through December 31, 2025.
Prohibited
DISCs (Domestic International Sales Corporations)

Transactions
and FSCs (Foreign Sales Corporations) were firms
Relating to
with export benefits, and these benefits were repealed
Holding DISC or
going forward. This provision would disallow an
FSC in Individual
interest in a DISC or FSC that receives a payment or
Retirement
commission from an entity owned directly by the
Account
individual from being held in that individual’s IRA.
Constructive ownership rules require a 50%
ownership, which is reduced to 10% for this purpose.
Increase in Tax on
This provision would increase the tax on small
For background, see
Certain Tobacco
cigarettes and cigars from $50.33 per 1,000 (about

CRS In Focus IF11321, Federal
Products and
$1.01 per pack of 20) to $100.66 per 1,000 (about
Regulation of Tobacco: Legal
Imposition of Tax
$2.01 per pack of 20). It would also increase the tax
Framework and Issues for the
on Nicotine
rate for large cigarettes (from $105.69 per 1,000 to
116th Congress, by Jennifer A.
$211.39 per 1,000); smokeless tobacco (from $1.51
Staman.
per pound to $26.84 per pound for snuff, and from
50.33 cents per pound to $10.70 per pound for

CRS Report RS22681, The
chewing tobacco); pipe tobacco (from $2.8311 per
Cigarette Tax Increase to
pound to $49.56 per pound); and rol -your-own
Finance SCHIP, by Jane G.
tobacco (from $24.78 per pound to $49.56 per
Gravelle.
pound).

It would change the way large cigars are taxed. Under
current law, large cigars are taxed 52.75% of the sales
price, but not more than $402.60 per 1,000. Under
this provision, the rate would be $49.56 per pound,
but not less than $0.1006 per cigar. This change would
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Tax Provisions in the “Build Back Better Act"

Section Title
Description
CRS Resources
increase the tax on cigars. For a smaller 5 gram cigar,
the tax would be $0.5463 per cigar; for a 15 gram
cigar, the tax would be $1.6389.
It would create a new taxable category of “discrete
single-use units” as a type of taxable smokeless
tobacco product, taxed at $100 per 1,000. Discrete
single-use units are defined to include lozenges,
tablets, pil s, and similar products that are not
intended to be smoked.
It would also impose a tax on nicotine products (for
use in vaping and other methods) calculated as the
amount of nicotine in the product in mil igrams
divided by 1,810 mil igrams times the tax rate for
1,000 small cigarettes ($100.66). Provides an
exemption for nicotine used in medical products
approved by the Federal Food and Drug
Administration.
The increased tax rate on most covered tobacco
products would begin in the first calendar quarter
after the act is enacted. The taxes on large cigars,
discrete single-use units, and taxable nicotine would
begin in the first calendar quarter starting at least 180
days after the act is enacted. The provision would
impose a one-time floor stocks tax on inventories on
the date of the tax increase, with a $1,000 credit
against any floor stocks tax liability.
Clarification of
Typically, covered tobacco products for which a

Rules Regarding
federal excise tax is paid that are then exported from
Tobacco
the United States can receive a drawback, or refund,
Drawback
of the tax paid (Section 5706). This provision clarifies
that any covered tobacco product that is eligible for
one of the limited exemptions in Section 5704
(generally relating to certain exports or imports) is
not eligible to receive a drawback refund. This change
would address cases where taxes are paid on imports
but withdrawn when substitute goods not subject to
excise tax are exported.
The clarification would apply to all drawback claims
made on or after December 18, 2018 (the date that
regulations were issued to address this issue; the
regulations were subsequently overturned in court). It
would not apply to claims made before that date.
Termination of
Through 2025, employers can claim a tax credit of up
For background, see
Employer Credit
to 25% of wages paid by employers providing paid

CRS Report R46800,
for Paid Family and leave to employees under the Family and Medical
Temporary Business-Related
Medical Leave
Leave Act of 1993 (FMLA; P.L. 103-3). The credit can
Tax Provisions Expiring 2021-
only be claimed for paid family and medical leave
2027 and Business “Tax
provided to certain employees with incomes below a
Extenders”, coordinated by
fixed threshold (for credits claimed in 2021, employee
Jane G. Gravelle and Mol y F.
compensation in 2020 cannot have exceeded
Sherlock.
$78,000). This provision would accelerate the
termination of this tax credit by two years, to

CRS In Focus IF11141,
December 31, 2023.
Employer Tax Credit for Paid
Family and Medical Leave, by
Mol y F. Sherlock.
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Tax Provisions in the “Build Back Better Act"

Section Title
Description
CRS Resources

CRS Report R46390, Paid
Family and Medical Leave:
Current Policy and Legislative
Proposals in the 116th
Congress, by Mol y F.
Sherlock, Barry F. Huston,
and Sarah A. Donovan.
Clarification of
DISCS and FSCs were firms with export benefits, and

Treatment of
these benefits were repealed going forward. This
DISC Gains and
provision clarifies that sale or exchange of, or
Distributions of
distributions to a foreign person wil be treated as
Certain Foreign
effectively connected income from a trade or business
Shareholders
in the United States, subjecting them to U.S. tax.
Access to Self-
Section 6103 would be modified to allow the

Employment
disclosure of certain tax return information of self-
Income
employed individuals for the purposes of determining
Information for
the paid family and medical leave benefit created in
Paid Leave
Subtitle A (the universal paid family and medical leave
Administration
benefit in a new title XXII of the Social Security Act).
Temporary Rule
This provision would allow eligible S corporations to

to Allow Certain S convert to a partnership without the conversion being
Corporations to
considered a taxable liquidation. Eligible S
Reorganize as
corporations include those that were an S
Partnerships
corporation on May 13, 1996, and all times thereafter.
without Tax
This provision would apply to conversions completed
during the two-year period starting on December 31,
2021.
Treatment of
Under current law, sound recording production costs
For background, see
Certain Qualified
are not deducted immediately, but are deducted over

CRS Report RL31852, The
Sound Recording
time under the income forecast method. Television
Section 179 and Section 168(k)
Productions
and theater productions have tax benefits that allow
Expensing Allowances: Current
them to expense (deduct immediately) up to $15
Law and Economic Effects, by
mil ion. This provision is set to expire after 2025.
Gary Guenther.
Production costs of qualified film, television, and live
theatrical productions are also eligible for bonus

CRS Report R46800,
depreciation. Bonus depreciation allows costs to be
Temporary Business-Related
deducted immediately. Bonus depreciation is currently
Tax Provisions Expiring 2021-
100%, but it is scheduled to be phased out over five
2027 and Business “Tax
years starting in 2023, and wil no longer be available
Extenders”, coordinated by
in 2027 and after.
Jane G. Gravelle and Mol y F.
Sherlock.
This provision would allow for the expensing of sound
recording production costs, up to $150,000. Sound
recording would also be made eligible for bonus
depreciation.
This provision would expire after 2025.
Payment to
This provision would modify the existing mechanism

Certain Individuals
for refunding taxes paid by consumers of diesel fuel
who Dye Fuel
and kerosene, which had already been taxed, who use
the fuel for nontaxable purposes. This provision
would specifically exempt off-highway business uses
(such as certain farming equipment), all trains, school
buses, and qualified local buses.
Extension of
Under current law, restaurants may claim an income

Credit for Portion
tax credit for the portion of Social Security and
of Employer Social
Medicare payrol taxes paid on tips received by
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Tax Provisions in the “Build Back Better Act"

Section Title
Description
CRS Resources
Security Taxes
employees who customarily receive tips (such as wait
Paid with Respect
staff). The credit is only available on the portion of
to Employee Tips
tips that exceed the federal minimum wage.
to Beauty Service
This provision would extend the same tax credit to
Establishments
employers of customarily tipped beauty service staff.
Beauty services are defined as barbering and hair care,
nail care, esthetics, and body and spa treatments.
Enhancement of
This provision would modify the Work Opportunity
For background, see
Work
Tax Credit (WOTC) for most WOTC-targeted

CRS Report R43729, The
Opportunity
groups hired before 2023 in the fol owing ways: (1)
Work Opportunity Tax Credit,
Credit During
increase the credit rate to 50% (from 40%), and (2)
by Benjamin Col ins and Sarah
COVID-19
allow the WOTC to be claimed for wages earned
A. Donovan.
Recovery Period
during the second year of employment. The provision
would also increase the maximum amount of WOTC-
eligible wages for most groups to $10,000 (from
$6,000) in wages per year.
Allowance of
This provision would allow an above-the-line
For background, see
Deduction for
deduction for up to $250 in dues paid to a labor

CRS Report RL30110, Federal
Certain Expenses
organization described in Section 501(c)(5).
Individual Income Tax Terms:
of the Trade or
An Explanation, by Mark P.
Business of Being
Keightley.
an Employee
Cover Over of
Under current law, Puerto Rico and the U.S. Virgin
For background, see
Certain Distil ed
Islands (USVI) receive a transfer (“cover over”) of

CRS Report R46800,
Spirits Taxes
federal distil ed spirits excise taxes col ected on rum
Temporary Business-Related
produced in each territory. Currently, the amount
Tax Provisions Expiring 2021-
transferred is limited to $13.25 per proof gallon. The
2027 and Business “Tax
highest excise tax rate on rum is $13.50 (the transfer
Extenders”, coordinated by
ignores any reduced rates provided to small
Jane G. Gravelle and Mol y F.
producers).
Sherlock.
This provision would remove the limit on taxes that
may be transferred to each territory.
The provision would require Puerto Rico to transfer
one-sixth of the portion of the transfer it receives
greater than $10.50 and less than the actual rate (or
$13.25, if lower) per proof gallon to the Puerto Rico
Conservation Trust. The transfer amount is
determined without considering any reduced rates
paid by small producers.
Research and
The TCJA (P.L. 115-97) repealed the option to
For background, see
Experimental
expense qualified research expenditures, beginning in

CRS In Focus IF10757, The
Expenditures
2022. Under current law, starting in 2022, companies
2017 Tax Law (P.L. 115-97)
wil be required to capitalize those costs and amortize
and Investment in Innovation,
them over 5 years for domestic research and 15 years
by Gary Guenther.
for foreign research.
This provision would delay the requirement that
qualified research expenditures be capitalized and
amortized until 2026.
Payrol Credit for
This provision would create a refundable payrol tax

Compensation of
credit for local newspaper publishers for a portion of
Local News
the wages paid to local news journalists.
Journalists
Local newspaper publishers would be able to claim a
credit against the Medicare Hospital Insurance tax
paid on the wages of local news journalists who spend
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Tax Provisions in the “Build Back Better Act"

Section Title
Description
CRS Resources
at least 100 hours a calendar quarter creating local
news coverage.
The wages for each journalist considered for the
credit may not exceed $12,500 per quarter. The
credit is equal to 50% of wages paid to each journalist
in the first year of the credit. The credit is then 30%
for years two through five. The credit expires after
the fifth year.
Publishers must not employ more than 750 people to
qualify for the credit. The U.S. government, state or
local governments, or any agencies of those
governments, do not qualify. The provision would also
prevent employers from getting “double benefits”
from this and other payrol tax credits.
Treatment of
Passive foreign investment companies (PFICS) are

Financial Guaranty
foreign-incorporated firms that have 75% of earnings
Insurance
in passive investments or 50% of assets that earn
Companies as
dividends, interest, or capital gains (for example, a
Qualifying
mutual fund or hedge fund). These firms are often
Insurance
located in tax havens with little or no corporate tax.
Corporations
Distributions from a PFIC are taxed at the highest tax
Under Passive
rate plus an interest charge. Passive income does not
Foreign
include income of life insurance companies if insurance
Investment
liabilities constitute 25% of their assets. This provision
Company Rules
would allow financial guaranty insurance companies to
include unearned premium (advanced premiums
col ected on policies that may be subject to return)
reserves in their insurance liabilities.
This provision would apply to tax years beginning after
December 31, 2017.
Credit for
The provision would create a new refundable tax

Qualified Access
credit of up to $2,000 for qualified access technology
Technology for
expenses incurred by the taxpayer for a qualified blind
the Blind
individual.
A qualified blind individual would include the taxpayer,
if blind, the blind spouse of a taxpayer, or the blind
dependent of the taxpayer. (The term blind is defined
in Section 63(f)(4).) Expenses would not include any
amounts paid for by insurance.
The credit would equal qualified access technology
expenditures incurred for a qualified blind individual,
up to $2,000 per qualified blind individual during a
period of three consecutive years. For example, if a
taxpayer had a blind spouse and incurred $2,000 in
2023 in credit-qualifying expenses related to their
spouse, the taxpayer could not claim an additional
credit with respect to their spouse until 2026. If, in
this example, the taxpayer was also blind, any credit-
qualifying expenses incurred on their behalf would be
subject to a separate $2,000 limit per individual per
period of three consecutive years.
Qualified access technology would include hardware,
software, or other information technology designed to
convert or adapt information visually represented into
forms or formats usable by blind individuals.
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Section Title
Description
CRS Resources
The credit cannot be claimed for expenses used to
claim other deductions or credits.
Beginning in 2023, the $2,000 cap would be adjusted
for inflation, rounded to the next lowest multiple of
$100.
This provision would apply to expenses incurred
between 2022 and 2026.
Modification of
A real estate investment trust (REIT) is a real estate
For background, see
REIT Constructive
company that would otherwise be taxed as a

CRS Report R44421, Real
Ownership Rules
corporation, except that it meets certain tests and
Estate Investment Trusts
faces a number of restrictions. Among the tests is the
(REITs) and the Foreign
requirement that at least 75% of REIT income be
Investment in Real Property Tax
passively derived from real estate (e.g., rents,
Act (FIRPTA): Overview and
mortgages). Income received from related parties is
Recent Tax Revisions, by Jane
not generally treated as qualifying income. A REIT-
G. Gravelle.
specific set of modified constructive ownership rules
is used to determine a REIT’s ownership interest.
These rules can create, through “downward”
attribution, instances where the constructive
ownership is attributed downward multiple times.
The provision would modify the constructive
ownership rules for REITs to generally limit the
application of the downward attribution rule in
situations where it has already been applied.
Source: CRS based on Subtitle I, Budget Reconciliation Legislative Recommendations Relating to Responsibly
Funding our Priorities.
Note: Provisions are effective in 2022 unless otherwise noted. The changes that would be made by the
provision are permanent, unless otherwise noted. “Section” citations refer to the section within the Internal
Revenue Code (IRC), 26 U.S.C., unless otherwise noted.

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Tax Provisions in the “Build Back Better Act"

Table 6. Subtitle J: Drug Pricing
Section Title
Description
CRS Resources
Part 1—Lowering Prices Through Fair Drug Price Negotiation
Selected Drug
This provision would create a regulatory penalty excise

Manufacturer
tax on drug manufacturers, producers, and importers,
Excise Tax
levied on sales of a specified drug during a period when
Imposed During
they fail to comply with the Fair Price Negotiation
Noncompliance
Program, which would be created by the Build Back
Periods
Better Act.
This provision would create a tiered excise tax rate
that depends on the number of days the manufacturer
is behind on a program requirement. The tax is
calculated as: tax = (applicable percentage * price) / (1 -
applicable percentage), where the applicable percentage
is determined by the number of days the manufacturer
is late on fulfil ing a program requirement.
The tax is calculated in one of two ways, depending on
if the manufacturer states a separate tax value at the
time of sale. If the manufacturer does state a separate
tax value (e.g., the tax is not included in the sale price),
then the tax is set so that the ratio of the tax to final
price inclusive of the tax is equal to the applicable
percentage. For example, assume the applicable
percentage was 65% (because the taxpayer was within
the first 90 days of missing a requirement). If the price
was $50, then the tax would be $92.86 ([0.65 * 50]/[1 -
0.65])). The sale price would be $142.86 and the
manufacturer would keep $50. If the manufacturer
does not state a separate tax value, then Department
of the Treasury regulations (26 C.F.R. 48.4216(a)-2(a))
state that the tax is assumed to be included in the final
sale price (and the formula above would simplify to tax
= applicable percentage * price). For example, if the
price was $50, then the tax would be $32.50
([0.65*50]). The sale price would be $50 and the
manufacturer would keep $17.50.
The percentages used in the calculation are 65% for the
first 90 days, 75% for days 91 through 180, 85% for
days 181 through 270, and 95% for all days after day
270.
This excise tax would be triggered in several cases:
when the manufacturer fails to enter drug price
negotiations by the required date; after the end of the
negotiation period if the manufacturer has not agreed
to a maximum fair price; after the end of the
renegotiation period if the manufacturer has not agreed
to a renegotiated maximum fair price; and if the
manufacturer does not respond to a request for
information by the Department of Health and Human
Services by the specified deadline.
The provision includes a rule that would allow irregular
sales made to avoid a tax to be considered as if they
were taxable, and would prevent manufacturers from
deducting taxes paid under this provision from their
federal income taxes.
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Section Title
Description
CRS Resources
This provision would be in effect from the date the bil
is enacted, but the Fair Price Negotiation Program
would begin in 2023.
Source: CRS based on Subtitle J, Budget Reconciliation Legislative Recommendations Relating to Drug Pricing.

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64

Table 7. Estimated Budgetary Effects of Tax Provisions in Subtitle F
“Infrastructure Financing and Community Development” of the “Build Back Better Act”
Fiscal Years, Millions of Dollars
2022-
Provision
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2031
Part 1—Infrastructure Financing
Subpart A—Bond Financing
Credit to Issuer for Certain
-196
-899
-1,799
-2,472
-2,795
-2,795
-2,736
-2,793
-2,948
-3,105
-22,539
Infrastructure Bonds
Advance Refunding Bonds
-267
-757
-1,140
-1,393
-1,608
-1,761
-1,878
-1,973
-2,042
-2,101
-14,919
Permanent Modification of Small
Issuer Exception to Tax-Exempt
-18
-69
-147
-231
-321
-419
-522
-631
-745
-862
-3,965
Interest Expense Allocation Rules for
Financial Institutions
Modifications to Qualified Small Issue
-1
-2
-5
-8
-12
-16
-21
-26
-32
-38
-161
Bonds
Expansion of Certain Exceptions to
the Private Activity Bond Rules for
(i)
(i)
(i)
(i)
(i)
(i)
(i)
(i)
(i)
(i)
-2
First-Time Farmers
Certain Water and Sewer Facility
Bonds Exempt from Volume Cap on
(i)
-1
-3
-5
-6
-8
-10
-13
-15
-18
-79
Private Activity Bonds
Exempt Facility Bonds for Zero-
Emission Vehicle Infrastructure
(i)
-1
-3
-5
-7
-10
-14
-19
-25
-32
-116
Application of Davis-Bacon Act
Requirements with Respect to Certain
No Revenue Effect
Exempt-Facility Bonds
Subpart B—Other Provisions Related to Infrastructure Financing
Credit for Operations and
Maintenance Costs of Government-
-73
-38
-35
-32
-29
-24
-20
-5
—
—
-256
Owned Broadband
CRS-65

2022-
Provision
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2031
Total of Infrastructure Financing
-555
-1,767
-3,132
-4,146
-4,778
-5,033
-5,201
-5,460
-5,807
-6,156
-42,037
Part 2—New Markets Tax Credit
Permanent Extension of New Markets
Tax Credit
—
-4
-19
-60
-106
-144
-212
-370
-587
-814
-2,316
Part 3—Rehabilitation Tax Credit
Determination of Credit Percentage
-376
-563
-858
-1,179
-1,375
-1,340
-1,146
-869
-557
-283
-8,544
Increase in the Rehabilitation Credit
for Certain Small Projects
—
—
—
—
-19
-76
-167
-281
-402
-511
-1,457
Modification of Definition of
Substantially Rehabilitated
-28
-87
-206
-400
-662
-951
-1,229
-1,472
-1,655
-1,781
-8,470
Elimination of Rehabilitation Credit
Basis Adjustment
—
-81
-257
-458
-667
-863
-961
-959
-937
-914
-6,097
Modification Regarding Certain Tax-
Exempt Use Property
-14
-31
-40
-48
-53
-56
-57
-59
-60
-62
-481
Qualification of Rehabilitation
Expenditures for Public School
-38
-86
-110
-139
-161
-169
-174
-178
-183
-189
-1,427
Buildings for Rehabilitation Credit
Total of Rehabilitation Tax Credit
-456
-848
-1,471
-2,224
-2,937
-3,454
-3,734
-3,818
-3,794
-3,740
-26,476
Part 4—Disaster and Resiliency
Exclusion of Amounts Received from
State-Based Catastrophe Loss
-4
-10
-10
-11
-12
-13
-14
-15
-16
-17
-122
Mitigation Programs
Repeal of Temporary Limitation on
-467
-645
-320
-318
-261
—
—
—
—
—
-2,011
Personal Casualty Losses
Credit for Qualified Wildfire
-12
-28
-31
-36
-42
-44
-46
-48
-49
-50
-387
Mitigation Expenditures
Total of Disaster and Resiliency
-483
-683
-361
-365
-315
-57
-60
-63
-65
-67
-2,520
CRS-66

2022-
Provision
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2031
Part 5—Housing
Subpart A—Low Income Housing Tax Credit
Increase in State Allocations
6
4
-57
-248
-593
-1,058
-1,585
-2,222
-2,577
-2,717
-11,048
Tax-Exempt Bond Financing
Requirement
-91
-242
-472
-719
-953
-1,176
-1,393
-1,393
-1,510
-1,549
-9,498
Buildings Designated to Serve
Extremely Low-Income Households
-8
-37
-92
-158
-225
-292
-358
-412
-474
-548
-2,603
Inclusion of Rural Areas as Difficult
Development Areas
-7
-37
-92
-165
-232
-300
-366
-420
-483
-554
-2,654
Repeal of Qualified Contract Option
2
8
17
28
39
49
59
73
85
105
466
Modification and Clarification of Rights
Relating to Building Purchase
2
8
17
28
39
49
59
73
85
105
466
Increase in Credit for Bond-Financed
Projects Designated by Housing
-31
-98
-210
-355
-477
-591
-702
-685
-745
-766
-4,660
Credit Agency
Subpart B—Neighborhood Homes Investment Act
Neighborhood Homes Credit
-200
-605
-1,422
-1,861
-2,114
-2,175
-2,239
-2,305
-2,373
-2,443
-17,736
Total of Housing
-326
-997
-2,300
-3,433
-4,494
-5,462
-6,488
-7,244
-7,938
-8,301
-46,983
Part 6—Investment in Tribal Infrastructure
Treatment of Indian Tribes as States
(i)
-1
-3
-4
-6
-8
-10
-12
-15
-17
-77
with Respect to Bond Issuance
New Markets Tax Credit for Tribal
—
(i)
-2
-6
-13
-22
-31
-41
-51
-59
-226
Statistical Areas
Inclusion of Indian Areas as Difficult
Development Areas for Purposes of
(i)
-2
-4
-7
-10
-13
-16
-18
-21
-24
-114
Certain Buildings
Total of Investment in Tribal
(i)
-3
-9
-17
-29
-43
-57
-71
-87
-100
-417
Infrastructure
CRS-67

2022-
Provision
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2031
Part 7—Investments in the Territories
Possessions Economic Activity Credit
-406
-853
-938
-1,017
-1,091
-1,169
-1,229
-1,270
-1,312
-1,356
-10,641
Additional New Markets Tax Credit
Allocations for the Territories
—
(i)
-1
-4
-8
-12
-18
-24
-29
-34
-129
Total of Investments in the Territories
-406
-853
-939
-1,021
-1,099
-1,181
-1,247
-1,294
-1,341
-1,390
-10,770
Total of Infrastructure Financing
and Community Development
-2,226
-5,154
-8,231
-11,266
-13,758
-15,375
-16,999
-18,320
-19,619
-20,567
-131,519
Source: Joint Committee on Taxation, Estimated Budgetary Effects of An Amendment in the Nature of a Substitute to the Revenue Provisions of Subtitles F, G, H, I, and J of the
Budget Reconciliation Legislative Recommendations Relating to Infrastructure Financing and Community Development, Green Energy, Social Safety Net, Responsibly Funding our
Priorities, and Drug Pricing, Scheduled for Markup by the Committee on Ways and Means on September 14, 2021, JCX-42-21, September 13, 2021, at
https://www.jct.gov/publications/2021/jcx-42-21/.
Notes: An (i) indicates a cost of less than $500,000.
Table 8. Estimated Budgetary Effects of Tax Provisions in Subtitle G
“Green Energy” of the “Build Back Better Act”
Fiscal Years, Millions of Dollars
Provision
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2022-2031
Part 1—Renewable Electricity and Reducing Carbon Emissions
Extension and Modification of Credit for
Electricity Produced from Certain Renewable
-181
-584
-1,038
-1,717
-2,865
-4,184
-5,651
-7,269
-8,811
-10,549
-42,851
Resources
Extension and Modification of Energy Credit
-1,349
-2,392
-2,686
-3,721
-6,667
-8,332
-8,851
-9,404
-9,956
-10,547
-63,907
Increase in Energy Credit for Solar Facilities
Placed in Service in Connection with Low-
Included in Estimate of “Extension and Modification of Energy Credit”
Income Communities
Elective Payment for Energy Property and
Included in Estimates of “Extension and Modification of Credit for Electricity Produced from
Electricity Produced from Certain Renewable
Certain Renewable Resources” and “Extension and Modification of Energy Credit”
Resources, Etc.
CRS-68

Provision
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2022-2031
Investment Credit for Electric Transmission
Property
—
—
—
-683
-1,050
-1,050
-1,050
-1,733
-2,100
-2,100
-9,765
Zero Emissions Facility Credit
Negligible Revenue Effect
Extension and Modification of Credit for
Carbon Oxide Sequestration
-12
-23
-29
-26
-9
-38
-75
-146
-216
-331
-908
Green Energy Publicly Traded Partnerships
-148
-126
-137
-144
-99
-50
-56
-64
-72
-80
-975
Zero-Emission Nuclear Power Production
Credit
-4,383
-2,909
-3,253
-3,524
-1,650
-209
—
—
—
—
-15,929
Total of Renewable Electricity and Reducing Carbon
Emissions
-6,073
-6,034
-7,143
-9,815
-12,340 -13,863 -15,683 -18,616 -21,155 -23,607
-134,335
Part 2—Renewable Fuels
Extension of Incentives for Biodiesel, Renewable
Diesel, and Alternative Fuels
-149
-2,688
-3,721
-3,802
-3,816
-3,803
-3,700
-3,708
-3,725
-3,743
-32,858
Extension of Second-Generation Biofuel
Incentives
-10
-19
-20
-22
-24
-25
-27
-29
-30
-32
-238
Sustainable Aviation Fuel Credit
—
-6
-13
-19
-24
-31
-66
-104
-145
-210
-618
Clean Hydrogen
-60
-172
-313
-496
-707
-966
-1,271
-1,598
-1,756
-1,779
-9,118
Total of Renewable Fuels
-219
-2,885
-4,067
-4,339
-4,571
-4,825
-5,064
-5,439
-5,656
-5,764
-42,832
Part 3—Green Energy and Efficiency Incentives for Individuals
Extension, Increase, and Modifications of
-255
-1,696
-1,657
-1,628
-1,654
-1,631
-1,570
-1,599
-1,615
-1,632
-14,938
Nonbusiness Energy Property Credit
Residential Energy Efficient Property
-50
-387
-972
-2,562
-2,635
-2,712
-2,792
-2,872
-2,941
-3,029
-20,951
Energy Efficient Commercial Buildings
-18
-72
-70
-68
-67
-66
-65
-66
-67
-69
-626
Deduction
Extension, Increase, and Modifications of New
-132
-233
-258
-271
-289
-307
-321
-320
-305
-289
-2,724
Energy Efficient Home Credit
Modification to Income Exclusion for
-6
-2
-2
-3
-4
-5
-6
-6
-7
-7
-48
Conservation Subsidies
CRS-69

Provision
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2022-2031
Total of Green Energy and Efficiency Incentives for
Individuals
-461
-2,390
-2,959
-4,532
-4,649
-4,721
-4,754
-4,863
-4,935
-5,026
-39,287
Part 4—Greening the Fleet and Alternative Vehicles
Refundable New Qualified Plug-In Electric Drive
Motor Vehicles Credit for Individuals
-195
-1,002
-1,128
-1,268
-1,451
-1,682
-1,915
-2,112
-2,320
-2,499
-15,574
Credit for Previously-Owned Qualified Plug-In
Electric Drive Motor Vehicles
-27
-83
-96
-120
-132
-146
-162
-179
-197
-215
-1,357
Qualified Commercial Electric Vehicles
-229
-490
-663
-831
-1,033
-1,270
-1,488
-1,675
-1,850
-2,043
-11,572
Qualified Fuel Cell Motor Vehicles
-4
-7
-8
-9
-11
-4
—
—
—
—
-44
Alternative Fuel Refueling Property Credit
-93
-404
-461
-523
-591
-666
-749
-837
-932
-1,027
-6,283
Reinstatement and Expansion of Employer-
Provided Fringe Benefits for Bicycle Commuting
-20
-21
-23
-13
-16
-16
-18
-18
-19
-19
-183
Credit for Certain New Electric Bicycles
-113
-305
-397
-517
-666
-826
-983
-1,121
-1,225
-1,277
-7,430
Total of Greening the Fleet and Alternative Vehicles
-681
-2,312
-2,776
-3,281
-3,900
-4,610
-5,315
-5,942
-6,543
-7,080
-42,443
Part 5—Investment in the Green Workforce
Extension of the Advanced Energy Project
Credit
-273
-370
-289
-233
-307
-405
-169
-29
-25
-32
-2,133
Labor Costs of Installing Mechanical Insulation
Property
-371
-745
-939
-1,099
-1,267
-966
-670
-564
-462
-343
-7,426
Total of Investment in the Green Workforce
-644
-1,115
-1,228
-1,332
-1,574
-1,371
-839
-593
-487
-375
-9,559
Part 6—Environmental Justice
Qualified Environmental Justice Program Credit
—
-400
-700
-800
-900
-1,000
-600
-300
-200
-100
-5,000
Part 7—Superfund

Reinstatement of Superfund
2,197
3,361
3,533
3,689
3,845
4,006
4,175
4,354
4,541
4,734
38,434
Total of Green Energy
-5,881 -11,775 -15,340 -20,410 -24,089 -26,384 -28,080 -31,399 -34,435 -37,218
-235,022
Source: Joint Committee on Taxation, Estimated Budgetary Effects of An Amendment in the Nature of a Substitute to the Revenue Provisions of Subtitles F, G, H, I, and J of the
Budget Reconciliation Legislative Recommendations Relating to Infrastructure Financing and Community Development, Green Energy, Social Safety Net, Responsibly Funding our
CRS-70

Priorities, and Drug Pricing, Scheduled for Markup by the Committee on Ways and Means on September 14, 2021, JCX-42-21, September 13, 2021, at
https://www.jct.gov/publications/2021/jcx-42-21/.
Table 9. Estimated Budgetary Effects of Tax Provisions in Subtitle H
“Social Safety Net” of the “Build Back Better Act”
Fiscal Years, Millions of Dollars
Provision
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2022-2031
Part 1—Child Tax Credit
Modifications Applicable Beginning in
2021; Extension and Modification of Child
Tax Credit and Advance Payment for
2022; Establishment of Monthly Child Tax
-106,463
-121,808
-129,345
-133,722 -46,959
-3,556
-3,510
-3,510
-3,537
-3,599
-556,008
Credit with Advance Payment Through
2025; and Refundable Child Tax Credit
After 2025
Part 2—Child and Dependent Care Tax Credit
Certain Improvements to the Child and
-2,663
-9,179
-9,413
-9,786
-10,353 -10,195 -10,453 -10,706 -11,065 -11,324
-95,135
Dependent Care Credit Made Permanent
Increase in Exclusion for Employer-
Provided Dependent Care Assistance
-199
-270
-283
-294
-344
-362
-374
-383
-394
-400
-3,302
Made Permanent
Total of Child and Dependent Care Tax
Credit
-2,862
-9,449
-9,696
-10,080
-10,697 -10,557 -10,827 -11,089 -11,459 -11,724
-98,437
Part 3—Supporting Caregivers
Payrol Credit for Certain Wages Paid to
Child Care Workers
-334
-670
-674
-724
-749
-764
-780
-795
-811
-827
-7,130
Credit for Caregiver Expenses
-3,248
-6,688
-7,084
-7,504
-3,860
—
—
—
—
—
-28,384
Total of Supporting Caregivers
-3,582
-7,358
-7,758
-8,228
-4,609
-764
-780
-795
-811
-827
-35,514
Part 4—Earned Income Tax Credit
Certain Improvements to the Earned
Income Tax Credit Made Permanent
-578
-13,296
-13,955
-14,471
-14,890 -15,116 -15,377 -15,642 -15,894 -16,107
-135,325
CRS-71

link to page 75 link to page 75 link to page 75 link to page 75 link to page 75
Provision
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2022-2031
Funds for Administration of Earned
Income Credits in the Territories
—
-5
-5
-5
-5
-5
-5
-5
-5
-5
-43
Total of Earned Income Tax Credit
-578
-13,301
-13,960
-14,476
-14,895 -15,121 -15,382 -15,647 -15,899 -16,112
-135,368
Part 5—Expanding Access to Health Coverage and Lowering Costs
Improve Affordability and Reduce
Premium Costs of Health Insurance for
Estimate Not Availablea
Consumers
Modification of Employer-Sponsored
Coverage Affordability Test in Health
Insurance Premium Tax Credit
Estimate Not Availablea
Treatment of Lump-Sum Social Security
Benefits in Determining Household
Income
Estimate Not Availablea
Temporary Expansion of Health
Insurance Premium Tax Credits for
Certain Low-Income Populations
Estimate Not Availablea
Special Rule for Individuals Receiving
Unemployment Compensation
Estimate Not Availablea
Permanent Credit for Health Insurance
Costs
-2
-11
-19
-20
-21
-22
-23
-25
-26
-28
-198
Total Expanding Access to Health Coverage
and Lowering Costs
-2
-11
-19
-20
-21
-22
-23
-25
-26
-28
-198
Part 6—Pathways to Practice Training Programs
Establishing Rural and Underserved
Pathway to Practice Training Programs
—
—
-74
-165
-262
-387
-589
-844
-1,136
-1,420
-4,877
for Post-Baccalaureate Students, Medical
Students, and Medical Residents
Total of Pathways to Practice Training
—
—
-74
-165
-262
-387
-589
-844
-1,136
-1,420
-4,877
Programs
CRS-72

Provision
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2022-2031
Part 7—Higher Education
Credit for Public University Research
Infrastructure
-24
-25
-25
-26
-19
-6
—
—
—
—
-125
Modification of Excise Tax on Investment
Income of Private Col eges and
—
-244
-248
-253
-258
-257
-262
-267
-273
-278
-2,341
Universities
Treatment of Federal Pell Grants for
Income Tax Purposes
-6
-229
-225
-215
-212
-221
-214
-205
-196
-188
-1,911
Repeal of Denial of American
Opportunity Tax Credit on Basis of
-3
-21
-21
-20
-20
-20
-20
-19
-18
-18
-180
Felony Drug Conviction
Total of Higher Education
-33
-519
-519
-514
-509
-504
-496
-491
-487
-484
-4,557
Total of Social Safety Net
-113,520 -152,446 -161,371 -167,205 -77,952 -30,911 -31,607 -32,401 -33,355 -34,194
-834,959
Source: Joint Committee on Taxation, Estimated Budgetary Effects of An Amendment in the Nature of a Substitute to the Revenue Provisions of Subtitles F, G, H, I, and J of the
Budget Reconciliation Legislative Recommendations Relating to Infrastructure Financing and Community Development, Green Energy, Social Safety Net, Responsibly Funding our
Priorities, and Drug Pricing, Scheduled for Markup by the Committee on Ways and Means on September 14, 2021, JCX-42-21, September 13, 2021, at
https://www.jct.gov/publications/2021/jcx-42-21/.
a. The Joint Committee on Taxation (JCT) revenue estimate indicates that the cost estimate for this provision wil be provided by the Congressional Budget Office.
The estimate is not included in JCT’s estimate of the revenue effects, or any of the indicated totals.
Table 10. Estimated Budgetary Effects of Tax Provisions in Subtitle I
“Responsibly Funding our Priorities” of the “Build Back Better Act”
Fiscal Years, Millions of Dollars
2022-
Provision
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2031
Part 1—Corporate and International Tax Reforms
Subpart A—Increase in Corporate Tax Rate
Increase in Corporate Rate
39,275
48,712
50,536
51,760
53,154
57,314
59,558
59,926
59,698
60,161
540,095
CRS-73

2022-
Provision
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2031
Subpart B—Limitations on Deduction for Interest Expense
Limitations on Deduction for
Interest Expense
1,564
3,222
3,408
3,583
3,660
3,697
3,802
3,914
3,995
3,968
34,813
Subpart C—Outbound International Provisions
Modifications to Deduction for
Foreign-Derived Intangible Income
and Global Intangible Low-Taxed
4,319
16,051
24,248
25,511
15,467
2,592
2,410
1,762
1,709
2,377
96,447
Income
Repeal of Election for 1-Month
Deferral in Determination of
Taxable Year of Specified
10,906
10,906
—
—
—
—
—
—
—
—
21,811
Corporations
Modifications of Foreign Tax
Credit Rules Applicable to Certain
Taxpayers Receiving Specific
217
436
485
554
623
621
657
706
652
710
5,662
Economic Benefits
Modification to Foreign Tax Credit
Limitations
-132
2,996
8,298
9,960
9,044
8,867
7,339
5,731
5,599
5,609
63,311
Foreign Oil and Gas Extraction
Income and Foreign Oil Related
Included in Estimate of “Modifications to Inclusion of Global Intangible Low-Taxed Income”
Income to Include Oil Shale and
Tar Sands
Modifications to Inclusion of
Global Intangible Low-Taxed
1,691
5,057
12,417
12,123
10,705
10,900
11,075
12,833
14,190
15,736
106,726
Income
Modifications to Determination of
Deemed Paid Credit for Taxes
-1,683
-3,692
-3,977
-4,022
-3,973
-4,097
-4,353
-4,482
-4,686
-4,809
-39,774
Properly Attributable to Tested
Income
CRS-74

2022-
Provision
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2031
Deduction for Foreign Source
Portion of Dividends Limited to
Control ed Foreign Corporations,
21
42
44
45
46
48
49
51
52
54
451
Etc.
Limitation on Foreign Base
Company Sales and Service
943
2,182
2,624
2,766
2,344
1,938
1,977
1,954
1,927
1,968
20,622
Income
Subpart D—Inbound International Provisions
Modification to Base Erosion and
Anti-Abuse Tax
473
559
887
1,647
2,396
3,180
3,593
3,839
4,019
4,270
24,863
Subpart E—Other Business Tax Provisions
Credit for Clinical Testing of
Orphan Drugs Limited to First Use
88
186
208
234
260
286
314
346
380
418
2,720
or Indication
Modification to Treatment of
Certain Losses
25
165
172
179
186
193
201
209
217
226
1,773
Adjusted Basis Limitation for
Divisive Reorganization
801
1,506
2,058
2,230
2,261
2,297
2,333
2,369
2,406
2,446
20,707
Rents from Prison Facilities not
Treated as Qualified Income for
8
15
16
16
14
11
12
12
13
13
130
Purposes of REIT Income Test
Modification to Exemption for
576
876
405
118
25
20
16
13
10
8
2,067
Portfolio Interest
Certain Partnership Interest
4
9
9
9
9
10
10
10
10
10
90
Derivatives
Adjustments to Earnings and
Profits of Control ed Foreign
150
325
375
425
475
525
575
625
675
725
4,875
Corporations
CRS-75

2022-
Provision
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2031
Certain Dividends from
Control ed Foreign Corporations
to United States Shareholders
Included with Estimate of “Modifications to Foreign Tax Credit Limitations”
Treated as Extraordinary
Dividends
Modification of Rules for
Partnership Interests Held in
Connection with the Performance
1,079
1,594
1,511
1,430
1,389
1,379
1,389
1,413
1,445
1,487
14,116
of Services
Limitation on Certain Special Rules
for Section 1202 Gains
69
470
517
572
639
698
705
710
677
661
5,718
Constructive Sales
Included with Estimate of “Wash Sales by Related Parties; Wash Sales of Specified Assets”
Rules Relating to Common
Control
768
1,550
1,560
1,606
1,754
1,958
2,186
2,459
2,749
3,004
19,593
Wash Sales by Related Parties;
Wash Sales of Specified Assets
3,226
4,946
2,725
1,626
1,074
804
653
587
562
559
16,762
Total of Corporate and International
Tax Reforms
64,388
98,113
108,526
112,372
101,552
93,241
94,501
94,987
96,299
99,601
963,578
Part 2—Tax Increases for High-Income Individuals
Increase in Top Marginal Individual
32,501
22,736
36,941
39,751
15,104
4,366
4,555
4,686
4,837
5,020
170,498
Income Tax Rate
Increase in Capital Gains Rate for
11,363
13,497
13,712
13,281
12,870
11,716
11,135
11,455
11,771
12,597
123,396
Certain High-Income Households
Application of Net Investment
Income Tax to Trade or Business
12,742
19,543
21,734
24,050
25,861
27,966
28,997
29,675
30,439
31,156
252,163
Income of Certain High-Income
Households
Limitation on Deduction of
Qualified Business Income for
10,520
18,309
19,684
20,948
8,564
—
—
—
—
—
78,025
Certain High-Income Individuals
CRS-76

2022-
Provision
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2031
Limitation on Excess Business
Losses of Noncorporate
3,127
2,046
2,123
2,204
2,288
22,671
32,639
31,422
33,272
34,991
166,783
Taxpayers
Surcharge on High-Income
Individuals, Estates, and Trusts
24,360
-13,294
12,384
13,052
13,713
14,406
14,731
15,353
15,988
16,643
127,335
Termination of Temporary
Increase in Unified Credit
2,676
12,188
13,073
12,694
11,710
1,490
265
95
64
9
54,265
Increase in Limitation on Estate
Tax Valuation Reduction for
Certain Real Property Used in
—
-22
-31
-32
-34
-38
-38
-40
-40
-42
-317
Farming or Other Trades and
Businesses
Certain Rules Applicable to
Grantor Trusts & Certain Sales
Between Grantor Trust and
30
160
223
327
478
672
917
1,240
1,657
2,191
7,895
Deemed Owner
Valuation Rules for Certain
Transfers of Nonbusiness Assets
382
1,775
1,880
1,865
1,919
2,205
2,335
2,399
2,519
2,666
19,945
Total of Tax Increases for High-
97,701
76,938
121,723
128,140
92,473
85,454
95,536
96,285
100,507
105,231
999,988
Income Households
Part 3—Modification of Rules Relating to Retirement Plans
Subpart A—Limitations on High-income Taxpayers with Large Retirement Account Balances
Contribution Limit for Individual
Retirement Plans of High-Income
Included in Estimate of “Increase in Minimum Required Distributions for High-Income
Taxpayers with Large Account
Taxpayers with Large Retirement Account Balances”
Balances
Increase in Minimum Required
Distributions for High-Income
3,618
3,027
1,302
318
-343
-576
-1,051
-1,273
-1,463
-1,760
1,798
Taxpayers with Large Retirement
Account Balances
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link to page 83
2022-
Provision
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2031
Subpart B—Other Provisions Relating to Individual Retirement Plans
Tax Treatment of Rol overs to
Roth IRAs and Accounts
—
—
—
—
—
—
—
—
140
609
749
Prohibition of IRA Investments
Conditioned on Account Holder’s
125
153
155
158
177
182
184
186
188
193
1,701
Status
Statute of Limitations with Respect
to IRA Noncompliance
(i )
1
1
1
1
1
1
1
1
1
8
Prohibition of Investment of IRA
Assets in Entities in which the
3
3
3
4
4
5
5
5
5
6
42
Owner Has a Substantial Interest
IRS Owners Treated as
Disqualified Persons for Purposes
—
1
1
1
1
1
2
2
2
2
13
of Prohibited Transaction Rules
Total of Modifications of Rules
Relating to Retirement Plans
3,745
3,186
1,462
481
-159
-388
-860
-1,079
-1,127
-950
4,311
Part 4—Funding the Internal Revenue Service and Improving Taxpayer Compliance
Funding of the Internal Revenue
Service
Estimate Not Availablea
Application of Backup Withholding
with Respect to Third-Party
-2
-1
(i)
(i)
(i)
(i)
(i)
(i)
(i)
(i)
-4
Network Transactions
Limitation on Deduction for
Qualified Conservation
4,733
4,698
699
304
313
337
344
352
359
365
12,504
Contributions Made by Pass-
Through Entities, Etc.
Modification of Procedural
Requirements Related to
201
221
113
116
119
122
125
128
132
135
1,414
Assessment of Penalties
CRS-78

2022-
Provision
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2031
Total of Funding the Internal Revenue
Service and Improving Taxpayer
4,932
4,918
812
420
432
459
469
480
491
500
13,914
Compliance
Part 5—Other Provisions
Modifications to Limitation on
Deduction of Excessive Employee
1,028
2,157
2,315
2,438
2,536
1,841
1,119
1,139
1,158
1,178
16,909
Remuneration
Extension of Tax to Fund Black
Lung Disability Trust Fund
101
137
135
131
32
—
—
—
—
—
536
Prohibited Transactions Relating
to Holding DISC or FSC in
39
95
126
157
187
217
249
277
292
301
1,940
Individual Retirement Account
Increase in Tax on Certain
Tobacco Products and Imposition
6,368
9,517
9,528
9,776
9,838
9,955
10,159
10,371
10,539
10,710
96,760
of Tax on Nicotine
Clarification of Rules Regarding
Tobacco Drawback
Included in Estimate of “Increases in Tax on Certain Tobacco Products and Imposition of Tax on Nicotine”
Termination of Employer Credit
for Paid Family and Medical Leave
—
—
101
219
168
77
44
26
7
—
642
Clarification of Treatment of DISC
Gains and Distributions of Certain
41
86
92
95
96
97
99
101
103
106
915
Foreign Shareholders
Access to Self-Employment Income
Information for Paid Leave
No Revenue Effect
Administration
Temporary Rule to Allow Certain
S Corporations to Reorganize as
-417
-1,182
-897
-235
-269
-305
-339
-369
-392
-416
-4,820
Partnerships without Tax
Treatment of Certain Qualified
-310
-59
6
43
112
86
43
21
11
12
-35
Sound Recording Productions
CRS-79

2022-
Provision
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2031
Payment to Certain Individuals
who Dye Fuel
(i)
(i)
(i)
(i)
(i)
(i)
(i)
(i)
(i)
(i)
-4
Extension of Credit for Portion of
Employer Social Security Taxes
Paid with Respect to Employee
—
-66
-69
-72
-75
-79
-82
-86
-90
-94
-711
Tips to Beauty Service
Establishments
Enhancement of Work
Opportunity Credit During
-2,306
-2,183
-1,198
-395
-57
—
—
—
—
—
-6,139
COVID-19 Recovery Period
Allowance of Deduction for
Certain Expenses of the Trade or
-66
-442
-442
-443
-449
-485
-483
-486
-479
-476
-4,252
Business of Being an Employee
Cover Over of Certain Distil ed
Spirits Taxes
-31
-204
-204
-204
-204
-204
-204
-204
-204
-204
-1,867
Research and Experimental
Expenditures
-29,091
-39,856
-32,161
-24,133
19,284
38,009
29,958
19,853
9,269
4,851
-4,016
Payrol Credit for Compensation
of Local News Journalists
-146
-276
-251
-240
-238
-118
—
—
—
—
-1,269
Treatment of Financial Guaranty
Insurance Companies as Qualifying
Insurance Corporations under
(i)
-1
-4
-4
-7
-8
-11
-13
-13
-13
-74
Passive Foreign Investment
Company Rules
Credit for Qualified Access
-375
-799
-302
-929
-900
-203
—
—
—
—
-3,508
Technology for the Blind
Modification of REIT Constructive
(i)
(i)
(i)
(i)
(i)
(i)
(i)
(i)
(i)
(i)
(i)
Ownership Rules
Total of Other Provisions
-25,165
-33,076
-23,225
-13,796
30,054
48,880
40,552
30,630
20,201
15,955
91,007
Total of Responsibly Funding
145,601
150,078
209,299
227,616
224,352
227,646
230,198
221,303 216,371 220,337 2,072,797
our Priorities
CRS-80

Source: Joint Committee on Taxation, Estimated Budgetary Effects of An Amendment in the Nature of a Substitute to the Revenue Provisions of Subtitles F, G, H, I, and J of the
Budget Reconciliation Legislative Recommendations Relating to Infrastructure Financing and Community Development, Green Energy, Social Safety Net, Responsibly Funding our
Priorities, and Drug Pricing, Scheduled for Markup by the Committee on Ways and Means on September 14, 2021, JCX-42-21, September 13, 2021, at
https://www.jct.gov/publications/2021/jcx-42-21/.
Notes: An (i) indicates a cost of less than $500,000. An (ii) indicates a gain of less than $500,000.
a. The Joint Committee on Taxation (JCT) revenue estimate indicates that the cost estimate for this provision wil be provided by the Congressional Budget Office.
The estimate is not included in JCT’s estimate of the revenue effects, or any of the indicated totals.
Table 11. Estimated Budgetary Effects of Tax Provisions in Subtitle J
“Drug Pricing” of the “Build Back Better Act”
Fiscal Years, Millions of Dollars
Provision
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2022-2031
Part 1—Lowering Prices through Fair Drug Price Negotiation
Selected Drug Manufacturer Excise Tax Imposed
No Revenue Effect
During Noncompliance Periods
Source: Joint Committee on Taxation, Estimated Budgetary Effects of An Amendment in the Nature of a Substitute to the Revenue Provisions of Subtitles F, G, H, I, and J of the
Budget Reconciliation Legislative Recommendations Relating to Infrastructure Financing and Community Development, Green Energy, Social Safety Net, Responsibly Funding our
Priorities, and Drug Pricing, Scheduled for Markup by the Committee on Ways and Means on September 14, 2021, JCX-42-21, September 13, 2021, at
https://www.jct.gov/publications/2021/jcx-42-21/.
Table 12. Summary Estimated Budgetary Effects of Tax Provisions in the “Build Back Better Act,” by Subtitle
Fiscal Years, Millions of Dollars
2022-
Subtitle
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2031
Total of Infrastructure Financing
and Community Development
-2,226
-5,154
-8,231
-11,266
-13,758
-15,375
-16,999
-18,320
-19,619
-20,567
-131,519
(Subtitle F)
Total of Green Energy (Subtitle G)
-5,881
-11,775
-15,340
-20,410
-24,089
-26,384
-28,080
-31,399
-34,435
-37,218
-235,022
Total of Social Safety Net (Subtitle
H)
-113,520
-152,446
-161,371
-167,205
-77,952
-30,911
-31,607
-32,401
-33,355
-34,194
-834,959
Total of Responsibly Funding our
Priorities (Subtitle I)
145,601
150,078
209,299
227,616
224,352
227,646
230,198
221,303
216,371
220,337
2,072,797
CRS-81

2022-
Subtitle
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2031
Total of Drug Pricing (Subtitle J)
No Revenue Effect
Total for Subtitles F, G, H, I,
and J
23,974
-19,297
24,356
28,735
108,553
154,977
153,513
139,183 128,962 128,357
871,298
Source: Joint Committee on Taxation, Estimated Budgetary Effects of An Amendment in the Nature of a Substitute to the Revenue Provisions of Subtitles F, G, H, I, and J of the
Budget Reconciliation Legislative Recommendations Relating to Infrastructure Financing and Community Development, Green Energy, Social Safety Net, Responsibly Funding our
Priorities, and Drug Pricing, Scheduled for Markup by the Committee on Ways and Means on September 14, 2021, JCX-42-21, September 13, 2021, at
https://www.jct.gov/publications/2021/jcx-42-21/.

CRS-82

Tax Provisions in the “Build Back Better Act"

Author Information

Molly F. Sherlock, Coordinator
Jane G. Gravelle
Specialist in Public Finance
Senior Specialist in Economic Policy

Anthony A. Cilluffo
Mark P. Keightley
Analyst in Public Finance
Specialist in Economics

Margot L. Crandall-Hollick
Donald J. Marples
Specialist in Public Finance
Specialist in Public Finance

Grant A. Driessen

Specialist in Public Finance

Acknowledgments
The authors would like to thank colleagues who contributed their expertise to various sections of this
report: Milan Ball, Legislative Attorney; David Bearden, Specialist in Environmental Policy; Conor Boyle,
Analyst in Social Policy; David Bradley, Specialist in Labor Economics; Benjamin Collins, Analyst in
Labor Policy; Melissa Diaz, Analyst in Energy Policy; Sarah Donovan, Specialist in Labor Policy;
Cassandria Dortch, Specialist in Education Policy; Bernadette Fernandez, Specialist in Health Care
Financing; Elayne Heisler, Specialist in Health Services; Mark Holt, Specialist in Energy Policy; Angela
Jones, Analyst in Environmental Policy; Will Morton, Analyst in Income Security; Elizabeth Myers,
Analyst in Income Security; Jared Sussman, Analyst in Health Policy; John Topoleski, Specialist in Income
Security; and Marco Villagrana, Analyst in Health Care Financing.

Disclaimer
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