Tax Provisions in the Build Back Better Act: Rules Committee Print 117-18

Tax Provisions in the Build Back Better Act: Rules Committee Print 117-18

Tax Provisions in the Build Back Better Act:
Rules Committee Print 117-18
November 9, 2021
Congressional Research Service
https://crsreports.congress.gov
R46960

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Tax Provisions in the Build Back Better Act: Rules Committee Print 117-18

Contents
Tables
Table 1. Subtitle E—Infrastructure Financing and Community Development ............................... 4
Table 2. Subtitle F—Green Energy ................................................................................................. 8
Table 3. Subtitle G—Social Safety Net ......................................................................................... 28
Table 4. Subtitle H—Responsibly Funding Our Priorities ............................................................ 40

Table A-1. Estimated Budgetary Effects of Tax Provisions in Subtitle E “Infrastructure
and Community Development” of H.R. 5376, “Build Back Better Act,” with
Modifications ............................................................................................................................. 60
Table A-2. Estimated Budgetary Effects of Tax Provisions in Subtitle F “Green Energy”
of H.R. 5376, “Build Back Better Act,” with Modifications ...................................................... 62
Table A-3. Estimated Budgetary Effects of Tax Provisions in Subtitle G “Social Safety
Net” of H.R. 5376, “Build Back Better Act,” with Modifications ............................................. 67
Table A-4. Estimated Budgetary Effects of Tax Provisions in Subtitle H “Responsibly
Funding Our Priorities” of H.R. 5376, “Build Back Better Act,” with Modifications ............... 70

Appendixes
Appendix. Cost Estimates ............................................................................................................. 59

Contacts
Author Information ........................................................................................................................ 78

link to page 6 Tax Provisions in the Build Back Better Act: Rules Committee Print 117-18

n October 28, 2021, and again on November 3, 2021, the House Rules Committee
released text of a modified version of H.R. 5376, commonly referred to as the Build Back
O Better Act.1 Subtitles E, F, G, and H of Title XIII of the 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. The October 28 and November 3 texts modify an earlier version of H.R.
5376. For more on the provisions in the earlier version of this legislation, see CRS Report
R46923, Tax Provisions in the “Build Back Better Act:” The House Ways and Means
Committee’s Legislative Recommendations, coordinated by Molly F. Sherlock.2
This report summarizes the tax provisions in the November 3, 2021, version of the Build Back
Better Act. A number of the provisions are designed to raise additional federal tax revenue, and
those with the largest revenue effects include
 modifications to individual income taxes levied on high-income individuals,
including
 the application of the net investment income tax to trade or business income
for certain filers;
 making limitations on excess business losses of noncorporate taxpayers
permanent; and
 establishing a surcharge on high-income individuals, trusts, and estates;
 the addition of a 15% alternative minimum corporate tax based on financial
statement income;
 a new excise tax on corporate stock repurchases; and
 modifications to the treatment of international taxes, including changes to
 the deduction for foreign-derived intangible income;
 the base erosion and anti-abuse tax; and
 the tax on global intangible low-taxed income.
Other provisions would reduce tax liability for individual taxpayers or businesses engaged in
certain types of economic activities. Among these provisions, those with the largest revenue
effects include
 for individuals, a temporary extension of enhancements made to the child tax
credit in the American Rescue Plan Act of 2021 (ARPA; P.L. 117-2) through
2022, with a permanent extension of full refundability beginning in 2023; and
 for businesses, tax credits for investment in or production of renewable
electricity.
All tax provisions in the November 3, 2021, modification of the Build Back Better Act are
summarized in a series of tables below. References to relevant CRS reports are included where
applicable.
 Table 1 includes the provisions in Subtitle E;

1 The modified legislative text is available at https://rules.house.gov/bill/117/hr-5376.
2 A section-by-section staff summary of the Build Back Better Act as reported by the House Committee on the Budget
and a comparative staff print showing subsequent modifications are available for both the October 28 and November 3
versions of the legislation at https://rules.house.gov/bill/117/hr-5376.
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 Table 2 includes the provisions in Subtitle F;
 Table 3 includes the provisions in Subtitle G; and
 Table 4 includes the provisions in Subtitle H.
Revenue estimates from the Joint Committee on Taxation (JCT) are included in the Appendix.3
JCT estimates that the tax provisions in the November 3 modification will generate $944.5 billion
in additional revenue between 2022 and 2031. It estimates that Subtitle H, Responsibly Funding
Our Priorities, will increase revenue by $1,476.1 billion between 2022 and 2031. Provisions in
the other subtitles are estimated to result in a reduction in revenues, on net, with Subtitle E,
Infrastructure Financing and Community Development, reducing revenue by $28.7 billion;
Subtitle F, Green Energy, reducing revenue by $300.5 billion; and Subtitle G, Social Safety Net,
reducing revenue by $202.4 billion, all over the 2022 through 2031 budget window.
The effective date for most of the proposed tax provisions would be after December 31, 2021.
This is generally the case unless otherwise noted in the description of the provision. Additionally,
provisions would be permanent unless otherwise noted.
As previously noted, the November 3, 2021, version of the Build Back Better Act modifies text
previously released on October 28, 2021.4 Key changes made between the two versions are
discussed in the text box below. Table 1 through Table 4 note how the tax provisions in the
November 3 version of the Build Back Better Act compare to H.R. 5376, as reported by the
House Committee on the Budget on September 27, 2021.5

3 Joint Committee on Taxation, Estimated Budget Effects Of The Revenue Provisions Of Title XIII—Committee On
Ways And Means, Of H.R. 5376, The “Build Back Better Act,” As Reported By The Committee On The Budget, With
Modifications (Rules Committee Print 117-18), JCX-45-21, November 4, 2021, at
https://www.jct.gov/publications/2021/jcx-45-21/.
4 The version of the text released October 28 is available at https://rules.house.gov/bill/117/hr-5376.
5 For the purposes of this comparison, a provision is identified as being identical or nearly identical if the change would
not have had a substantial or substantive policy impact.
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Comparing the November 3 Build Back Better Act Tax Provisions to Earlier
Versions
The November 3, 2021, version of the Build Back Better Act modifies text previously released on October 28,
2021.
Newly Added Provisions
Several provisions were added to the November 3, 2021, legislation that did not appear in the October 28 version
or in H.R. 5376 as reported by the House Committee on the Budget. These provisions include a proposal to raise
the current limit on deductions for state and local taxes paid (the SALT deduction), and then extend the new,
higher deduction to apply after the current-law deduction was scheduled to expire. The November 3 text also
includes additional funding for the IRS and Treasury to administer the child tax credit and advance payments of the
child tax credit and energy-related tax credits. Another newly added proposal would create a temporary above-
the-line deduction for employee uniforms.
Provisions from H.R. 5376 as Reported by the House Committee on the Budget
Several provisions or groups of provisions that were in the Build Back Better Act (H.R. 5376), as reported by the
House Committee on the Budget, but were not included in the October 28, 2021, version of the legislation, were
included in the November 3 version. These include provisions that would modify the low-income housing tax
credit (LIHTC) and enact the Neighborhood Homes Investment Act. Five provisions that col ectively raise
revenue modifying rules related to individual retirement plans were added back to the November 3 version of the
Build Back Better legislation. Modified taxes on nicotine that would raise revenue were also added back to the
November 3 version. Another provision that was added back would allow an above-the-line deduction for up to
$250 in union dues; it had appeared in the initial Build Back Better legislation before being excluded in the
October 28 modification.
Modifications
Many provisions were modified between the October 28, 2021, and November 3, 2021, versions of the tax
provisions in the Build Back Better Act (the House Rules Committee provides resources to facilitate detailed
comparison, at https://rules.house.gov/bil /117/hr-5376). There were numerous technical changes to various
parameters associated with the energy-related tax credits. Separately, changes to the health insurance premium
tax credit that would have been permanent in the October 28 version of the bil were made temporary in the
November 3 version.
Deletions
The November 3 bil does not include a proposed reduction in the excise tax on investment income for certain
col eges and universities that was included in the October 28 version of the bil .

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Table 1. Subtitle E—Infrastructure Financing and Community Development
Section Title
Description
CRS Resources
Part 1—Low Income Housing Credit
Increases 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 2024. States would receive $3.14 per
Introduction to the Low-Income
person in 2022, with a small population state
Section 135101
Housing Tax Credit, by Mark
allocation of $3,629,096; $3.54 per person in 2023,
P. Keightley.
with a small population state allocation of
$4,081,825; $3.97 per person in 2024, with a small

CRS In Focus IF11335, The
population state allocation of $4,582,053. In 2025,
Low-Income Housing Tax
the allocation amount would be reduced to $2.65
Credit: Policy Issues, by Mark
per person, with a small population state allocation
P. Keightley.
of $3,120,000. The 2025 allocation amounts are
lower than the current law 2021 allocation amounts
of $2.8125 per person, with a small population state
allocation of $3,245,625.
The allocation amounts for calendar years after 2025
would be the 2025 allocation amount, adjusted for
inflation.
This provision is a modification of Section 135501 in
H.R. 5376, as reported on September 27, 2021.
Tax Exempt Bond
This provision would reduce the 50% tax-exempt
For background, see
Financing
bond financing requirement to 25% for bond

CRS Report RS22389, An
Requirement
obligations issued in calendar years 2022 through
Introduction to the Low-Income

2026. Credits awarded to projects where the bond
Housing Tax Credit, by Mark
financing threshold is met do not reduce a state’s
Section 135102
P. Keightley.
annual housing credit.

This provision is a modification of Section 135502 in

CRS In Focus IF11335, The
Low-Income Housing Tax
H.R. 5376, as reported on September 27, 2021.
Credit: Policy Issues, by Mark
P. Keightley.
Buildings Designated
This provision would require that at least 8% of a
For background, see
to Serve Extremely
state’s annual low-income housing credit allocation

CRS Report RS22389, An
Low-Income
authority be set-aside for projects that serve
Introduction to the Low-Income
Households
extremely low-income households. The set-aside
Housing Tax Credit, by Mark

would apply to projects where at least 20% of the
P. Keightley.
units are rent-restricted and occupied by households
Section 135103
whose income does not exceed the greater of 30%

CRS In Focus IF11335, The
of area median income or 100% of the federal
Low-Income Housing Tax
poverty line.
Credit: Policy Issues, by Mark
P. Keightley.
Projects requiring an increase in credits to be
financially feasible would receive a 50% basis boost. A
state could not award more than 13% 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 8% of its private activity bond authority.
This provision would apply to allocations made after
December 31, 2021.
This provision is a modification of Section 135503 in
H.R. 5376, as reported on September 27, 2021.
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Section Title
Description
CRS Resources
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

CRS Report RS22389, An

to exit the low-income housing tax credit (LIHTC)
Introduction to the Low-Income
program after the first 15 years. The qualified
Section 135104
Housing Tax Credit, by Mark
contract option allows a property owner to sell a
P. Keightley.
LIHTC property after 15 years. To exercise this
option, a property owner must request that the state 
CRS In Focus IF11335, The
housing credit authority locate a buyer who wil
Low-Income Housing Tax
purchase the property and keep it in the program for
Credit: Policy Issues, by Mark
another 15 years. The purchase price is determined
P. Keightley.
by statute. If 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.
This provision is identical or nearly identical to
Section 135505 in H.R. 5376, as reported on
September 27, 2021.
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
Section 135105
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.
Credit: Policy Issues, by Mark
This provision would clarify that a third party offer is
P. Keightley.
not needed by changing the right of first refusal to a
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.
This provision is identical or nearly identical to
Section 135506 in H.R. 5376, as reported on
September 27, 2021.
Part 2—Neighborhood Homes Investment Act
Neighborhood
This provision would provide new federal tax credits
For background, see
Homes Credit
to offset the cost of constructing or rehabilitating

CRS In Focus IF11884,

owner-occupied homes. The credits would be
Neighborhood Homes
awarded to project sponsors (e.g., developers),
Section 135201
Investment Act: Overview and
which would either use the credits directly to offset
Policy Considerations, by Mark
development and rehabilitation costs or sell the
P. Keightley.
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
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Section Title
Description
CRS Resources
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,
and to properties located in a qualified census tract.
This provision is identical or nearly identical to
Section 135511in H.R. 5376, as reported on
September 27, 2021.
Part 3—Investments in Tribal Infrastructure
Treatment of Indian
This provision would modify the treatment of Indian
For background, see
Tribes as States with
tribes so that they are generally treated as states for

CRS Report RL31457,
Respect to Bond
the purposes of issuing qualified private activity
Private Activity Bonds: An
Issuance
bonds. This provision would direct the Secretary of
Introduction, by Steven

the Treasury to establish a national bond volume cap
Maguire and Joseph S.
based on tribal population data for qualifying bonds
Section 135301
Hughes.
issued in tribal areas.
This provision is identical or nearly identical to
Section 135511 in H.R. 5376, as reported on
September 27, 2021.
New Markets Tax
This provision would create a temporary New
For background, see
Credit for Tribal
Markets Tax Credit (NMTC) allocation for low-

CRS Report RL34402, New
Statistical Areas
income tribal areas and for projects that serve or
Markets Tax Credit: An

employ tribal members. The annual allocation
Introduction, by Donald J.
amount would be $175 mil ion per year for calendar
Section 135302
Marples and Sean Lowry.
years 2022-2025.
This provision is a modification of Section 138146 in
H.R. 5376, as reported on September 27, 2021.
Inclusion of Indian
This provision would modify the definition of difficult

Areas as Difficult
development areas (DDAs) for purposes of the low-
Development Areas
income housing tax credit to include “Indian areas.”
for Purposes of
Projects in DDAs are eligible for a 30% basis boost
Certain Buildings
under current law. An Indian area would be any

Indian area as defined in Section 4(11) of the Native
American Housing Assistance and Self Determination
Section 135303
Act of 1996.
If an area were to be a DDA solely because it is an
Indian area, then a project would not be treated as
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, a tribally
designated housing entity, 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.
This provision is identical or nearly identical to
Section 135603 in H.R. 5376, as reported on
September 27, 2021.
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Section Title
Description
CRS Resources
Part 4—Other Provisions
Possessions
This provision would create a new tax credit for

Economic Activity
certain domestic corporations actively conducting
Credit
business in American Samoa, the Commonwealth of

the Northern Mariana Islands, Puerto Rico, Guam,
and the Virgin Islands. For these corporations, the
Section 135401
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.
The credit is increased to 50% with a cap of
$142,800 for certain small businesses.
This provision is identical or nearly identical to
Section 135701 in H.R. 5376, as reported on
September 27, 2021.
Tax Treatment of
Under normal tax rules, recipients of loan repayment
Certain Assistance to programs must recognize the amounts repaid as
Farmers, Etc.
either income or a reduction in the basis of the

asset.
Section 135402
This provision would exclude from recognition
certain payments to socially disadvantaged farmers
and others enacted in the American Rescue Plan Act
of 2021 (P.L. 117-2). The provision would also
provide that no deduction would be denied by
reason of the exclusion.
This provision did not appear in H.R. 5376, as
reported on September 27, 2021.
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 exclude qualified catastrophe mitigation
by Mol y F. Sherlock and
Mitigation Programs
payments made by state or local government
Jennifer Teefy.

programs from gross income. Qualified catastrophe
mitigation payments would be amounts received by

Section 135403
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 be required to adjust their basis
in property for which payment is received.
This provision is a modification of Section 135401 in
H.R. 5376, as reported on September 27, 2021.
Source: November 3, 2021, modified version of the Build Back Better Act (BBBA; H.R. 5376) as posted on the
House Rules Committee website.
Notes: Provisions are effective in 2022 unless otherwise noted. The changes that would be made by the
provision are permanent, unless otherwise noted. Within the description, “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—Green Energy
Section Title and
Number
Description
CRS Resources
Part 1—Renewable Energy and Reducing Carbon Emissions
Extension and
Current law provides a production tax credit (PTC), at a
For background, see
Modification of
rate of 2.5 cents or 1.3 cents per kilowatt hour (kWh)

CRS Report R43453, The
Credit for
depending on the technology used, for the first 10 years of
Renewable Electricity
Electricity Produced production at qualifying renewable electricity production
Production Tax Credit: In
from Certain
facilities that begin construction before 2022. The credit
Brief, by Mol y F.
Renewable
amount is adjusted annually for inflation from a statutory
Sherlock.
Resources
rate of 1.5 cents per kWh, with some technologies qualifying  CRS Report R46865,

for a half-credit amount. This provision would extend the
PTC for wind, biomass, geothermal, solar (which previously
Energy Tax Provisions:
Section 136101
expired at the end of 2005), landfil gas, trash, qualified
Overview and Budgetary
hydropower, and marine and hydrokinetic resources
Cost, by Mol y F.
through 2026.
Sherlock.
The base credit amount for the PTC would be set in statute

CRS Report R46451,
at 0.3 cents per kWh (0.5 cents per kWh in 2021, or 0.3
Energy Tax Provisions
cents for half-credit technologies, after being adjusted for
Expiring in 2020, 2021,
inflation). Facilities that pay prevailing wages during the
2022, and 2023 (“Tax
construction phase and first 10 years of operation and meet
Extenders”), by Mol y F.
registered apprenticeship requirements are eligible for a
Sherlock, Margot L.
PTC that is five times the base amount, or 2.5 cents or 1.3
Crandall-Hol ick, and
cents per kWh after being adjusted for inflation. Facilities
Donald J. Marples.
with a maximum net output of less than one megawatt are

CRS Report R45171,
also eligible for the five times base credit amount (e.g., 2021
Registered Apprenticeship:
rates of 2.5 cents or 1.3 cents per kWh).
Federal Role and Recent
A “bonus credit” amount would be provided for projects
Federal Efforts, by
that meet domestic content requirements to certify that
Benjamin Col ins.
certain steel, iron, and manufactured products used in the

CRS In Focus IF11927,
facility were domestically produced. The bonus credit
Federally Funded
amount would be 10% of the credit amount.
Construction and the
The credit amount could be increased by 10% for facilities
Payment of Locally
located in an energy community. An energy community is
Prevailing Wages, by
defined as being a census tract or any adjoining tract in
David H. Bradley and Jon
which a coal mine closed after December 31, 1999, or a
O. Shimabukuro.
coal-fired electric power plant was retired after December
31, 2009.
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 could 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 provision provides that for facilities financed with tax-
exempt bonds, the credit amount would be reduced by the
lesser of (1) 15%; or (2) the fraction of the proceeds of a
tax-exempt obligation used to finance the project over the
aggregate amount of the project’s financing costs.
The proposal also extends the option to claim the energy
investment tax credit (ITC) in lieu of the PTC.
This provision is a modification of Section 136101 in H.R.
5376, as reported on September 27, 2021.
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Section Title and
Number
Description
CRS Resources
Extension and
Current law provides a temporary investment tax credit
For background, see
Modification of
(ITC) for investments in certain energy property. This

CRS In Focus IF10479,
Energy Credit
provision would extend and modify the ITC, with the credit
The Energy Credit or

generally extended through the end of 2026, with the credit
Energy Investment Tax
for certain technologies extended through 2033.
Section 136102
Credit (ITC), by Mol y F.
The ITC would be extended through 2026 at a base rate of
Sherlock.
6% for solar, fuel cells, and small wind property and 2% for

microturbine property. These amounts would be increased

CRS Report R46865,
Energy Tax Provisions:
to 30% and 10%, respectively, if projects pay prevailing
Overview and Budgetary
wages during the construction phase and during the first five
Cost, by Mol y F.
years of operation and meet registered apprenticeship
Sherlock.
requirements. The higher credit rates are also available to
any project with a maximum net output of less than one

CRS Report R46451,
megawatt of electrical or thermal energy.
Energy Tax Provisions
Expiring in 2020, 2021,
The ITC for geothermal heat pumps, combined heating and
2022, and 2023 (“Tax
power (CHP), and waste energy recovery property would
Extenders”), by Mol y F.
be extended through 2031 with a 6% base credit rate with
Sherlock, Margot L.
the 30% credit rate allowed for projects meeting wage and
Crandall-Hol ick, and
workforce requirements or for projects below the
Donald J. Marples.
maximum net output threshold. The credit would phase
down after 2031, with the rates being 5.2% and 26% in 2032

CRS Report R45171,
and 4.4% and 22% in 2033, with no credit allowed for
Registered Apprenticeship:
property beginning construction after 2033.
Federal Role and Recent
This list of qualifying property would be expanded to include
Federal Efforts, by
energy storage technology, qualified biogas property,
Benjamin Col ins.
electrochromic glass, and microgrid control ers at the 6% or

CRS In Focus IF11927,
30% rate. Linear generator assemblies would be added to
Federally Funded
the definition of qualifying fuel cells. The credit would also
Construction and the
be available for interconnection property.
Payment of Locally
A “bonus credit” amount would be provided for projects
Prevailing Wages, by
that meet domestic content requirements to certify that
David H. Bradley and Jon
certain steel, iron, and manufactured products used in the
O. Shimabukuro.
facility were domestically produced. The bonus credit
amount would be 2% of the credit amount, or 10% for
projects that meet wage and workforce requirements.
An increased credit amount would be available to projects in
an energy community, with the credit increase being 10
percentage points for projects meeting wage and workforce
requirements or 2 percentage points otherwise. An energy
community is defined as being a census tract or any adjoining
tract in which a coal mine closed after December 31, 1999,
or a coal-fired electric power plant was retired after
December 31, 2009.
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 could 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 provision provides that for facilities financed with tax-
exempt bonds, the credit amount would be reduced by the
lesser of (1) 15%; or (2) the fraction of the proceeds of a
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Section Title and
Number
Description
CRS Resources
tax-exempt obligation used to finance the project over the
aggregate amount of the project’s financing costs.
This provision is a modification of Section 136102 in H.R.
5376, as reported on September 27, 2021.
Increase in Energy
This provision would allow for the allocation of 1.8 gigawatts For background on the ITC,
Credit for Solar
for “environmental justice solar and wind capacity” credits
see
Facilities Placed in
annually from 2022 through 2026. Taxpayers receiving a

CRS In Focus IF10479,
Service in
capacity allocation may be entitled to tax credits in addition
The Energy Credit or
Connection with
to otherwise allowed ITCs. Specifically, projects receiving an
Energy Investment Tax
Low-Income
allocation that are located in a low-income community or on
Credit (ITC), by Mol y F.
Communities
Indian land would be eligible for a 10% bonus investment tax
Sherlock CRS In Focus

credit, while projects that are part of a low-income
IF10479.
residential building project or qualified low-income
Section 136103
economic benefit project would be eligible for a 20% bonus
For background on housing
investment credit. No facility could receive more than a
assistance programs, see
maximum 20% bonus investment credit under this provision. 
CRS Report RL34591,
Qualifying solar and wind facilities would include those with
Overview of Federal
a nameplate capacity of 5 megawatts or less, and qualifying
Housing Assistance
property would include energy storage property installed in
Programs and Policy, by
connection with the solar property and interconnection
Maggie McCarty, Libby
property.
Perl, and Katie Jones.
When determining which facilities to select for allocations,

the Treasury Secretary would be directed to consider which
facilities 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
communities. Facilities receiving an allocation would have
certain information disclosed to the public and be required
to have the facility placed in service within four years.
This provision is a modification of Section 136103 in H.R.
5376, as reported on September 27, 2021.
Elective Payment
This provision would allow taxpayers to treat certain tax
For background, see
for Energy Property credit amounts as payments of tax. Payments in excess of

CRS Report R45693, Tax
and Electricity
tax liability can be refunded to the taxpayer, allowing the
Equity Financing: An
Produced from
credits to be received as “direct pay.” This direct payment
Introduction and Policy
Certain Renewable
would be allowed for the Section 30C credit for alternative
Considerations, by Mark
Resources, Etc.
fuel refueling property, the Section 45 renewable electricity
P. Keightley, Donald J.

production credit, the Section 45Q carbon oxide
Marples, and Mol y F.
Section 136104
sequestration credit, the Section 48 energy investment tax
Sherlock.
credit, and the Section 48C qualifying advanced energy
project credit. The direct pay election would also be
available for the new Section 48D investment credit for
electric transmission property; new Section 48E advanced
manufacturing investment credit; new Section 48F clean
electricity investment credit; new Section 45W zero-
emission nuclear power production credit; new Section 45X
clean hydrogen production credit; new Section 45AA
advanced manufacturing production credit; new Section
45BB clean electricity production credit; and new Section
45CC clean fuel production credit.
Tax-exempt entities, including state and local governments
and Indian tribal governments, would be treated as
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Section Title and
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Description
CRS Resources
taxpayers eligible to elect a direct payment. There would be
a gross-up of payments in the case of budget sequestration.
This provision would not apply to territories with mirror-
code tax systems.
This provision is a modification of Section 136104 in H.R.
5376, as reported on September 27, 2021.
Investment Credit
This provision would create a new ITC for qualifying electric For background, see
for Electric
transmission property, which includes property that is

CRS Report R45171,
Transmission
capable of transmitting at least 275 kilovolts or is a
Registered Apprenticeship:
Property
superconducting line, with a capacity of not less than 500
Federal Role and Recent

megawatts. Upgrades of existing lines would be treated as
Federal Efforts, by
replacements. The new ITC would be 6% of qualifying
Section 136105
Benjamin Col ins.
investments, with a 30% ITC available for projects that pay
prevailing wages during the construction phase and during

CRS In Focus IF11927,
the first five years of operation and that meet registered
Federally Funded
apprenticeship requirements.
Construction and the
Payment of Locally
“Bonus credit” amounts for domestic content and limits on
Prevailing Wages, by
direct pay related to domestic content would apply, similar
David H. Bradley and Jon
to those applying to the ITC (see “Extension and
O. Shimabukuro.
Modification of Energy Credit”). Projects financed with tax-
exempt bonds would have the credit amount reduced by the
lesser of (1) 15%; or (2) the fraction of the proceeds of a
tax-exempt obligation used to finance the project over the
aggregate amount of the project’s financing costs.
The credit would be available for property placed in service
before December 31, 2031, unless the property began
construction prior to January 1, 2022, or was selected for
cost allocation in a regional transmission plan.
This provision is a modification of Section 136105 in H.R.
5376, as reported on September 27, 2021.
Extension and
Under current law, industrial carbon capture or direct air
For background, see
Modification of
capture facilities that begin construction by December 31,

CRS In Focus IF11455,
Credit for Carbon
2025, can qualify for the Section 45Q tax credit for carbon
The Tax Credit for Carbon
Oxide
oxide sequestration. This tax credit can be claimed for
Sequestration (Section
Sequestration
carbon oxide captured during the 12-year period fol owing a
45Q), by Angela C. Jones

qualifying facility’s being placed in service. Currently, the per
and Mol y F. Sherlock.
metric ton tax credit for geologically sequestered carbon
Section 136106
oxide is set to increase to $40 per ton by 2026 ($35 per ton 
CRS Insight IN11710,
for carbon oxide that is reused, such as for enhanced oil
Carbon Capture and
recovery) and adjusted for inflation thereafter. This
Sequestration Tax Credit
provision would extend the start of construction deadline to
(“Section 45Q”) Legislation
December 31, 2031.
in the 117th Congress, by
Mol y F. Sherlock and
The amount of carbon oxide that must be captured at a
Angela C. Jones.
qualifying facility would be reduced to 1,000 metric tons
annually for a direct air capture (DAC) facility, 18,750

CRS Report R46451,
metric tons annually (not less than 75% of which would
Energy Tax Provisions
otherwise have been released into the atmosphere) for an
Expiring in 2020, 2021,
electricity generating facility, and 12,500 metric tons for any
2022, and 2023 (“Tax
other facility (not less than 50% of which would otherwise
Extenders”), by Mol y F.
have been released into the atmosphere).
Sherlock, Margot L.
Crandall-Hol ick, and
Base credit amounts would be $17 per metric ton for
Donald J. Marples.
carbon oxide that is captured and geologically sequestered
and $12 per metric ton for carbon oxide that is reused.

CRS Report R45171,
Increased credit amounts of $85 per ton and $60 per ton,
Registered Apprenticeship:
respectively, would be available for facilities that pay
Federal Role and Recent
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Description
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prevailing wages during the construction phase and during
Federal Efforts, by
the first 12 years of operation and meet registered
Benjamin Col ins.
apprenticeship requirements.

CRS In Focus IF11927,
The credit amount for DAC would be increased to a base
Federally Funded
rate of $36 per metric ton, with a credit of $180 per metric
Construction and the
ton for projects that meet wage and workforce
Payment of Locally
requirements. These amounts would be $26 and $130 per
Prevailing Wages, by
metric ton for carbon oxide captured using DAC that is
David H. Bradley and Jon
beneficially reused.
O. Shimabukuro.
Projects financed with tax-exempt bonds would have the
credit amount reduced by the lesser of (1) 15%; or (2) the
fraction of the proceeds of a tax-exempt obligation used to
finance the project over the aggregate amount of the
project’s financing costs. The provision would also provide
flexibility with respect to the period in which credits can be
claimed for projects affected by federally declared disasters.
This provision is a modification of Section 136107 in H.R.
5376, as reported on September 27, 2021.
Green Energy
If 90% of a business’s gross income is qualifying income, the
For background, see
Publicly Traded
business can elect to be treated as a master limited

CRS Report R41893,
Partnerships
partnership (MLP), allowing the business to be taxed as a
Master Limited

partnership while ownership interests are tradable in
Partnerships: A Policy
financial markets. Qualifying income currently includes
Section 136107
Option for the Renewable
mining and natural resource income. This provision would
Energy Industry, by Mol y
expand the definition of qualifying income to include income
F. Sherlock and Mark P.
derived from green and renewable energy. These additions
Keightley.
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.
This provision is identical or nearly identical to Section
136108 in H.R. 5376, as reported on September 27, 2021.
Zero-Emission
This provision would create a new tax credit for qualifying
For background, see
Nuclear Power
zero-emission nuclear power produced and sold after

CRS Report R42853,
Production Credit
December 31, 2021. Qualified nuclear power facilities are
Nuclear Energy: Overview

taxpayer-owned facilities that use nuclear power to generate
of Congressional Issues, by
electricity that did not receive an advanced nuclear
Section 136108
Mark Holt.
production tax credit allocation under Section 45J, and are
placed in service before the date of enactment (i.e., are

CRS Insight IN10725,
existing nuclear power plants).
The Advanced Nuclear
Production Tax Credit, by
The PTC amount would be 0.3 cents per kWh. Taxpayers
Mol y F. Sherlock and
that satisfy prevailing wage and registered apprenticeship
Mark Holt.
requirements would be eligible for a tax credit of 1.5 cents
per kWh.

CRS Report R45171,
Registered Apprenticeship:
The credit would be reduced when the price of electricity
Federal Role and Recent
increases. Credits would be reduced by a “reduction
Federal Efforts, by
amount,” which is 16% of the excess of gross receipts
Benjamin Col ins.
(excluding certain state and local zero-emissions grants)
from electricity produced by the facility and sold over the

CRS In Focus IF11927,
product of 2.5 cents times the amount of electricity sold
Federally Funded
during the taxable year.
Construction and the
Credit amounts and amounts in the phaseout formula would
Payment of Locally
be adjusted for inflation. Taxpayers could elect to receive
Prevailing Wages, by
the credit as direct pay (discussed above).
David H. Bradley and Jon
O. Shimabukuro.
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The credit would terminate on December 31, 2027.
This provision is a modification of Section 136109 in H.R.
5376, as reported on September 27, 2021.
Part 2—Renewable Fuels

Extension of
Current law provides a 50-cents-per-gallon tax credit for
For background, see
Incentives for
alternative fuels and alternative fuel mixtures through 2021

CRS Report R46865,
Biodiesel,
and a $1.00-per-gallon tax credit for biodiesel and
Energy Tax Provisions:
Renewable Diesel,
renewable diesel (with an additional $0.10-per-gallon tax
Overview and Budgetary
and Alternative
credit for agri-biodiesel) through 2022. The biodiesel and
Cost, by Mol y F.
Fuels
renewable diesel mixtures tax credit may be claimed as an
Sherlock.

immediate excise tax credit against the blender’s motor and
aviation fuels excise taxes. Credits in excess of excise tax

CRS Report R46451,
Section 136201
liability may be refunded. The biodiesel and small agri-
Energy Tax Provisions
biodiesel credits may be claimed as income tax credits. The
Expiring in 2020, 2021,
alternative fuels credit can be claimed as an excise tax credit
2022, and 2023 (“Tax
or received as an outlay. The alternative fuels mixture credit
Extenders”), by Mol y F.
is an excise tax credit.
Sherlock, Margot L.
Crandall-Hol ick, and
This provision would extend the existing tax credits for
Donald J. Marples.
alternative fuels and alternative fuel mixtures and biodiesel
and renewable diesel through December 31, 2026.
This provision is a modification of Section 136201 in H.R.
5367, as reported on September 27, 2021.
Extension of
Current law provides a $1.01-per-gallon income tax credit
For background, see
Second Generation
for second-generation biofuel production through 2021. This  CRS Report R46865,
Biofuel Incentives
provision would extend the second-generation biofuel
Energy Tax Provisions:

producer tax credit through December 31, 2026.
Overview and Budgetary
Section 136202
This provision is a modification of Section 136202 in H.R.
Cost, by Mol y F.
5276, as reported on September 27, 2021.
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.
Sustainable Aviation This provision would create a new tax credit for the sale or
For background, see
Fuel Credit
mixture of sustainable aviation fuel starting in 2023. The tax

CRS In Focus IF11696,

credit would have a base amount of $1.25 per gallon, with a
Aviation and Climate
supplemental credit amount of $0.01 per gallon for each
Section 136203
Change, by Richard K.
percentage point by which the lifecycle greenhouse gas
Lattanzio.
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 defined according to the most
recent Carbon Offsetting and Reduction Scheme for
International Aviation adopted by the International Civil
Aviation Organization and agreed to by the United States
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Description
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(or a similar methodology which satisfies criteria in the
Clean Air Act), as compared with petroleum-based jet fuel.
The sustainable aviation fuel credit would require claimants
to be registered with the Secretary of the Treasury, and
could 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, 2026.
This provision is a modification of Section 136203 of H.R.
5376, as reported on September 27, 2021.
Clean Hydrogen
This provision would create a new credit for the qualified
For background, see

production of clean hydrogen. The credit would be available

CRS Report R45171,
for qualified clean hydrogen produced at a qualifying facility
Section 136204
Registered Apprenticeship:
during the facility’s first 10 years of operation. The base
Federal Role and Recent
credit amount would be $0.60 per kilogram (kg) times the
Federal Efforts, by
applicable percentage. The credit would be $3.00 per kg
Benjamin Col ins.
times the applicable percentage if the clean hydrogen is
produced at a facility that meets prevailing wage and

CRS In Focus IF11927,
registered apprenticeship requirements. Credit amounts
Federally Funded
would be indexed for inflation.
Construction and the
Payment of Locally
The applicable percentage would be determined by the
Prevailing Wages, by
lifecycle greenhouse gas emissions rate achieved in
David H. Bradley and Jon
producing clean hydrogen. The applicable percentage would
O. Shimabukuro.
be 100% for hydrogen achieving a lifecycle greenhouse gas
emissions rate of less than 0.45 kilograms of carbon dioxide
equivalent (CO2e) per kg. The applicable percentage would
be 33.4% for hydrogen achieving a lifecycle greenhouse gas
emission rate of less than 1.5 kilograms of CO2e per kg (but
not less than 0.45 kilograms). For hydrogen with a lifecycle
greenhouse gas emission rate of less than 2.5 kgs of CO2e
per kg (but not less than 1.5), the applicable percentage
would be 25%, and for hydrogen with a lifecycle greenhouse
gas emissions rate of less than 4 kgs of CO2e per kg (but
not less than 2.5), the applicable percentage would be 20%.
For facilities placed into service before 2027 producing
hydrogen with a greenhouse gas emissions rate of no more
than 6 kg of CO2e per kg (but not less than 4), the
applicable percentage would be 15%.
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 could not claim credits for clean hydrogen
produced at facilities that claimed credits under Section
45Q. Taxpayers could elect to claim the energy investment
tax credit (ITC) in lieu of the clean hydrogen production
credit. Taxpayers may claim the Section 45 PTC for
electricity produced from renewable resources by the
taxpayer if the electricity is used at a qualified clean
hydrogen facility to produce qualified clean hydrogen.
The provision would terminate the alternative fuel excise
tax credit for hydrogen after December 31, 2021.
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The provision provides that for facilities financed with tax-
exempt bonds, the credit amount would be reduced by the
lesser of (1) 15%; or (2) the fraction of the proceeds of a
tax-exempt obligation used to finance the project over the
aggregate amount of the project’s financing costs.
The credit would not be available to facilities that start
construction after December 31, 2028.
This provision is a modification of Section 136204 of H.R.
5376, as reported on September 27, 2021.
Part 3—Green Energy and Efficiency Incentives for Individuals

Extension, Increase,
Current law provides a 10% tax credit for qualified energy-
For background, see
and Modifications of efficiency improvements and expenditures for residential

CRS Report R42089,
Nonbusiness Energy energy property on a taxpayer’s primary residence through
Residential Energy Tax
Property Credit
2021. The credit is subject to a $500 per taxpayer lifetime
Credits: Overview and

limit. This provision would extend the tax credit through
Analysis, by Margot L.
December 31, 2031, and make additional modifications.
Section 136301
Crandall-Hol ick and
The proposed modifications would increase the credit rate
Mol y F. Sherlock.
to 30% with an annual per-taxpayer limit of $1,200 and a

CRS Report R46451,
$600 per item limit (geothermal and air source heat pumps
Energy Tax Provisions
and biomass stoves would be excluded from this cap). The
Expiring in 2020, 2021,
credit would be allowed for expenditures made on any
2022, and 2023 (“Tax
dwelling unit used by the taxpayer (not limited to primary
Extenders”), by Mol y F.
residences). Limits for expenditures on windows and doors
Sherlock, Margot L.
would also be increased. Required energy efficiency
Crandall-Hol ick, and
standards would be modified, and changed to update over
Donald J. Marples.
time without additional legislative action. Qualifying building
envelope components would no longer include roofs, but

would include air sealing insulation. Biomass stoves would be
made eligible for tax credits. 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,
taxpayers would be required to submit a product
identification number to claim the tax credit.
This provision is a modification of Section 136301 in H.R.
5376, as reported on September 27, 2021.
Residential Energy
Current law provides a tax credit for the purchase of solar
For background, see
Efficient Property
electric property, solar water heating property, fuel cells,

CRS Report R42089,

geothermal heat pump property, small wind energy
Residential Energy Tax
property, and qualified biomass fuel property. The credit
Section 136302
Credits: Overview and
rate is 26% through 2022 (it was 30% through 2019), and is
Analysis, by Margot L.
scheduled to be reduced to 22% in 2023 before expiring.
Crandall-Hol ick and
This provision would extend the credit through December
Mol y F. Sherlock.
31, 2033, restoring the 30% credit rate after 2021 and
through 2031, and then reducing the credit rate to 26% in

CRS Report R46451,
2032 and 22% in 2033. Qualified battery storage technology
Energy Tax Provisions
would be added to the list of eligible property.
Expiring in 2020, 2021,
2022, and 2023 (“Tax
The credit would be made refundable after 2023. Starting in
Extenders”), by Mol y F.
2024, only property installed by qualified installers would be
Sherlock, Margot L.
eligible for the credit and taxpayers would be required to
Crandall-Hol ick, and
report the qualified installation identification number to
Donald J. Marples.
claim the credit.

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Description
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Payments would be made to territories for the revenue loss
associated with providing the residential energy efficient
property credit.
This provision is a modification of Section 136302 in H.R.
5376, as reported on September 27, 2021.
Energy Efficient
Under current law, a permanent deduction of up to $1.80
For background, see
Commercial
per square foot is allowed for certain energy-saving

CRS Committee Print
Building Deduction
commercial building property installed as part of (1) the
CP10004, Tax

interior lighting system; (2) the heating, cooling, ventilation,
Expenditures:
or hot water system; or (3) the building envelope. This
Section 136303
Compendium of
provision would temporarily modify the energy-efficient
Background Material on
commercial building deduction, with the modifications
Individual Provisions — A
effective through 2031.
Committee Print Prepared
The temporary modifications would reduce the amount by
for the Senate Committee
which a building must increase its efficiency relative to a
on the Budget, 2020, by
reference building, from 50% to 25%. They would further
Jane G. Gravelle et al.
provide that the per-square-foot deduction of $0.50 be
(pp. 99-104).
increased by $0.02 for each percentage point by which the

CRS Report R45171,
certified efficiency improvements reduce energy and power
Registered Apprenticeship:
costs, with a maximum amount of $1.00 per square foot.
Federal Role and Recent
For projects that meet prevailing wage requirements and
Federal Efforts, by
registered apprenticeship requirements, the base credit is
Benjamin Col ins.
$2.50, which would be increased by $0.10 for each
percentage point increase in energy efficiency, with a

CRS In Focus IF11927,
maximum credit amount of $5.00 per square foot. The
Federally Funded
maximum credit amount would be the total deduction a
Construction and the
building can claim over a four-year period (the current tax
Payment of Locally
year plus the three preceding tax years). Taxpayers making
Prevailing Wages, by
energy-efficiency retrofits that are part of a qualified retrofit
David H. Bradley and Jon
plan on a building that is at least five years old would be able
O. Shimabukuro.
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). Any tax-
exempt organization would be allowed to allocate the
deduction to the designer or the building or retrofit plan.
This provision is a modification of Section 136303 in H.R.
5376, as reported on September 27, 2021.
Extension, Increase,
Under current law, through 2021, a tax credit is available for For background, see
and Modifications of eligible contractors for building and selling qualifying energy-

CRS Report R46451,
New Energy
efficient new homes. The credit is equal to $2,000, with
Energy Tax Provisions
Efficient Home
certain manufactured homes qualifying for a $1,000 credit.
Expiring in 2020, 2021,
Credit
This provision would extend the energy-efficient new home
2022, and 2023 (“Tax

credit through December 31, 2031, and increase and modify
Extenders”), by Mol y F.
Section 136304
the credit amount. For homes acquired after 2021, a $2,500
Sherlock, Margot L.
credit would be available for new homes that meet certain
Crandall-Hol ick, and
Energy Star efficiency standards, and a $5,000 credit would
Donald J. Marples.
be available for new homes that are certified as zero-energy

ready homes. Multifamily dwellings that meet certain Energy

CRS In Focus IF11927,
Federally Funded
Star efficiency standards could be eligible for a $500 credit
Construction and the
per unit, with a $1,000 per unit credit available for eligible
Payment of Locally
zero-energy ready multifamily dwellings. The credits for
Prevailing Wages, by
multifamily dwelling units would be increased to $2,500 and
David H. Bradley and Jon
$5,000, respectively, if the taxpayer ensures that the
O. Shimabukuro.
laborers and mechanics employed by contractors and
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Description
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subcontractors in the construction of the residence are paid
prevailing wages.
This provision is identical or nearly identical to Section
136304 in H.R. 5376, as reported on September 27, 2021.
Modifications to
Under current law, subsidies provided by public utilities to
For background, see
Income Exclusion
customers for the purchase or installation of energy

CRS Committee Print
for Conservation
conservation measures are excluded from taxable income.
CP10004, Tax
Subsidies
This provision would provide that amounts provided for
Expenditures:

water conservation or efficiency, storm water management,
Compendium of
Section 136305
or wastewater management could also be excluded. For
Background Material on
wastewater management, the property purchased or
Individual Provisions — A
installed would need to be on the taxpayer’s principal
Committee Print Prepared
residence. The provision would be effective for amounts
for the Senate Committee
received after December 31, 2018.
on the Budget, 2020, by
This provision is identical or nearly identical to Section
Jane G. Gravelle et al.
136305 in H.R. 5376, as reported on September 27, 2021.
(pp. 121-124).
Credit for Qualified
This provision would create a tax credit for 30% of qualified
For background, see
Wildfire Mitigation
wildfire mitigation expenditures made after the date of

CRS In Focus IF10244,
Expenditures
enactment. Qualified wildfire mitigation expenditures would
Wildfire Statistics, by

be specified wildfire mitigation expenditures made under a
Katie Hoover and Laura
state wildfire mitigation program that requires wildfire
Section 136306
A. Hanson.
mitigation expenditures be paid by the taxpayer and the
state, for property owned or leased by the taxpayer. The

CRS In Focus IF10732,
credit rate would be reduced below 30% if the taxpayer’s
Federal Assistance for
percentage of the wildfire mitigation expenditure (as
Wildfire Response and
opposed to the state’s share) were to fall below 30%. For
Recovery, by Katie
business expenditures, the credit would be part of the
Hoover.
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.
This provision is identical or nearly identical to Section
135403 in H.R. 5376, as reported on September 27, 2021.
Part 4—Greening the Fleet and Alternative Vehicles

Refundable New
This provision would create a new refundable tax credit for
For background, see
Qualified Plug-In
plug-in electric vehicles (EVs), effective beginning in 2022.

CRS In Focus IF11017,
Electric Drive
The credit would be $4,000 for vehicles with a battery
The Plug-In Electric Vehicle
Motor Vehicle
capacity of 10 kilowatt hours that can be charged by an
Tax Credit, by Mol y F.
Credit for
external source of electricity, plus $3,500 for vehicles with a
Sherlock.
Individuals
battery capacity of at least 40 kilowatt hours (50 kilowatt


hours after 2026) that have a gas tank capacity of no more

CRS Report R46864,
than 2.5 gallons. An additional amount of $4,500 would be
Alternative Fuels and
Section 136401
available for domestically assembled vehicles assembled at a
Vehicles: Legislative
facility that operates under a union-negotiated col ective
Proposals, by Melissa N.
bargaining agreement, and an additional amount of $500
Diaz.
would be available for vehicles powered by battery cells

CRS Report R46231,
meeting domestic content requirements. The maximum per-
Electric Vehicles: A Primer
vehicle credit would be up to $12,500, not to exceed 50% of
on Technology and
the vehicle purchase price. Vehicles subject to depreciation
Selected Policy Issues, by
would be ineligible. Taxpayers would be allowed to claim the
Melissa N. Diaz.
credit for one vehicle per year.

The credit would phase out for married taxpayers filing a
joint return with modified AGI above $500,000 ($375,000 in
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the case of head of household filers; $250,000 in the case of
other filers). The credit would be reduced by $200 for each
$1,000 (or fraction thereof) by which the taxpayer’s
modified AGI exceeds the threshold amount. The taxpayer’s
modified AGI would be the lesser of modified AGI in the
taxable year or prior year.
Credits would only be allowed for vehicles that have a
manufacturer’s suggested retail price of less than $80,000
for vans, SUVs, or pickup trucks, and $55,000 for other
vehicles.
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 30% tax credit, up to $7,500.
Starting in 2022, taxpayers purchasing eligible vehicles could
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 providing 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.
This provision is a modification of Section 136401 in H.R.
5376, as reported on September 27, 2021.
Credit for
This provision would create a new refundable tax credit for
For background, see
Previously Owned
previously owned qualified plug-in electric and fuel cell

CRS In Focus IF11017,
Qualified Plug-In
vehicles. The credit would be up to $4,000 (a base credit of
The Plug-In Electric Vehicle
Electric Drive
$2,000 plus $2,000 for vehicles propelled by a battery with a
Tax Credit, by Mol y F.
Motor Vehicles
capacity of 40 kilowatt hours [50 kilowatt hours after 2026]
Sherlock.

having a gas tank with a capacity of less than 2.5 gallons).
The credit would be limited to 50% of the vehicle purchase

CRS Report R46864,
Section 136402
price.
Alternative Fuels and
Vehicles: Legislative
The credit would phase out for married taxpayers filing a
Proposals, by Melissa N.
joint return with modified AGI above $150,000 ($112,500 in
Diaz.
the case of head of household filers; $75,000 in the case of
other filers). The credit would be reduced by $200 for each

CRS Report R46231,
$1,000 (or fraction thereof) by which the taxpayer’s
Electric Vehicles: A Primer
modified AGI exceeds the threshold amount. The taxpayer’s
on Technology and
modified AGI would be the lesser of modified AGI in the
Selected Policy Issues, by
taxable year or prior year.
Melissa N. Diaz.
Credits would only be allowed for vehicles with a sale price

of $25,000 or less with a model year that is at least two
years earlier than the calendar year in which the vehicle is
sold. This credit could only be claimed for the first transfer
of a qualifying vehicle. Taxpayers would be required to
include the VIN on their tax return to claim a tax credit.
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Taxpayers purchasing eligible vehicles could elect to transfer
the tax credit to the dealer, so long as the dealer meets
registration, disclosure, and other requirements.
Payments would be made to territories for the revenue loss
associated with providing the EV credit.
The credit would not apply to vehicles acquired after
December 31, 2031.
This provision is a modification of Section 136402 in H.R.
5376, as reported on September 27, 2021.
Qualified
This provision would create a new tax credit for qualified

Commercial
commercial electric vehicles. The credit would be the lesser
Electric Vehicles
of (1) 15% of the vehicle’s cost (30% for vehicles not

powered by a gasoline or diesel internal combustion engine);
or (2) the incremental cost of the vehicle relative to a
Section 136403
comparable vehicle. Eligible vehicles would have a battery
capacity of not less than 15 kilowatt hours and be charged
by an external source of electricity. Mobile machinery and
qualified commercial fuel cell vehicles would also be eligible
for this credit. Leasing companies could elect to determine
the credit using the rules under Section 36C for individuals if
the vehicle is leased to an individual. Qualifying vehicles
would be depreciable property.
Tax-exempt entities would have the option of electing to
receive direct payments.
Taxpayers would be required to include the VIN on their
tax return to claim a tax credit.
The credit would not apply to vehicles acquired after
December 31, 2031.
This provision is a modification of Section 136403 in H.R.
5376, as reported on September 27, 2021.
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,

$4,000, with up to an additional $4,000 available based on
Energy Tax Provisions
fuel economy). Heavier vehicles qualify for up to a $40,000
Section 136404
Expiring in 2020, 2021,
credit. This provision would modify the definition of
2022, and 2023 (“Tax
qualified fuel cell motor vehicles to exclude vehicles subject
Extenders”), by Mol y F.
to depreciation (commercial vehicles), and extend the credit
Sherlock, Margot L.
through December 31, 2031. Commercial fuel cell vehicles
Crandall-Hol ick, and
would be eligible for the new credit for qualified commercial
Donald J. Marples.
electric vehicles.

This provision is identical or nearly identical to Section

CRS Report R46864,
Alternative Fuels and
136404 in H.R. 5376, as reported on September 27, 2021.
Vehicles: Legislative
Proposals, by Melissa N.
Diaz.
Alternative Fuel
Current law allows, through 2021, a tax credit for the cost
For background, see
Refueling Property
of any qualified alternative fuel vehicle refueling property

CRS Report R46451,
Credit
installed by a business or at a taxpayer’s principal residence.
Energy Tax Provisions

The credit is equal to 30% of these costs, limited to $30,000
Expiring in 2020, 2021,
for businesses at each separate location with qualifying
Section 136405
2022, and 2023 (“Tax
property, and $1,000 for residences. This provision would
Extenders”), by Mol y F.
extend the credit through December 31, 2031, and make
Sherlock, Margot L.
additional modifications. For residential property, the credit
Crandall-Hol ick, and
would be extended at the 30% rate, with the credit limit
Donald J. Marples.
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increased to $3,333.33. For business property (property

CRS Report R46864,
subject to depreciation), the credit would be extended at a
Alternative Fuels and
rate of 6% (30% if prevailing wage and registered
Vehicles: Legislative
apprenticeship requirements were met), with the credit limit
Proposals, by Melissa N.
increased to $100,000.
Diaz.
A supplemental 4% credit (20% if prevailing wage and

CRS Report R46231,
registered apprenticeship requirements are met) would be
Electric Vehicles: A Primer
available for costs above the $100,000 limit for business
on Technology and
property that refuels using only electricity or fuel consisting
Selected Policy Issues, by
of at least 85% hydrogen by volume. To qualify for the
Melissa N. Diaz.
supplemental credit, the property would need to be

intended for general public use (i.e., no fee or payment

CRS Report R45171,
Registered Apprenticeship:
arrangement required) and accept payments via a credit card
Federal Role and Recent
reader (including contactless technology) or be exclusively
Federal Efforts, by
used by commercial or government vehicles.
Benjamin Col ins.
The definition of qualifying property would be modified to
include bidirectional charging equipment.

CRS In Focus IF11927,
Federally Funded
The credit would not apply to property placed in service
Construction and the
after December 31, 2031.
Payment of Locally
This provision is a modification to Section 136405 in H.R.
Prevailing Wages, by
5376, as reported on September 27, 2021.
David H. Bradley and Jon
O. Shimabukuro.
Reinstatement and
Before 2018, up to $20 per month in employer

Expansion of
reimbursements for qualifying bicycle commuting expenses
Employer-Provided
were excludable from an employee’s income and wages and
Fringe Benefit for
hence not subject to income or employment taxes. P.L. 115-
Bicycle Commuting
97, commonly called the Tax Cuts and Jobs Act (TCJA),

temporarily suspended, through 2025, the exclusion for
employer-provided bicycle commuter fringe benefits. This
Section 136406
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).
This provision is identical or nearly identical to Section
136406 in H.R. 5376, as reported on September 27, 2021.
Credit for Certain
This provision would create a new refundable 30% tax credit
New Electric
for qualified electric bicycles. The maximum credit amount
Bicycles
would be $900. The credit could be claimed for one bike

per three-year period per taxpayer (two bikes in the case of
a joint return).
Section 136407
Qualified electric bicycles include those made by a qualified
manufacturer and that include a VIN, cost no more than
$4,000, 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 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
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the case of head of household filers; $75,000 in the case of
other filers). The credit would be 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 could 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 VIN on their
tax return to claim a tax credit.
Payments would be made to territories for the revenue loss
associated with this credit.
Beginning after December 31, 2022, taxpayers purchasing
qualified electric bicycles could elect to transfer the credit
to the retailer selling the bicycle if the retailer is registered
with the Secretary of the Treasury, reports certain
information to the taxpayer, and makes a payment to the
taxpayer equal to the amount of the credit. Such payments
would be excluded from the taxpayer’s gross income.
The credit would not apply to bicycles acquired after
December 31, 2025.
This provision is a modification of Section 136407 in H.R.
5376, as reported on September 27, 2021.
Part 5—Investment in the Green Workforce and Manufacturing

Extension of the
This provision would provide additional allocations of the
For background, see
Advanced Energy
qualified advanced energy manufacturing tax credit, which is

CRS Committee Print
Project Credit
a 30% tax credit for investments in projects that reequip,
CP10004, Tax

expand, or establish certain energy manufacturing facilities.
Expenditures:
The American Recovery and Reinvestment Act (P.L. 111-5)
Section 136501
Compendium of
provided $2.3 bil ion in allocations, which have been ful y
Background Material on
allocated.
Individual Provisions — A
An additional $5 bil ion in allocations would be provided in
Committee Print Prepared
2022 and 2023 and an additional $1.875 bil ion would be
for the Senate Committee
allocated in each year from 2024 through 2031. In 2022 and
on the Budget, 2020, by
2023, $800 mil ion in annual allocations would be for
Jane G. Gravelle et al.
projects in automotive communities, with $300 mil ion set
(pp. 221-224).
aside in each of the subsequent years. The same amounts

would be set aside for projects in energy communities

CRS Report R45171,
Registered Apprenticeship:
(defined as communities in or adjacent to a census tract that
Federal Role and Recent
had a coal mine close after 1999, or a coal-fired electric
Federal Efforts, by
generating unit retired after 2009).
Benjamin Col ins.
The base rate for the credit would be 6%, with the 30%

credit rate allowed for projects meeting prevailing wage and

CRS In Focus IF11927,
Federally Funded
registered apprenticeship requirements.
Construction and the
The Secretary would be directed to consider which projects
Payment of Locally
wil have the greatest net impact on avoiding or reducing
Prevailing Wages, by
emissions; wil provide the greatest domestic job creation;
David H. Bradley and Jon
wil provide the greatest job creation in the vicinity of
O. Shimabukuro.
projects in low-income communities and communities with
dislocated manufacturing or coal-industry workers; and wil
provide the greatest job creation in areas with populations
more at risk for adverse health or environmental effects,
where a significant portion of 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 to give the highest
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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.
This provision is a modification of Section 136501 in H.R.
5376, as reported on September 27, 2021.
Labor Costs of
This provision would create a new tax credit for 2% of the

Installing Mechanical labor cost of installing mechanical insulation (10% if
Insulation Property
prevailing wage and registered apprenticeship requirements

are met).
Section 136502
The credit would not apply to costs incurred after
December 31, 2027.
This provision is a modification of Section 136502 in H.R.
5376, as reported on September 27, 2021.
Advanced
This provision would create a new advanced manufacturing
For background, see
Manufacturing
investment tax credit for taxpayers investing in advanced

CRS Report R46581,
Investment Credit
manufacturing facilities to manufacture semiconductors or
Semiconductors: U.S.

semiconductor tooling equipment. The tax credit would
Industry, Global
have a base amount of 5%, with the credit rate increasing to
Section 136503
Competition, and Federal
25% for facilities that pay prevailing wages and meet
Policy, by Michaela D.
registered apprenticeship requirements.
Platzer, John F. Sargent
Taxpayers would be able to elect to receive the credit as
Jr., and Karen M. Sutter.
direct pay.
For property for which construction began before January 1,
2022, only the basis attributable to construction taking place
after December 31, 2021, would be eligible for the credit.
To qualify for this credit, construction on a facility must
begin by December 31, 2025.
This provision did not appear in H.R. 5376, as reported on
September 27, 2021.
Advanced
This provision would create a new production tax credit

Manufacturing
that could be claimed for the domestic production and sale
Production Credit
of qualifying solar and wind components.

Credits for solar components would include (1) for a thin
Section 136504
photovoltaic cell or crystalline photovoltaic cell, 4 cents per
direct current watt of capacity; (2) for photovoltaic wafers,
$12 per square meter; (3) for solar grade polysilicon, $3 per
kilogram; and (4) for solar modules, 7 cents per direct
current watt of capacity.
Credits for wind components would be computed as an
applicable amount times the total rated capacity of the
completed wind turbine for which the component was
designed. The applicable amount would be 2 cents for
blades, 5 cents for nacelles, 3 cents for towers, 2 cents for
fixed platform offshore wind foundations, and 4 cents for
floating platform offshore wind foundations.
The total credit amount would be increased by 10% for
components manufactured in facilities operating under a
col ective bargaining agreement.
Taxpayers would be able to elect to receive the credit as
direct pay.
The credit would phase out for components sold after
December 31, 2026. Components sold in 2027 would be
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eligible for 75% of the ful credit amount. Components sold
in 2028 and 2029 would be eligible for 50% and 25% of the
ful credit amount, respectively. No credit would be available
for components sold after December 31, 2029.
This provision did not appear in H.R. 5376, as reported on
September 27, 2021.
Part 6—Environmental Justice

Qualified
This provision would create a new refundable tax credit for

Environmental
eligible educational institutions that received an allocation
Justice Program
from the Treasury and incur costs associated with a qualified
Credit
environmental justice program. The credit would be 30% for

a program involving material participation of faculty and
students of an institution described in Section 371(a) of the
Section 136601
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 would be
made public and the Secretary would disclose allocation
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.
There would be a gross-up of payments in the case of
budget sequestration.
This provision is a modification of Section 136601 in H.R.
5376, as reported on September 27, 2021.
Part 7—Superfund

Reinstatement of
This provision would permanently reinstate the Hazardous
For background, see
Superfund
Substance Superfund financing rate for certain excise taxes

CRS Report R41039,

starting on July 1, 2022, but would not reauthorize the
Comprehensive
Superfund special environmental tax on corporate income
Section 136701
Environmental Response,
that also once financed this trust fund.
Compensation, and
This provision would permanently reinstate Superfund
Liability Act: A Summary of
excise taxes on domestic crude oil and imported petroleum
Superfund Cleanup
products at the rate of 16.4 cents per barrel in 2022, with
Authorities and Related
adjustments for inflation annually thereafter. The previous
Provisions of the Act, by
tax rate was 9.7 cents per barrel when this tax last expired
David M. Bearden.
at the end of 1995.
Generally, the tax is paid by refineries that receive crude oil
or by the person using or importing a petroleum product.
The Infrastructure Investment and Jobs Act (H.R. 3684)
separately renews other excise taxes that contribute to the
Superfund. H.R. 3684 increases the tax rate on domestically
produced chemical feedstocks and imported chemical
derivatives and renews those taxes from July 1, 2022,
through December 31, 2031. H.R. 3684 also removes the
statutory link between the dates of applicability of the crude
oil and chemical products taxes.
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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.
This provision is a modification of Section 136701 in H.R.
5376, as reported on September 27, 2021.
Part 8—Incentives for Clean Electricity and Clean Transportation

Clean Electricity
This provision would create a new clean electricity

Production Credit
production tax credit (PTC). This new PTC would be for

the sale of domestically produced electricity with a
greenhouse gas emissions rate not greater than zero. To
Section 136801
qualify for a tax credit, electricity would need to be
produced at a qualifying facility for which construction began
after December 31, 2026.
The base PTC amount would be 0.3 cents per kWh, with
the tax credit amount increased to 1.5 cents per kWh for
facilities that pay prevailing wages and meet registered
apprenticeship requirements (0.5 cents and 2.5 cents,
respectively, in 2021, applying the inflation adjustment
factor; the amounts would be adjusted for inflation annually).
Facilities with a maximum net output of less than 1
megawatt would also qualify for the ful 1.5 cents per kWh
amount. The PTC would be available for electricity
produced during the facility’s first 10 years of operation.
The credit amount would be increased by 10% for electricity
produced in energy communities. An energy community is
defined as being a census tract or any adjoining tract in
which a coal mine closed after December 31, 1999, or a
coal-fired electric power plant was retired after December
31, 2009.
A 10% domestic content bonus would be available for
electricity produced at facilities that certify that certain steel,
iron, and manufactured products used in the facility were
domestically produced.
The provision would provide that for facilities financed with
tax-exempt bonds, the credit amount is reduced by the
lesser of (1) 15%; or (2) the fraction of the proceeds of a
tax-exempt obligation used to finance the project over the
aggregate amount of the project’s financing costs.
Taxpayers would be able to elect to receive the credit as
direct pay, effectively making the tax credit refundable.
Taxpayers would not be able to claim the clean electricity
production credit if the facility or electricity produced from
the facility claimed certain other energy-related investment
or production tax credits. Taxpayers would choose between
the clean electricity PTC and ITC, and could not claim both.
The tax credit would phase out when emissions reduction
target levels are achieved or after 2031 (the later of the
two). The emissions target phaseout wil begin after the
calendar year in which greenhouse gas emissions from the
electric power sector are equal to or less than 25% of 2021
electric power sector emissions. Once phaseout begins, the
ful credit amount would remain available for facilities that
begin construction the fol owing year. The credit amount for
facilities beginning construction in the second year would be
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75% of the ful credit amount. This would be reduced to
50% for facilities beginning construction in the third year,
and zero afterward.
This provision did not appear in H.R. 5376, as reported on
September 27, 2021.
Clean Electricity
This provision would create a new clean electricity
For background, see
Investment Credit
investment tax credit (ITC). This new ITC would be for

CRS Report R45171,

investment in qualifying zero-emissions electricity generation
Registered Apprenticeship:
facilities or grid improvement property. Qualifying grid
Section 136802
Federal Role and Recent
improvements would include stand-alone energy storage.
Federal Efforts, by
Costs of interconnection property are eligible for clean
Benjamin Col ins.
electricity projects smaller than 5 megawatts. This credit
would be available for facilities and property for which

CRS In Focus IF11927,
construction begins after December 31, 2026.
Federally Funded
Construction and the
The base ITC amount would be 6%, with the tax credit rate
Payment of Locally
increased to 30% for facilities that pay prevailing wages and
Prevailing Wages, by
meet registered apprenticeship requirements. Facilities with
David H. Bradley and Jon
a maximum net output of less than 1 megawatt would also
O. Shimabukuro.
qualify for the 30% credit.
The clean electricity ITC is increased by one-third (2
percentage points or 10 percentage points) for property
placed in service in an energy community (as defined above
for the purposes of the clean electricity PTC). Similarly, a
10% domestic content bonus also applies for the clean
electricity ITC.
The provision would provide that for facilities financed with
tax-exempt bonds, the credit amount is reduced by the
lesser of (1) 15%; or (2) the fraction of the proceeds of a
tax-exempt obligation used to finance the project over the
aggregate amount of the project’s financing costs.
Taxpayers would be able to elect to receive the credit as
direct pay, effectively making the credit refundable.
Taxpayers would not be able to claim the clean electricity
production credit if the facility or electricity produced from
the facility claimed certain other energy-related investment
or production tax credits. Taxpayers would choose between
the clean electricity PTC and ITC, and could not claim both.
The clean electricity ITC would phase out according to the
same schedule as would apply to the clean electricity PTC.
This provision did not appear in H.R. 5376, as reported on
September 27, 2021.
Increase in Clean
This provision would allow for the allocation of 1.8 gigawatts For background, see
Electricity
for “environmental justice solar and wind capacity” credits

CRS Report R45171,
Investment Credit
annually from 2027 through 2031. Taxpayers receiving a
Registered Apprenticeship:
for Facilities Placed
capacity allocation may be entitled to tax credits in addition
Federal Role and Recent
in Service in
to otherwise allowed clean electricity ITCs. Specifically,
Federal Efforts, by
Connection with
projects receiving an allocation that are located in a low-
Benjamin Col ins.
Low-Income
income community or on Indian land would be eligible for a
Communities
10% bonus investment tax credit, while projects that are

CRS In Focus IF11927,
Federally Funded

part of a low-income residential building project or qualified
low-income economic benefit project would be eligible for a
Construction and the
Section 136803
20% bonus investment credit. No facility could receive more
Payment of Locally
than a maximum 20% bonus investment credit under this
Prevailing Wages, by
provision.
David H. Bradley and Jon
O. Shimabukuro.
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Qualifying clean electricity projects would include those with
a nameplate capacity of 5 megawatts or less (other than
facilities producing electricity through combustion or
gasification).
The Secretary of the Treasury would consult with the
Secretary of Energy and EPA Administrator in determining
allocations. In selecting facilities for allocations, the Secretary
would be directed to consider which facilities 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 communities.
Facilities receiving an allocation would have certain
information disclosed to the public and be required to have
the facility placed in service within four years.
This provision would take effect on January 1, 2027.
This provision did not appear in H.R. 5376, as reported on
September 27, 2021.
Cost Recovery for
This provision would provide that any facility qualifying for

Qualified Facilities,
the clean electricity PTC or any facility or property
Qualified Property,
qualifying for the clean electricity ITC would be treated as 5-
and Grid
year property under the modified accelerated cost recovery
Improvement
system (MACRS), making it so that cost recovery for
Property
renewable energy investments is generally similar to current

law.
Section 136804
This provision would apply to facilities and property placed
in service after December 31, 2026.
This provision did not appear in H.R. 5376, as reported on
September 27, 2021.
Clean Fuel
This provision would create a tax credit for domestic clean
For background, see
Production Credit
fuel production starting in 2027. The tax credit per gallon of

CRS Report R45171,

transportation fuel would be calculated as the applicable
Registered Apprenticeship:
amount multiplied by the emissions factor of the fuel. To
Section 136805
Federal Role and Recent
qualify, the fuel must be produced by the taxpayer at a
Federal Efforts, by
qualified facility (excluding facilities that receive credits for
Benjamin Col ins.
producing clean hydrogen or carbon oxide sequestration)
and sold by the taxpayer. Qualified producers must be

CRS In Focus IF11927,
registered with the IRS.
Federally Funded
Construction and the
The “applicable amount” would be determined by the type
Payment of Locally
of fuel and the producer’s labor practices. The base credit
Prevailing Wages, by
amount for zero-emissions fuels would be $0.20 for
David H. Bradley and Jon
nonaviation fuel and $0.35 for aviation fuel. If the producer
O. Shimabukuro.
meets prevailing wage and registered apprenticeship
requirements, then the applicable amount would be $1.00
for nonaviation fuel and $1.75 for aviation fuel. These
amounts would be adjusted annually for inflation.
The “emissions factor” would be calculated according to the
formula: [(50 kilograms of CO2-equivalent (CO2e) global
warming potential per metric mil ion British Thermal Units
(mmBTU) – emissions rate of fuel produced) / 50 kilograms
of CO2e per mmBTU]. For example, suppose a producer
met the labor practices and other requirements and
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Section Title and
Number
Description
CRS Resources
produced a nonaviation fuel with an emissions factor of 25
kg of CO2e emissions per mmBTU. That producer’s credit
per gallon would be $1.00 * [(75-25)/75] = $0.70 per gallon.
The Treasury Secretary would publish tables of emissions
rates for various fuel types that would be used in the
calculation.
Qualifying transportation fuel would be fuel with an
emissions rate not greater than 50 kilograms of CO2e per
mmBTU for fuel sold in 2027 through 2030. For sustainable
aviation fuel the emission rate could not be greater than 35
kilograms of CO2e per mmBTU. For fuel sold after 2030,
qualifying fuel could not have an emissions rate greater than
25 kilograms of CO2e per mmBTU.
The tax credit would phase out when emissions reduction
target levels are achieved or after 2031 (the later of the
two). The emissions target phaseout would begin after the
calendar year in which greenhouse gas emissions from the
transportation sector are equal to or less than 25% of 2021
transportation sector emissions. Once phaseout begins, the
ful credit amount would remain available for facilities that
begin construction the fol owing year. The credit amount for
facilities beginning construction in the second year would be
75% of the ful credit amount. This would be reduced to
50% for facilities beginning construction in the third year,
and zero afterward.
Taxpayers would be able to elect to receive the credit as a
direct payment.
This provision did not appear in H.R. 5376, as reported on
September 27, 2021.
Source: November 3, 2021, modified version of the Build Back Better Act (BBBA; H.R. 5376) as posted on the
House Rules Committee website.
Notes: Part 9 of Subtitle F would appropriate $4,073,433,000 bil ion to the IRS, to remain available through
2031, to administer the provisions in this subtitle.
Provisions are effective in 2022 unless otherwise noted. The changes that would be made by the provisions are
permanent, unless otherwise noted. Within the description, “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—Social Safety Net
Section Title and
Number
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 the 2021 child credit (and the 2022 credit as

CRS Insight IN11786,
Beginning in 2021
described in Section 137102 below), including:
The Child Tax Credit in the

Safe Harbor
November 3 Modified
Section 137101
Under current law, low- and moderate-income taxpayers
Version of the Build Back
who receive excess advance child credit payments may, in
Better Act: Summary
certain situations, be protected from repayment as a
Table, by Margot L.
result of a safe harbor provision. Excess advance
Crandall-Hol ick.
payments are equal to the value of the credit a taxpayer is For background, see
eligible to claim on their tax return minus amounts

CRS Report R46900, The
received as advance payments. The safe harbor applies in
Expanded Child Tax Credit
cases where there is a change in the number of qualifying
for 2021: Frequently
children used to estimate the advance payment in
Asked Questions (FAQs),
comparison to the number of children taken into account
by Margot L. Crandall-
when claiming and calculating the credit on the applicable
Hol ick.
income tax return (assuming this information is not
updated with the IRS during the year).a

CRS Insight IN11752,
The Impact of a “Fully
This provision would amend the existing safe harbor such
Refundable” Child Tax
that the safe harbor would not apply in cases where the
Credit, by Margot L.
qualifying child taken into account in determining the
Crandall-Hol ick.
advance payment amount was done so either fraudulently
or due to intentional disregard of the rules and

CRS Insight IN11656,
regulations. This would include cases where two
The Child Tax Credit: How
taxpayers knowingly set up an arrangement whereby one
Would the Biden
taxpayer receives advance payments (equaling up to 50%
Administration’s Proposed
of the 2021 credit), while the other claims the ful amount
American Families Plan
of the credit on their 2021 return.
Change the Child Tax
Joint Returns
Credit?, by Margot L.
Crandall-Hol ick.
Under current law, to determine the amount of the credit
a taxpayer wil receive when they file 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. The
provision would apply to advance payments issued by
territorial governments.
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
include “any information known to the [Treasury]
Secretary.”
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Number
Description
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Disclosure of Information Relating to Joint
Returns and Advanced Payments
In the case of an individual who receives an advance
payment, and who was a married joint filer during the
reference year (e.g., generally 2020 for the 2021
expanded child credit, or 2019 if data for 2020 are not
available), the Treasury may disclose to their spouse
information used to determine eligibility for and the
amount of the advanced payment (including principal place
of abode).
These provisions are generally applicable beginning in
2021 (including to advance payments made in 2021). The
provision related to disclosure of information relating to
joint returns and advance payments shall take effect after
the date of enactment.
Overall, these provisions are a modification of Section
137101 in H.R. 5376, as reported on September 27, 2021.
Extensions and
The American Rescue Plan Act of 2021 (ARPA; P.L. 117-
For more information, see
Modifications
2) temporarily increased (for 2021) the child credit for

CRS Insight IN11786,
Applicable
many taxpayers with children. Specifically, the law
The Child Tax Credit in the
Beginning in 2022
increased the maximum child credit from $2,000 per child
November 3 Modified

to $3,000 per child ($3,600 for children under 6 years
Version of the Build Back
old); expanded the eligibility age for children to include
Section 137102
Better Act: Summary
17-year-olds; and made the credit “ful y refundable.”
Table, by Margot L.
The bil would extend the 2021 ARPA-expanded child
Crandall-Hol ick.
credit to 2022 (as modified by Section 137101 above),
For background, see
with additional changes to the 2021 credit in effect for
2022 summarized below.b The parameters of the credit in

CRS Report R46900, The
2022 would not be adjusted for inflation.
Expanded Child Tax Credit
for 2021: Frequently
Modifications of Advance Payment Program
Asked Questions (FAQs),
Under current law, the advance payment program for the
by Margot L. Crandall-
2021 child credit advances up to 50% of the estimated
Hol ick.
2021 credit amount in equal periodic payments between

July 1, 2021, and December 31, 2021. (The IRS is issuing

CRS Insight IN11752,
The Impact of a “Fully
advance payments in six monthly payments between July
Refundable” Child Tax
15, 2021, and December 15, 2021.)
Credit, by Margot L.
This provision would advance all (100%) of the estimated
Crandall-Hol ick.
2022 child credit through the end of December 31, 2022,
in 12 monthly payments.

CRS Insight IN11656,
The Child Tax Credit: How
Under current law, otherwise-eligible taxpayers are
Would the Biden
automatically issued an advance payment, irrespective of
Administration’s Proposed
their income level, though they may opt out of advance
American Families Plan
payments with the IRS.
Change the Child Tax
This provision would generally limit eligibility for the
Credit?, by Margot L.
advance payment program to taxpayers whose income in
Crandall-Hol ick.
the reference year is below the initial phaseout. (The

CRS Report R43840,
reference taxable year is generally the prior taxable year,
Federal Income Taxes and
or if such data are not available, the year preceding the
Noncitizens: Frequently
prior year. For the 2022 child tax credit, the reference
Asked Questions, by Erika
taxable year would be 2021, or if data from that year are
K. Lunder and Margot L.
not available, 2020.) Those initial phaseout thresholds are
Crandall-Hol ick.
$150,000 for married joint filers, $112,500 for head of
household filers, and $75,000 for single filers.

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Number
Description
CRS Resources
Under current law, residents of Puerto Rico are generally
ineligible to receive advance payments. Instead, they must
file a 2021 tax return with the IRS to receive their 2021
child credit.
The provision would allow the Treasury Secretary to
make advanced payments of the 2022 child credit to
residents of Puerto Rico between July and December of
2022. If in effect, this would effectively allow Puerto Rican
residents to receive up to half of their total 2022 credit in
advance payments, and claim the remainder on their 2022
tax return, filed in early 2023.
Repeal of Temporary SSN Requirement for
Qualifying Children
Under current law (enacted as part of P.L. 115-97 and in
effect from 2018 to 2025), a taxpayer can only receive the
child credit for an otherwise-eligible child if they provide
the child’s Social Security Number (SSN). This SSN must
be associated with work authorization, meaning an SSN
issued solely to receive a public benefit does not qualify.
These types of work-authorized SSNs are generally
provided to all U.S. citizen children and certain noncitizen
children, including legal permanent residents (i.e., “green
card holders”), refugees, and asylees. As a result of this
provision, for example, taxpayers cannot claim the child
credit for otherwise-eligible children with individual
taxpayer identification numbers (ITINs).
The provision would repeal the temporary “work-
authorized” SSN requirement for qualifying children.
Hence, eligible taxpayers with children with ITINs could
claim the credit for those children (assuming those
children meet all the other eligibility requirements). This
would apply for 2022-2025. Since this temporary
requirement is scheduled to expire at the end of 2025,
this provision would effectively permanently repeal the
temporary SSN requirement for children.
Income Lookback
Under current law, when a taxpayer calculates their child
credit for a given year on their income tax return, they
use the income for that year to determine whether and to
what extent the credit is subject to phaseout.c For
example, a taxpayer would generally use their annual 2022
income to calculate their 2022 child credit amount, if
subject to the phaseout.
The provision would allow taxpayers to elect 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 elect to 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 in advance payments of
the credit due to annual fluctuations in their income.
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
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CRS Resources
safe harbor provision in Section 137101 of the bil , as
described above. 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 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.)d
The phaseout of the safe harbor would be unchanged
under the law in effect for 2021.
Overall, these provisions are a modification of Section
137102 in H.R. 5376, as reported on September 27, 2021.
Refundable Child
Under current law, the child credit is scheduled to revert
For more information, see
Tax Credit After
to levels in effect under prior law, including as amended

CRS Insight IN11786,
2022
by P.L. 115-97. The changes made by P.L. 115-97 were in
The Child Tax Credit in the

effect from 2018 to 2025, and most of them would be in
November 3 Modified
effect for 2023-2025 under this bil . Specifically, under
Section 137103
Version of the Build Back
current law from 2023 to 2025, the credit is scheduled to
Better Act: Summary
equal a maximum of $2,000 per qualifying child. Lower-
Table, by Margot L.
income taxpayers wil receive their credit, whether all or
Crandall-Hol ick.
part of the credit, as the refundable portion of the credit.
From 2023 to 2025, the refundable portion wil generally
For background, see
be calculated under the earned income formula as 15% of

CRS Report R46900, The
earned income above $2,500, not to exceed $1,400 per
Expanded Child Tax Credit
qualifying child.e From 2023 to 2025, the credit wil begin
for 2021: Frequently
to phase out when a taxpayer’s income exceeds $400,000
Asked Questions (FAQs),
for married joint filers and $200,000 for unmarried
by Margot L. Crandall-
taxpayers (e.g., head of household). From 2023 to 2025,
Hol ick.
taxpayers can only receive the credit for children for

CRS Insight IN11752,
whom they have furnished a work-authorized SSN.
The Impact of a “Fully
Beginning in 2026, the child credit is scheduled to revert
Refundable” Child Tax
to levels in effect before P.L. 115-97 under current law. In
Credit, by Margot L.
other words, beginning in 2026 the credit is scheduled to
Crandall-Hol ick.
equal a maximum of $1,000 per qualifying child. Beginning

CRS Report R45124, The
in 2026, the refundable portion of the credit would
Child Tax Credit:
generally be calculated as 15% of earned income over
Legislative History, by
$3,000, not to exceed $1,000 per qualifying child.e
Margot L. Crandall-
Beginning in 2026, the credit starts to phase out when
Hol ick.
income exceeds $110,000 for married joint filers and
$75,000 for unmarried taxpayers (e.g., head of
household). Beginning in 2026, taxpayers can only receive
the credit for children for whom they have furnished a
taxpayer ID, which includes an SSN, an ITIN, or an
adoption taxpayer ID number (ATIN).
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Description
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Finally, under current law, beginning in 2023, a qualifying
child wil revert permanently to being a dependent child
0-16 years old, meaning 17-year-olds would not be
eligible. (This age limit of a qualifying child is a permanent
provision that was not temporarily changed by P.L. 115-
97.)
This provision would modify current law beginning in
2023 by making the credit “ful y refundable.” Specifically,
for taxpayers with a principal place of abode in the United
States for more than half the year, the provision would
eliminate the formula(s) for calculating the refundable
portion of the child credit. Hence, the child credit would
be the same amount per child for low- and moderate-
income taxpayers, irrespective of their income. The
maximum credit would be $2,000 per child from 2023 to
2025 and $1,000 per child beginning in 2026. (Higher-
income taxpayers would stil be subject to a phaseout of
the credit, as scheduled to be in effect for a given year.)
Ful refundability would also be available to taxpayers who
are residents of Puerto Rico.
The temporary SSN requirement for qualifying children
would be repealed for 2023-2025 by Section 137102 of
this bil .
Under this provision, the credit’s advance payment
program would no longer be in effect beginning in 2023.
This provision is a modification of Sections 137103 and
137104 in H.R. 5376, as reported on September 27, 2021.
Appropriations
The provision would provide for an additional

appropriation of $3.9633 bil ion for the IRS for

administrative expenses of the child tax credit and
Section 137104
advance payments of the child tax credit, and $1 bil ion
for the Treasury Department for outreach efforts to
increase enrol ment of eligible families in the child tax
credit and the advance payments of the child tax credit.
These amounts would be available upon enactment and
through September 30, 2026.
This provision is a modification of Section 137105 in H.R.
5376, as reported on September 27, 2021.
Part 2—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 Earned Income
qualifying children (often referred to as the “childless
The “Childless” EITC:
Tax Credit
EITC”). Specifically, the law modified several parameters
Temporary Expansion for
Extended Through
of the credit that in combination tripled the maximum
2021 Under the American
2022
amount of the childless EITC from about $500 to about
Rescue Plan Act of 2021

$1,500 per taxpayer. The law also temporarily reduced
(ARPA; P.L. 117-2), by
the eligibility age of the childless EITC for young workers
Section 137201
Margot L. Crandall-
and eliminated the age limit for older workers. The bil
Hol ick.
would temporarily extend the changes to the childless
EITC enacted by the ARPA for one year—2022, as

CRS Report R43805, The
described below
Earned Income Tax Credit
(EITC): How It Works and
Regarding the credit amount, for 2022 this provision
Who Receives It, by
would increase the childless EITC amount by making
Margot L. Crandall-
several modifications to the credit formula: (1)
increasing—to $9,820—the minimum earned income
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Number
Description
CRS Resources
necessary to receive the maximum credit amount (i.e.,
Hol ick, Gene Falk, and
“the earned income amount”); (2) increasing—to
Conor F. Boyle.
$11,610—the highest income level at which taxpayers
receive the maximum credit amount before it begins to
phase out; and (3) doubling the phase-in and phaseout
rates from 7.65% to 15.3%.f Combined, these changes
would effectively triple the maximum EITC for childless
workers. (Like other aspects of the EITC under current
law, the $9,820 and $11,610 amounts would be indexed
for inflation in 2022.)
Regarding eligibility age, for 2022, this provision would
temporarily expand eligibility for 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 2022. For students who are attending school at
least part-time, the age limit would be reduced from 25 to
24 for 2022.g For former foster children and youth who
are homeless, the minimum age would be reduced from
25 to 18. The provision would also temporarily eliminate
the upper age limit for 2022, so workers aged 65 and
older would be eligible.
The provision also includes a temporary earned income
lookback for 2022 (a similar provision was temporarily
enacted for 2021 under ARPA whereby taxpayers could
use their 2019 income). Under this provision, if a
taxpayer’s earned income in 2022 was less than their
earned income in 2021, the taxpayer could elect to use
their 2021 earned income in calculating their EITC. This
income lookback would be applicable to all EITC
recipients—those with and without children.
This provision is a modification of Section 137401 in H.R.
5376, as reported on September 27, 2021.
Funds for
Under current law, residents of the territories may be

Administration of
eligible to receive an EITC under their own territorial tax
Earned Income Tax
law. These territories are Puerto Rico, American Samoa,
Credits in the
the Commonwealth of the Northern Mariana Islands
Territories
(CNMI), the United States Virgin Islands (USVI), and

Guam. These territorial EITCs are paid by the local
territorial government, with the Treasury making
Section 137202
aggregate payments to territorial governments for the
total cost of these benefits. (Territorial residents are
generally ineligible for the federal EITC.) From 2021 to
2025 under current law, 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.
This 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 beginning in 2022.
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Description
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This provision is identical or nearly identical to Sections
137402 in H.R. 5376, as reported on September 27, 2021.
Part 3—Expanding Access to Health Coverage and Lowering Costsh
Improve
Under current law, certain individuals without access to
For background, see
Affordability and
subsidized health insurance coverage may be eligible for

CRS Report R44425,
Reduce Premium
the premium tax credit (PTC). In order to be eligible to
Health Insurance Premium
Costs of Health
receive the premium tax credit in 2021, individuals must
Tax Credit and Cost-
Insurance for
have annual household income at or above 100% of the
Sharing Reductions, by
Consumers
federal poverty level; not be eligible for certain types of
Bernadette Fernandez.

health insurance coverage, with exceptions; file federal
income tax returns; and enrol in a plan through an

Section 137301
individual exchange.
This provision would temporarily extend expanded
eligibility for and the amount of the PTC original y
enacted under ARPA by modifying the income eligibility
criteria and credit formula for 2021 through 2025.
Regarding income eligibility, the provision would
temporarily eliminate the phaseout for households with
annual incomes above 400% of the federal poverty level
(FPL).
Regarding the formula, the provision would temporarily
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. The provision
would temporarily strike the existing indexing provision
that would apply to the formula beginning in 2023 through
2026.
This provision is a modification of Section 137501 in H.R.
5376, as reported on September 27, 2021.
Modification of
Under current law, individuals who are eligible for
For background, see
Employer-
minimum eligible coverage from their employer are

CRS Report R44425,
Sponsored
generally ineligible for the PTC. An exception is provided
Health Insurance Premium
Coverage
to an individual whose employer-provided health benefits
Tax Credit and Cost-
Affordability Test in
are unaffordable or inadequate. In 2021, coverage is
Sharing Reductions, by
Health Insurance
considered unaffordable if an employee’s share of the
Bernadette Fernandez.
Premium Tax
premium for self-only coverage under the plan exceeds
Credit
9.83% of the employee’s household income. This

affordability test is annually adjusted.
Section 137302
For 2022 through 2025, 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 compared to current law.
The provision would temporarily strike the annual
adjustment process through 2026.
This provision is a modification of Section 137502 in H.R.
5376, as reported on September 27, 2021.
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Number
Description
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Treatment of
Beginning in 2022, this provision would exclude from
For background, see
Lump-Sum Social
household income—for purposes of determining PTC

CRS Report R44425,
Security Benefits in
eligibility and amount for a given year—any lump-sum
Health Insurance Premium
Determining
Social Security benefit payment attributable to a prior
Tax Credit and Cost-
Household Income
year. This provision would allow taxpayers to elect to
Sharing Reductions, by

include as part of their income the excludable amount, as
Bernadette Fernandez.
specified, beginning in 2026.
Section 137303

This provision is identical or nearly identical to Section
137503 in H.R. 5376, as reported on September 27, 2021.
Temporary
For 2022 through 2025, this provision would expand PTC
For background, see
Expansion of Health eligibility for lower-income households and make other

CRS Report R44425,
Insurance Premium
temporary changes.
Health Insurance Premium
Tax Credits for
The provision would temporarily disallow income criteria
Tax Credit and Cost-
Certain Low-
to be used to determine PTC eligibility. For households
Sharing Reductions, by
Income Populations
with incomes not exceeding 138% of FPL, the provision
Bernadette Fernandez.

would temporarily disregard the affordability test

CRS Report R45455, The
Section 137304
applicable to eligible employer-sponsored plans and
Affordable Care Act’s
qualified small employer health reimbursement
(ACA’s) Employer Shared
arrangements for PTC eligibility purposes.
Responsibility Provisions
For households with incomes less than 200% of FPL, the
(ESRP), by Ryan J. Rosso.
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 repeal 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
repeal the requirement that such employers pay a penalty
if at least one ful -time employee enrol s in an exchange
plan and is eligible for a PTC or cost-sharing reduction
(CSR).
This provision is identical or nearly identical to Section
137504 in H.R. 5376, as reported on September 27, 2021.
Special Rule for
For 2021 and 2022, this provision would deem individuals
For background, see
Individuals
who receive unemployment compensation for any week

CRS Report R44425,
Receiving
during a given year to have met the PTC income eligibility
Health Insurance Premium
Unemployment
criteria. The provision would temporarily disregard any
Tax Credit and Cost-
Compensation
household income above 150% of FPL in 2022 (133% of
Sharing Reductions, by

FPL in 2021).
Bernadette Fernandez.
Section 137305
This provision is a modification of Section 137507 in H.R.

5376, as reported on September 27, 2021.
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Section Title and
Number
Description
CRS Resources
Permanent Credit
For the health coverage tax credit (HCTC), this provision
For background, see
for Health
would strike the sunset date of January 1, 2022, to

CRS Report R44392, The
Insurance Costs
authorize it on a permanent basis. The provision would
Health Coverage Tax

increase the HCTC’s subsidy rate to 80% of the premium
Credit (HCTC): In Brief, by
for qualifying health plans, for coverage months beginning
Section 137306
Bernadette Fernandez.
after December 31, 2021.

This provision is identical or nearly identical to Section
137508 in H.R. 5376, as reported on September 27, 2021.
Exclusion of
For 2023 through 2026, this provision would exclude
For background, see
Certain Dependent
income of a dependent under 24 years old from the

CRS Report R44425,
Income for
calculation of the PTC and determination of eligibility for
Health Insurance
Purposes of
cost-sharing reductions. An exception to this exclusion
Premium Tax Credit and
Premium Tax
would apply to aggregate income from all dependents
Cost-Sharing
Credit
younger than 24 in a given household that exceeds
Reductions, by

$3,500; the dol ar level would be annually adjusted
Bernadette Fernandez.
beginning in 2024.
Section 137307

This provision did not appear in H.R. 5376, as reported
on September 27, 2021.
Part 5—Higher Education
Credit for Public
This provision would create a new tax credit for
For background, see
University Research donations to public educational institutions for research

CRS Report R45922, Tax
Infrastructure
infrastructure, in lieu of claiming the charitable
Issues Relating to

contribution deduction for these amounts.
Charitable Contributions
Section 137501
Specifically, taxpayers would be able to claim a credit
and Organizations, by
equal to 40% of cash contributions for a qualifying project
Jane G. Gravelle, Donald
of a certified educational institution, subject to credit
J. Marples, and Mol y F.
allocation limits. This tax credit would be part of the
Sherlock.
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.
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.
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.
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Section Title and
Number
Description
CRS Resources
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.
This provision is identical or nearly identical to Sections
137701 in H.R. 5376, as reported on September 27, 2021.
Treatment of
Under current law, the portion of a scholarship (including
For background, see
Federal Pell Grants
a Pell Grant) that covers qualified tuition and fees is

CRS Report R45418,
for Income Tax
generally excludable from income and hence not taxable.i
Federal Pell Grant Program
Purposes
In contrast, the portion of a scholarship that covers room
of the Higher Education

and board and other living expenses is taxable. Pell Grants
Act: Primer, by Cassandria
may be used to pay for tuition and fees, room and board,
Section 137502
Dortch.
and other educational expenses. In addition, under
current law, when calculating an education tax credit,

CRS Report R41967,
taxpayers must reduce their credit-eligible education
Higher Education Tax
expenses by any amounts received as tax-free
Benefits: Brief Overview
scholarships. Since the amount of an education tax credit
and Budgetary Effects, by
depends on expenses incurred for tuition and fees, then
Margot L. Crandall-
all else being equal, receipt of a tax-free scholarship
Hol ick.
reduces the amount of credit-eligible expenses, and may

CRS Report R42561, The
reduce the amount of their education credit.
American Opportunity Tax
This provision would temporarily modify the current
Credit: Overview, Analysis,
exclusion for scholarship income such that any amount of
and Policy Options, by
a Pell Grant—not just the portion that pays for qualified
Margot L. Crandall-
tuition and fees—would be excluded from income, and
Hol ick.
hence not be taxable. In addition, under this provision,

expenses eligible for education tax credits would
temporarily not be reduced by any amount of a Pell Grant.
Both of these changes would apply to Pell Grants received
in 2022 through 2025.
This provision is a modification of Section 137703 in H.R.
5376, as reported on September 27, 2021.
Repeal of Denial of
Under current law, the American Opportunity Tax Credit For background, see
American
(AOTC) cannot be claimed for a student convicted of a

CRS Report R42561, The
Opportunity Tax
federal or state felony drug possession or distribution
American Opportunity Tax
Credit on Basis of
offense. This lifetime prohibition generally applies
Credit: Overview, Analysis,
Felony Drug
beginning with the year in which the conviction occurs.
and Policy Options, by
Conviction
The provision would repeal this ban, allowing the AOTC
Margot L. Crandall-

to be claimed for an otherwise eligible student convicted
Hol ick.
Section 137503
of a felony drug offense.

This provision is identical or nearly identical to Section
137704 in H.R. 5376, as reported on September 27, 2021.
Modification of
Under current law, taxpayers who itemize their
For background, see
Limitation on
deductions may claim a deduction for certain state and

CRS Report R46246, The
Deduction for State local taxes paid (the SALT deduction). P.L. 115-97 limited
SALT Cap: Overview and
and Local taxes,
nonbusiness SALT deduction claims for tax years 2018
Analysis, by Grant A.
etc.j
through 2025, set to $10,000 for single taxpayers and
Driessen and Joseph S.

married couples filing jointly and $5,000 for married
Hughes.
taxpayers filing separately. That law also excluded foreign
Section 137601
real property taxes paid from SALT deduction claims over 
CRS Report RL32781,
the same time frame.
Federal Deductibility of
State and Local Taxes, by
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Section Title and
Number
Description
CRS Resources
The provision would increase the SALT deduction
Grant A. Driessen and
limitation from $10,000 to $72,500 for single taxpayers
Steven Maguire.
and married couples filing jointly, and from $5,000 to

$36,250 for married individuals filing separately. The
increase would be effective for tax years beginning after
2020.
The provision would also extend the deduction (as
modified in this proposal) an additional six tax years,
through tax year 2031.
This provision did not appear in H.R. 5376, as reported
on September 27, 2021.
Source: November 3, 2021, modified version of the Build Back Better Act (BBBA; H.R. 5376) as posted on the
House Rules Committee website.
Notes: Provisions are effective in 2022 unless otherwise noted. The changes that would be made by the
provision are permanent, unless otherwise noted. Within the description, “Section” citations refer to the section
within the Internal Revenue Code (IRC), 26 U.S.C., unless otherwise noted. This subtitle is a modified version of
Subtitle H in H.R. 5376, as reported on September 27, 2021. For more information on Subtitle H, see CRS
Report R46923, Tax Provisions in the “Build Back Better Act:” The House Ways and Means Committee’s
Legislative Recommendations, coordinated by Mol y F. Sherlock.
Part 4 of Subtitle F of the October 28 modified legislative text of the Build Back Better Act would also establish
new Pathway to Practice Training Programs, which are beyond the scope of this report and not included in the
table above. Part 4, Section 137403 includes a new refundable tax credit (under Section 36G of the Internal
Revenue Code) for qualifying educational institutions to offset amounts paid or incurred by the institution for
each eligible student who receives a Pathway to Practice medical scholarship voucher.
a. For example, the advance payments of the 2021 credit wil be based on an estimate of the 2021 credit
amount generally using 2020 tax data (the year of the data used to estimate the credit amount is referred to
as the “reference year”). Differences in the number of qualifying children between 2021 and 2020 may
occur when children move between taxpayers from year to year or if a child is born in 2021.
b. Territorial residents would be eligible to receive this larger child credit for 2022 from their territorial
revenue authority, with the IRS making aggregate payments to the territory for the larger 2022 credit
amount under existing law, IRC Section 24(k).
c. 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.
d. The age of the children would be based on their age at the end of 2022. When issuing advance payments in
2022, the IRS could project a child’s age under IRC Section 7527A(b)(1)(D). In other words, a qualifying
child who is 5 years old in 2021 and 6 years old in 2022 would result in the taxpayer being eligible for a
maximum credit of $3,000, or $250 per month advanced in 2022. Hence, for the purposes of the safe
harbor, the child would be considered an older child.
e. Under IRC 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 scheduled under current law
to revert to 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.
f.
Under current law, beginning in 2022 the statutory earned income amount and the phaseout threshold
amount for childless EITC recipients wil revert to their levels prior to ARPA, $4,220 and $5,280
respectively, and be annually adjusted for inflation. For reference, in 2021, prior to ARPA these amounts
after inflation adjustment would have been $7,100 and $8,880, respectively. The phaseout threshold amount
for married joint filers with a given number of qualifying children is $5,000 more than for unmarried filers. In
2021, once adjusted for inflation, this amount equals $5,940 for childless EITC recipients ($5,950 for those
with children). See IRS Revenue Procedure (RP) 2020-45.
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g. The definition of a student would be someone carrying half or more of the normal ful -time workload for
their program of study, as defined under IRC Section 25A(b)(3).
h. The November 3 version of the bil includes two new health provisions that are not summarized in this
table. These provisions did not appear in H.R. 5376 as reported on September 27, 2021, or in the October
28 version of the bil . Section 137308 would limit patient cost sharing (e.g., copays) on insulin to no more
than $35 per month beginning in 2023. Section 137309 would require new information reporting beginning
in 2023, so that group health plan sponsors would receive a semiannual report from pharmacy benefit
managers on costs, fees, and rebates associated with pharmacy benefit manager contracts.
i.
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).
j.
A manager’s amendment, released November 4, 2021, to the Rules Committee Print 117-18 would increase
the SALT cap limit to $80,000 ($40,000 married taxpayers filing separately) through 2030. The cap would
then return to $10,000 for 2031, and would expire for 2032 and al future years.

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Table 4. Subtitle H—Responsibly Funding Our Priorities
Section Title and
Number
Description
CRS Resources
Part 1—Corporate and International Tax Reforms

Subpart A—Corporate Provisions

Corporate
This provision would impose an alternative minimum tax
For background, see
Alternative
of 15% on corporations based on financial income. It

CRS Report R46887,
Minimum Tax
would apply to corporations with $1 bil ion or more in
Minimum Taxes on

earnings in the previous three years. In the case of U.S.
Business Income:
corporations that have foreign parents, it would apply
Section 138101
Background and Policy
only to income earned in the United States of $100
Options, by Mol y F.
mil ion or more (and apply when the international
Sherlock and Jane G.
financial reporting group has income of $1 bil ion or
Gravelle.
more). It would apply to a new corporation in existence
for less than three years based on the earnings in the

CRS Insight IN11646, A
years of existence.
Look at Book-Tax
Differences for Large
The provision would exclude Subchapter S corporations,
Corporations Using
regulated investment companies (RICs), and real estate
Aggregate Internal
investment trusts (REITs).
Revenue Service (IRS)
Firms that file consolidated returns would include income
Data, by Mol y F.
allocable to the firm from related firms including
Sherlock and Jane G.
control ed foreign corporations (and any disregarded
Gravelle.
entities); for other related firms, dividends would be
included. The provision would allow special deductions
for cooperatives and Alaska native corporations.
The additional tax would equal the amount of the
minimum tax in excess of the regular income tax plus the
additional tax from the Base Erosion and Anti-Abuse tax.
Income would be increased by federal and foreign income
taxes to place income on a pretax basis.
Losses would be allowed in the same manner as with the
regular tax, with loss carryovers limited to 80% of taxable
income.
Domestic credits under the general business tax (such as
the R&D credit) would be allowed to offset up to 75% of
the combined regular and minimum tax. Foreign tax
credits would be allowed based on the allowance for
foreign taxes paid in a corporation’s financial statement.
A credit for additional minimum tax could be carried over
to future years to offset regular tax when that tax is
higher.
This provision did not appear in H.R. 5376, as reported
on September 27, 2021.
Excise Tax on
This provision would impose a 1% excise tax on the
For background, see
Repurchase of
repurchase of stock by a publicly traded corporation. The

CRS In Focus IF11960,
Corporate Stock
amount subject to tax would be reduced by any new
An Excise Tax on Stock

issues to the public or stock issued to employees. The tax
Repurchases and Tax
would not apply if repurchases are less than $1 mil ion or
Section 138102
Advantages of Buybacks
are contributed to an employee pension or similar plan.
over Dividends, by Jane G.
The tax would not apply if the repurchases are treated as
Gravelle.
a dividend. It also would not apply to repurchases by

CRS Legal Sidebar
regulated investment companies (RICs) or real estate
LSB10266, Stock
investment trusts (REITs). Further, it would not apply to
Buybacks: Background and
repurchases that are treated as dividends or to purchases
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Section Title and
Number
Description
CRS Resources
by a dealer in securities in the ordinary course of
Reform Proposals, by Jay
business.
B. Sykes.
The excise tax would apply to purchases of corporation

CRS In Focus IF11393,
stock by a subsidiary of the corporation (a corporation or
Stock Buybacks: Concerns
partnership that is more than 50% owned). The tax would
over Debt-Financing and
also apply to purchases by a U.S. subsidiary of a foreign-
Long-Term Investing, by
parented firm. It would apply to newly inverted (after
Gary Shorter.
September 20, 2021) or surrogate firms (firms that

merged to create a foreign parent with the former U.S.

CRS In Focus IF11506,
Stock Buybacks and
shareholders owning more than 60% of shares).
Company Executives’
The tax would not be deductible.
Profits, by Gary Shorter.
This provision did not appear in H.R. 5376, as reported
on September 27, 2021.
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). Before

CRS Report R45186,
Interest Expense
2022, the income base is earnings before interest, taxes,
Issues in International

depreciation, and amortization (EBITDA). Excess interest
Corporate Taxation: The
is carried forward. The limit applies at the partnership or
Section 138111
2017 Revision (P.L. 115-
corporate level for partnerships and Subchapter S
97), by Jane G. Gravelle
corporations.
and Donald J. Marples.
This provision would add an additional interest limitation

CRS In Focus IF11809,
under Section 163(n). The share of interest deducted by
Trends and Proposals for
firms with operations in other countries would be limited
Corporate Tax Revenue,
to 110% of the allocated share of worldwide interest; the
by Donald J. Marples and
allocated share is the same as the U.S. firm’s share of
Jane G. Gravelle.
worldwide EBITDA. This provision would apply to firms
with an average excess interest of $12 mil ion over three

years. This limit would not apply to small businesses with
average earnings over three years of less than $25 mil ion,
partnerships, Subchapter S corporations, real estate
investment trusts (REITs), or regulated investment
companies (RICs).
The Section 163(j) limit applies at the partner or
shareholder level for partnerships and Subchapter S
corporations.
The provision would be effective for taxable years
beginning after December 31, 2022.
This provision is a modification of Section 138111 in H.R.
5376, as reported on September 27, 2021.
Subpart C—Outbound International Provisions

Modifications to
Current law imposes a minimum tax on global intangible
For background see
Deduction for
low-taxed income (GILTI) of control ed foreign

CRS Report R45186,
Foreign-Derived
corporations (CFCs), after allowing a deduction for 10%
Issues in International
Intangible Income
of tangible assets and 50% of the remainder. A deduction
Corporate Taxation: The
and Global
is also allowed for foreign-derived intangible income
2017 Revision (P.L. 115-
Intangible Low-
(FDII) for 10% of tangible assets and 37.5% of the
97), by Jane G. Gravelle
Taxed Income
remainder. These deduction amounts for the remainder
and Donald J. Marples.

are scheduled to fall to 37.5% for GILTI and 21.875% for
FDII after 2025. With the current 21% tax rate, these

CRS In Focus IF11809,
Section 138121
deductions result in a rate of 10.5% (13.125% after 2025)
Trends and Proposals for
for GILTI and 13.125% (16.4% after 2025) for FDII.
Corporate Tax Revenue,
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Tax Provisions in the Build Back Better Act: Rules Committee Print 117-18

Section Title and
Number
Description
CRS Resources
The combined GILTI and FDII deductions are limited to
by Donald J. Marples and
taxable income and any unused deduction cannot be
Jane G. Gravelle.
carried back or forward.

This provision would reduce the deduction for GILTI to
28.5% and the deduction for FDII to 24.8%. With the
current 21% rate, these deductions would result in a tax
rate of 15.015% for GILTI and 15.792% for FDII. The
proposal would allow amounts in excess of taxable
income to be deducted and increase net operating losses,
effectively allowing them to be carried forward.
This provision would be effective for taxable years
beginning after December 31, 2022.
This provision is a modification of Section 138121 in H.R.
5376, as reported on September 27, 2021.
Repeal of Election
Under current law, control ed foreign corporations are

for 1-Month
generally required to have the same tax year as the U.S.
Deferral in
parent, but there is an election to begin the tax year one
Determination of
month earlier. This provision would repeal that election.
Taxable Year of
It would apply to tax years beginning after November 30,
Specified Foreign
2022.
Corporations
This provision is a modification of Section 138122 in H.R.

5376, as reported on September 27, 2021.
Section 138122
Modifications of
Under current law, a credit for foreign taxes paid offsets

Foreign Tax Credit
U.S. tax on foreign-source income dol ar for dol ar,
Rules Applicable to
whereas a deduction is less valuable. Dual-capacity
Certain Taxpayers
taxpayers are taxpayers who receive a benefit from a
Receiving Specific
foreign government (such as a right to extract oil). These
Economic Benefits
taxpayers also sometimes pay higher taxes that may not

be distinguishable from payments for benefits (such as
royalties) that would be deductible. Under this provision,
Section 138123
taxes would only be creditable up to the amount that
would be paid under rules general y applicable to
corporations in that country, and the excess could be
deducted.
This provision is identical or nearly identical to Section
138123 in H.R. 5376, as reported on September 27, 2021.
Modifications to
Current law allows a credit for foreign taxes paid (80% of
For background see:
Foreign Tax Credit
foreign taxes can be credited for GILTI). The credit is

CRS Report R45186,
Limitations
limited to U.S. tax on foreign-source income. The code
Issues in International

allocates a share of interest and head office expenses of
Corporate Taxation: The
the U.S. parent company to foreign-source income, which
Section 138124
2017 Revision (P.L. 115-
reduces the limit. Any excess credits are carried back one
97), by Jane G. Gravelle
year and carried forward 10 years. This limit applies on an
and Donald J. Marples.
overall basis for all countries (within separate overall
limits, or baskets, for GILTI, branch, passive, and general

CRS In Focus IF11809,
income). This overall limit allows taxes in excess of the
Trends and Proposals for
U.S. tax in high-tax countries to offset U.S. tax due in low-
Corporate Tax Revenue,
or no-tax countries.
by Donald J. Marples and
Jane G. Gravelle.
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, eliminate the foreign tax credit carryback,
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Section Title and
Number
Description
CRS Resources
and allow excess credits for GILTI to be carried forward
five years for tax years beginning after December 31,
2022, and before January 1, 2031. It would also modify the
treatment of certain foreign asset dispositions.
This provision would be effective for tax years beginning
after December 31, 2022.
This provision is a modification of Section 138124 in H.R.
5376, as reported on September 27, 2021.
Foreign Oil and Gas Under current law, foreign oil and gas extraction income
For background, see
Extraction Income
is not taxed (although another section would include this

CRS Report R43128, Oil
and Foreign Oil
income in GILTI), and foreign oil-related income (such as
Sands and the Oil Spill
Related Income to
a distribution) is included in GILTI. This provision would
Liability Trust Fund: The
Include Oil Shale
amend the definition of these incomes to include oil shale
Definition of “Oil” and
and Tar Sands
and tar sands.
Related Issues for

This provision is identical or nearly identical to Section
Congress, by Jonathan L.
Section 138125
138125 in H.R. 5376, as reported on September 27, 2021.
Ramseur.
Modifications to
Current law imposes a minimum tax on global intangible
For background, see
Inclusion of Global
low-taxed income (GILTI) of CFCs, after allowing a

CRS Report R45186,
Intangible Low-
deduction for 10% of tangible assets and 50% of the
Issues in International
Taxed Income
remainder (this percentage would be reduced by the
Corporate Taxation: The

section described above). GILTI (including profits and
2017 Revision (P.L. 115-
losses) is measured on an overall basis, so that losses in
Section 138126
97), by Jane G. Gravelle
one jurisdiction can offset income in another. Any overall
and Donald J. Marples.
losses cannot be carried forward. Foreign oil and gas
extraction income is not included in GILTI and not taxed.

CRS In Focus IF11809,
Trends and Proposals for
This provision would provide for a per-country measure
Corporate Tax Revenue,
of GILTI income and loss, reduce the deduction for
by Donald J. Marples and
tangible assets to 5%, allow losses to be carried forward
Jane G. Gravelle.
for one year, and include foreign oil and gas extraction
income in GILTI. The reduction in the 10% deduction for

tangible assets would not apply to the territories.
This provision would be effective for taxable years
beginning after December 31, 2022.
This provision is a modification of Section 138126 in H.R.
5376, as reported on September 27, 2021.
Modifications to
Under current law, credits for foreign taxes paid on GILTI For background, see
Determination of
are limited to 80% of these taxes. This provision would

CRS Report R45186,
Deemed Paid
increase the amount to 95%. It would also provide that
Issues in International
Credit for Taxes
CFCs must have direct U.S. shareholders and would apply
Corporate Taxation: The
Properly
special rules to foreign-owned U.S. shareholders.
2017 Revision (P.L. 115-
Attributable to
This provision would be effective for tax years beginning
97), by Jane G. Gravelle
Tested Income
after December 31, 2022.
and Donald J. Marples.

This provision is a modification of Section 138127 in H.R.

CRS In Focus IF11809,
Section 138127
5376, as reported on September 27, 2021.
Trends and Proposals for
Corporate Tax Revenue,
by Donald J. Marples and
Jane G. Gravelle.
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Section Title and
Number
Description
CRS Resources
Deduction for
On adoption of the GILTI regime in 2017, dividends from
For background, see
Foreign Source
foreign corporations became deductible by shareholders

CRS Report R45186,
Portion of
with a 10% interest beginning in 2018. The GILTI regime
Issues in International
Dividends Limited
and Subpart F, which taxes certain easily shifted income at
Corporate Taxation: The
to Control ed
ful rates, apply only to CFCs. CFCs are 50% owned by
2017 Revision (P.L. 115-
Foreign
U.S. shareholders, each with at least 10% ownership. This
97), by Jane G. Gravelle
Corporations, etc.
provision would limit dividend deductions by 10%
and Donald J. Marples.

shareholders to dividends of CFCs. Foreign corporations
that are not CFCs could elect CFC status with the
Section 138128
agreement of all U.S. 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 distributions made after the
date of enactment and to taxable years beginning after the
date of enactment.
This provision is a modification of Section 138128 in H.R.
5376, as reported on September 27, 2021.
Limitation on
Under current law, subpart F imposes current taxes on
For background, see
Foreign Base
certain income that is easily shifted, including foreign base

CRS Report R45186,
Company Sales and
company sales and service income. This income is earned
Issues in International
Services Income
in a jurisdiction where the product or service is neither
Corporate Taxation: The

produced nor consumed (i.e., in an intermediary). It
2017 Revision (P.L. 115-
applies to transactions with related parties. This provision
Section 138129
97), by Jane G. Gravelle
would limit the definition of related parties to taxable
and Donald J. Marples.
units resident in the United States. It also would close
certain tax planning techniques that allow U.S.
shareholders to avoid tax.
This provision is a modification of Section 138129 in H.R.
5376, as reported on September 27, 2021.
Subpart D—Inbound International Provisions

Modifications to
Under current law, the base erosion and anti-abuse tax
For background, see
Base Erosion and
(BEAT) provides for an alternative calculation of tax by

CRS Report R45186,
Anti Abuse Tax
adding certain payments to related foreign parties (such as
Issues in International

interest and royalties) and taxing this income at 10%.
Corporate Taxation: The
Payments for the cost of goods sold are not included.
Section 138131
2017 Revision (P.L. 115-
BEAT does not allow tax credits, including the foreign tax
97), by Jane G. Gravelle
credit, except for a temporary allowance of the research
and Donald J. Marples.
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 10% in 2022,
12.5% in 2023, 15% in 2024 and 18% 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.
This provision is a modification of Section 138129 in H.R.
5376, as reported on September 27, 2021.
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Section Title and
Number
Description
CRS Resources
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 rare
Drugs Limited to
diseases and conditions—sometimes referred to as
First Use or
“orphan drugs”—have been able to claim a nonrefundable
Indication
tax credit for a portion of the qualified clinical testing

expenses they incur or pay.
Section 138141
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.
This provision is identical or nearly identical to Section
138141 in H.R. 5376, as reported on September 27, 2021
Modifications to
Under this provision, a worthless security would be

Treatment of
considered a loss from the sale or exchange at the time it
Certain Losses
became worthless, as opposed to on the last day of the

taxable year. The rules relating to worthless securities
would be expanded to include partnership indebtedness
Section 138142
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.
This provision is identical or nearly identical to Section
138142 in H.R. 5376, as reported on September 27, 2021.
Adjusted Basis
Corporations that reorganize have rules about whether

Limitation for
the corporation wil realize gain in the transaction. If these
Divisive
reorganizations only involve the exchange of stock, the
Reorganization
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
Section 138143
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.
This provision would apply to reorganizations after the
date of enactment with a transition rule for transactions
already subject to binding agreements or announced.
This provision is a modification of Section 138143 in H.R.
5376, as reported on September 27, 2021.
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Section Title and
Number
Description
CRS Resources
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 corporation,

CRS Report R44421,
Treated as
except that it meets certain tests and faces a number of
Real Estate Investment
Qualified Income
restrictions. Among the tests is the requirement that at
Trusts (REITs) and the
for Purposes of
least 75% of REIT income be passively derived from real
Foreign Investment in Real
REIT Income Tests
estate (e.g., rents, mortgages).
Property Tax Act (FIRPTA):

This provision would exclude prison facility rental income
Overview and Recent Tax
Section 138144
from being qualified income for the income test.
Revisions, by Jane G.
This provision is identical or nearly identical to Section
Gravelle.
138144 in H.R. 5376, as reported on September 27, 2021.
Modifications to
Under current law, an exemption for portfolio interest

Exemption for
allows foreign corporations (and nonresidents) to invest
Portfolio Interest
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
Section 138145
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.
This provision would apply to obligations issued after the
date of enactment.
This provision is identical or nearly identical to Section
138145 in H.R. 5376, as reported on September 27, 2021.
Certain Partnership
Under current law, income arising from notional principal

Interest Derivatives
contracts is generally sourced to the residence of the

recipient of the payment—unless the income is effectively
connected with U.S. trade or business activity. Publicly
Section 138146
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.
This provision would apply to payments made after
December 31, 2022.
This provision is a modification of Section 138146 in H.R.
5376, as reported on September 27, 2021.
Adjustments to
Under current law, earnings and profits determine

Earnings and Profits
whether a distribution is a dividend (which may be taxed),
of Control ed
return of capital (not taxed), or capital gain (taxed).
Foreign
Earnings and profits are adjusted by various items, but
Corporations
control ed foreign corporations are not subject to certain

inventory adjustments, installment sales, or the completed
contract method of accounting.
Section 138147
This provision would relocate the current law provision in
the tax code and would not include the former language
that these rules do not apply if they increase earnings and
profits above distributions, expanding its applicability to all
control ed foreign corporations regardless of the level of
distributions.
This provision is identical or nearly identical to Section
138125 in H.R. 5376, as reported on September 27, 2021.
Congressional Research Service

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Section Title and
Number
Description
CRS Resources
Certain Dividends
Under current law, dividends are often exempt or

of Control ed
partially exempt from tax through domestic intercompany
Foreign
dividend deductions, and foreign dividends from CFCs are
Corporations
exempt for 10% shareholders. When stock has been held
Treated as
for less than two years, and an extraordinary dividend is
Extraordinary
paid, that dividend reduces the basis (the basis is the price
Dividends
paid for the stock) of the stock, and if it exceeds the basis

it is treated as a capital gain. An extraordinary dividend is
one that exceeds 10% of the value of the stock (5% for
Section 138148
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 would apply to distributions made after the
date of enactment.
This provision is a modification of Section 138143 in H.R.
5376, as reported on September 27, 2021.
Limitation on
Under current law, noncorporate taxpayers may exclude

Certain Special
a portion of the gain from the sale of qualified small
Rules for Section
business stock held for at least five years. The exclusion
1202 Gains
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
Section 138149
September 28, 2010; 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.
This provision would apply to sales and exchanges after
September 13, 2021, subject to a binding contract
exception.
This provision is identical or nearly identical to Section
138150 in H.R. 5376, as reported on September 27, 2021
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
Section 138150
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.
This provision would apply to constructive sales and
contracts entered into after the date of enactment.
This provision is a modification of Section 138151 in H.R.
5376, as reported on September 27, 2021.
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Section Title and
Number
Description
CRS Resources
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
Section 138151
business.
This provision would include under the common control
rules certain component members that may have been
previously treated as an excluded member, and these
rules would apply for any for-profit or research and
development activity.
This provision is a modification of Section 138152 in H.R.
5376, as reported on September 27, 2021.
Modification of
Wash sale rules generally disallow claims of a loss related

Wash Sale Rules
to stocks or securities if the taxpayer acquires or

contracts to acquire similar assets within 30 days of the
sale of the original asset.
Section 138152
This provision would extend current-law wash sale rules
to the taxpayer and related parties and to specified assets
(including digital assets, currencies, commodities, and
short sales of these assets).
This provision is a modification of Section 138153 in H.R.
5376, as reported on September 27, 2021.
Research and
The 2017 tax revision (P.L. 115-97) repealed the option
For background, see
Experimental
to expense qualified research expenditures, beginning in

CRS In Focus IF10757,
Expenditures
2022. Under current law, starting in 2022, companies wil
The 2017 Tax Law (P.L.

be required to capitalize those costs and amortize them
115-97) and Investment in
over 5 years for domestic research and 15 years for
Section 138153
Innovation, by Gary
foreign research.
Guenther.
This provision would delay the requirement that qualified
research expenditures be capitalized and amortized until
2026.
This provision is identical or nearly identical to Section
138516 in H.R. 5376, as reported on September 27, 2021.
Part 2—Tax Increases for High-Income Individuals

Application of Net
This provision would subject the active income of high-
For background, see
Investment Income
income partners and S corporation owners that is not

CRS In Focus IF11820,
Tax to Trade or
already subject to Federal Insurance Contributions Act
The 3.8% Net Investment
Business Income of
(FICA) or Self-Employed Contributions Act (SECA) tax to
Income Tax: Overview,
Certain High
the 3.8% net investment income tax. The high-income
Data, and Policy Options,
Income Individuals
thresholds would be $250,000 (married filing separately),
by Mark P. Keightley.

$400,000 (single or head of household), and $500,000
(married filing jointly).
Section 138201
This provision is identical or nearly identical to Section
138203 in H.R. 5376, as reported on September 27, 2021.
Limitations on
The TCJA (P.L. 115-97) introduced excess business loss
For background, see
Excess Business
limitations, which limit the amount of business losses that

CRS Report R46377, The
Losses of
noncorporate taxpayers can use to offset their
Tax Treatment and
Noncorporate
nonbusiness income to $500,000 for a joint return and
Economics of Net
Taxpayers
$250,000 for a single return. These limits were set to
Operating Losses, by Mark

expire after 2025. In response to the economic effects of
P. Keightley.
the COVID-19 pandemic, the Coronavirus Aid, Relief, and
Section 138202
Economic Security (CARES) Act (P.L. 116-136)
temporarily suspended the limits on excess business
Congressional Research Service

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Section Title and
Number
Description
CRS Resources
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.
This provision is identical or nearly identical to Section
138205 in H.R. 5376, as reported on September 27, 2021.
Surcharge on High
The provision would create an additional income tax on

Income Individuals,
individuals, estates, and trusts on modified adjusted gross
Estates, and Trusts
income (MAGI) in excess of specified thresholds. The tax

would be applied at a flat rate of 5% and would apply to
MAGI in excess of $5 mil ion and below $12.5 mil ion for
Section 138203
married individuals filing separate returns, $200,000 and
$500,000 for estates and trusts, and $10 mil ion and $25
mil ion for all other noncorporate taxpayers. MAGI in
excess of these thresholds would be taxed at a flat rate of
8%. Taxes paid under this provision would not be treated
as income taxes paid for purposes of the alternative
minimum tax.
This provision is a modification of Section 138206 in H.R.
5376, as reported on September 27, 2021.
Part 3—Modifications 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 retirement
For background, see
for Individual
accounts (IRAs) regardless of the balance in the accounts.

CRS Report RL34397,
Retirement Plans of
This provision would disallow contributions for accounts
Traditional and Roth
High-Income
if the contributions would cause the total value of the
Individual Retirement
Taxpayers with
individual’s IRAs and defined contribution plans to exceed
Accounts (IRAs): A Primer,
Large Account
$10 mil ion. It would apply to married couples with
by Elizabeth A. Myers.
Balances
taxable income over $450,000 (singles over $400,000 and

CRS Report R46635,

heads of household over $425,000). There is also a
provision for reporting on employer defined contribution
Individual Retirement
Section 138301
plans for accounts with at least $2.5 mil ion.
Account (IRA) Ownership:
Data and Policy Issues, by
These provisions would be effective for tax years
Elizabeth A. Myers.
beginning after December 31, 2028.

This provision is a modification of Section 138301 in H.R.

CRS Report R43439,
Worker Participation in
5376, as reported on September 27, 2021.
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.
Congressional Research Service

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Section Title and
Number
Description
CRS Resources
Increase in
Under current law, taxpayers are generally required to
For background, see
Minimum Required
begin making withdrawals (“required minimum

CRS Report RL34397,
Distributions for
distributions”) from traditional IRAs when they are 72
Traditional and Roth
High-Income
years old (this does not apply to Roth IRAs). This
Individual Retirement
Taxpayers with
provision would require individuals with a combined
Accounts (IRAs): A Primer,
Large Retirement
traditional IRA, Roth IRA, and employer defined
by Elizabeth A. Myers.
Account Balances
contribution (DC) plan balance of over $10 mil ion to


make withdrawals of 50% of the excess over $10 mil ion.

CRS Report R46635,
This rule would apply to taxpayers with taxable income in
Individual Retirement
Section 138302
excess of the amounts listed above.
Account (IRA) Ownership:
Data and Policy Issues, by
A traditional IRA generally allows a deduction of
Elizabeth A. Myers.
contributions and taxation of withdrawals, while a Roth
IRA does not allow the deduction or impose the tax on

CRS Report R43439,
withdrawals, but exempts the earnings from tax.
Worker Participation in
Employer defined contribution plans can be in the
Employer-Sponsored
traditional or Roth form. The provision would also
Pensions: Data in Brief, by
require that when the amounts in all IRA and DC
John J. Topoleski and
accounts exceed $20 mil ion, withdrawals must be made
Elizabeth A. Myers.
from Roth IRAs and employer plans to reduce the

CRS Insight IN11722,
amount to the lesser of the amount needed to bring all
Data on Contributions to
accounts to $20 mil ion or the amounts in Roth IRA plans.
Individual Retirement
These provisions would be effective for tax years
Accounts (IRAs), by
beginning after December 31, 2028.
Elizabeth A. Myers and
This provision is a modification of Section 138302 in H.R.
John J. Topoleski.
5376, as reported on September 27, 2021.

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 income,

CRS In Focus IF11963,
IRAs and Accounts
although individuals can make nondeductible contributions to
Rollovers and Conversions

traditional IRAs regardless of income. For a nondeductible
to Roth IRAs and
IRA, the withdrawals are partially exempt to recover the
Section 138311
Designated Roth Accounts:
taxpayer’s contribution proportional to the withdrawal.
Proposed Changes in
Current law allows conversions (i.e., rol overs) from
Budget Reconciliation, by
traditional to Roth IRAs regardless of income, so that
Elizabeth A. Myers
taxpayers can invest in a nondeductible traditional IRA
and then convert it to a Roth IRA (so-called back-door

CRS Report RL34397,
Roths).
Traditional and Roth
Individual Retirement
Employer plans may allow various types of contributions,
Accounts (IRAs): A Primer,
such as pretax, Roth, and after-tax (non-Roth) contributions.
by Elizabeth A. Myers.
After-tax contributions are generally made after an
individual has contributed the maximum amount of pretax

CRS Report R46635,
or Roth contributions. Under current law, individuals may
Individual Retirement
convert after-tax savings in an employer plan to a
Account (IRA) Ownership:
designated Roth account in an employer plan or to a Roth
Data and Policy Issues, by
IRA (so-called mega back-door Roths).
Elizabeth A. Myers.
This provision would prohibit (1) all taxpayers from

CRS Report R43439,
converting after-tax savings in qualified plans and
Worker Participation in
nondeductible IRA funds to Roth IRAs and designated
Employer-Sponsored
Roth accounts after December 31, 2021; and (2) high-
Pensions: Data in Brief, by
income taxpayers from converting pretax savings in
Congressional Research Service

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Section Title and
Number
Description
CRS Resources
qualified plans or IRA savings attributable to deductible
John J. Topoleski and
contributions to Roth IRAs or designated Roth accounts
Elizabeth A. Myers.
after December 31, 2021.

CRS Insight IN11722,
For high-income taxpayers, as described above, rol overs
Data on Contributions to
could only be made from Roth plans (IRAs and employer
Individual Retirement
plans) after December 31, 2031.
Accounts (IRAs), by
This provision is identical or nearly identical to Section
Elizabeth A. Myers and
138311 in H.R. 5376, as reported on September 27, 2021.
John J. Topoleski.

CRS Insight IN11721,
Data on Retirement
Contributions to Defined
Contribution (DC) Plans,
by John J. Topoleski and
Elizabeth A. Myers.
Statute of
This provision would extend the statute of limitations

Limitations with
from three to six years for IRA noncompliance related to
Respect to IRA
valuation and prohibited transactions.
Noncompliance
This provision is identical or nearly identical to Section

138313 in H.R. 5376, as reported on September 27, 2021.
Section 138312

IRA Owners
Under the prohibited transaction rule, IRA owners cannot
Treated as
do business with disqualified persons (such as relatives
Disqualified Persons who own more than 50% of a business). This provision
for Purposes of
would clarify that disqualified persons include the owner
Prohibited
of the account, individuals who inherit the IRA, or
Transaction Rules
beneficiaries.

This provision is identical or nearly identical to Section
Section 138313
138315 in H.R. 5376, as reported on September 27, 2021.

Part 4—Funding the Internal Revenue Service and Improving Taxpayer Compliance
Enhancement of
This provision would provide the Internal Revenue
For background, see
Internal Revenue
Service (IRS) with additional appropriations directed

CRS In Focus IF11607,
Service Resources
toward taxpayer services ($1,931,500,000), enforcement
Internal Revenue Service

($44,887,500,000), operational support
Appropriations, FY2021,
($27,376,300,000), business systems modernization
Section 138401
by Gary Guenther.
($4,750,700,000), taxpayer services ($931,500,000),
Treasury Inspector General for Tax Administration
($403,000,000), Tax Court ($153,000,000), and
Treasury’s Office of Tax Policy ($104,533,803) to be
available through the end of FY2031. The IRS would be
required to design a multiyear operations plan on the use
of these funds and provide Congress with quarterly
updates on the use of the additional funding. The IRS
would also be appropriated $15,000,000 to study the
feasibility of a free IRS-run direct file system.
This provision did not appear in H.R. 5376, as reported
on September 27, 2021.
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Section Title and
Number
Description
CRS Resources
Application of
This provision would make payments from third-party
For background, see
Backup Withholding networks (such as some electronic payment processors,

CRS In Focus IF11910,
with Respect to
some "gig economy" platforms, and some cryptocurrency
Cryptocurrency Transfers
Third-Party
payment processors) subject to backup withholding. Not
and Data Collection, by
Network
all taxpayers would be subject to backup withholding on
Mark P. Keightley and
Transactions
these transactions. Only taxpayers who meet a
Andrew P. Scott.

requirement in Section 3406(a)(1) would have backup
withholding from their payments. Generally, this happens

CRS In Focus IF11896,
Section 138402
when the taxpayer does not provide a tax identification
Tax Treatment of Gig
number (such as a Social Security number) to the
Economy Workers, by
network or if the taxpayer is subject to backup
Anthony A. Cil uffo.
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.
This provision is identical to Section 138402 in H.R. 5376,
as reported on September 27, 2021.
Modification of
Under current law, generally no penalty or addition to tax
Procedural
under the IRC can be assessed unless the initial
Requirements
determination of such assessment is personally approved
Relating to
(in writing) by the immediate supervisor of the IRS
Assessment of
employee making such determination. Exceptions to
Penalties
supervisory preapproval apply, including for

penalties/additions to tax automatically calculated through
electronic means and associated with failure to file or pay
Section 138403
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.
This provision is identical or nearly identical to Section
138404 in H.R. 5376, as reported on September 27, 2021.
Part 5—Other Provisions

Modifications to
The American Rescue Plan Act of 2021 (ARPA; P.L. 117-

Limitation on
2) included expansion of the Section 162(m) limit on
Deduction of
excessive employee compensation, effective after
Excessive Employee
December 31, 2026, denying deduction of compensation
Remuneration
in excess of $1 mil ion to certain highly paid employees,

plus the CEO or CFO, at publicly traded companies.
Under the ARPA expansion, up to 10 individuals may be
Section 138501
covered under Section 162(m). This provision would
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.
This provision is a modification of Section 138501 in H.R.
5376, as reported on September 27, 2021.
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Section Title and
Number
Description
CRS Resources
Extension of Tax to
The black lung excise tax (BLET) is imposed on sales or
For background, see
Fund Black Lung
use of domestically mined coal. The tax is designed to

CRS Report R45261, The
Disability Trust
support the Black Lung Disability Trust Fund for domestic
Black Lung Program, the
Fund
miners. Currently, through 2021, coal from underground
Black Lung Disability Trust

mines is taxed at a rate of $1.10 per ton and coal from
Fund, and the Excise Tax
surface mines is taxed at 55 cents per ton, with the tax
Section 138502
on Coal: Background and
for both types of coal being no more than 4.4% of the sale
Policy Options, by Scott
price. Effective January 1, 2022, the tax on underground-
D. Szymendera and
mined coal wil be the lesser of (1) 50 cents per ton, or
Mol y F. Sherlock.
(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.
This provision is identical or nearly identical to Section
138502 in H.R. 5376, as reported on September 27, 2021.
Prohibited
DISCs (Domestic International Sales Corporations) and

Transactions
FSCs (Foreign Sales Corporations) were firms with
Relating to Holding
export benefits, and these benefits were repealed going
DISC or FSC in
forward. This provision would disallow an interest in a
Individual
DISC or FSC at the direction of the individual that
Retirement
receives a payment or commission from an entity owned
Account
directly by the individual from being held in that

individual’s IRA. Constructive ownership rules require a
50% ownership, which is reduced to 10% for this purpose.
Section 138503
This provision is a modification of Section 138503 in H.R.
5376, as reported on September 27, 2021.
Clarification of
DISCS and FSCs were firms with export benefits, and

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

This provision is identical or nearly identical to Section
Section 138504
138507 in H.R. 5376, as reported on September 27, 2021.
Treatment of
Under current law, sound recording production costs are
For background, see
Certain Qualified
not deducted immediately, but are deducted over time

CRS Report RL31852,
Sound Recording
under the income forecast method. Television and theater
The Section 179 and
Productions
productions have tax benefits that allow them to expense
Section 168(k) Expensing

(deduct immediately) up to $15 mil ion. This provision is
Allowances: Current Law
set to expire after 2025. Production costs of qualified film,
Section 138505
and Economic Effects, by
television, and live theatrical productions are also eligible
Gary Guenther.
for bonus depreciation. Bonus depreciation allows costs
to be deducted immediately. Bonus depreciation is

CRS Report R46800,
currently 100%, but it is scheduled to be phased out over
Temporary Business-
five years starting in 2023, and wil no longer be available
Related Tax Provisions
in 2027 and after.
Expiring 2021-2027 and
Business “Tax Extenders”,
This provision would allow for the expensing of sound
coordinated by Jane G.
recording production costs, up to $150,000. Sound
Gravelle and Mol y F.
recording would also be made eligible for bonus
Sherlock.
depreciation.

This provision would expire after 2025.
This provision is identical or nearly identical to Section
138510 in H.R. 5376, as reported on September 27, 2021.
Congressional Research Service

53

Tax Provisions in the Build Back Better Act: Rules Committee Print 117-18

Section Title and
Number
Description
CRS Resources
Payment to Certain
This provision would modify the existing mechanism for

Individuals who Dye refunding taxes paid by consumers of diesel fuel and
Fuel
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
Section 138506
equipment), all trains, school buses, and qualified local
buses.
This provision is identical or nearly identical to Section
138511 in H.R. 5376, as reported on September 27, 2021.
Treatment of
Passive foreign investment companies (PFICS) are foreign-

Financial Guaranty
incorporated firms that have at least 75% of earnings in
Insurance
passive investments or at least 50% of assets that earn
Companies as
dividends, interest, or capital gains (for example, a mutual
Qualifying Insurance fund or hedge fund). These firms are often located in tax
Corporations under havens with little or no corporate tax. Distributions from
Passive Foreign
a PFIC are taxed at the highest tax rate plus an interest
Investment
charge. Passive income does not include income of life
Company Rules
insurance companies if insurance liabilities constitute 25%

of their assets. This provision would allow financial
guaranty insurance companies to include unearned
Section 138507
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.
This provision is identical or nearly identical to Section
138510 in H.R. 5376, as reported on September 27, 2021.
Extension of Period
Under current law, taxpayers file their tax return using
For background, see
of Limitation for
the applicable tax filing status. Married individuals

CRS Report R43157, The
Certain Legally
generally must file using one of the married tax filing
Federal Tax Treatment of
Married Couples
statuses: either jointly (married filing jointly) or separately
Married Same-Sex

(married filing separately). Unmarried individuals generally
Couples, by Margot L.
must use one of the unmarried tax filing statues: either
Section 138508
Crandall-Hol ick, Mol y
single if they have no dependents or as a head of
F. Sherlock, and Erika K.
household if they have at least one dependent. Tax filing
Lunder.
status affects a variety of tax provisions including tax
rates, as well as eligibility for and the amount of a variety
of tax benefits. For many (although not all) married
couples, filing their taxes jointly reduces their tax liability,
in comparison to their combined liabilities from
unmarried tax filing statuses (i.e., marriage bonuses).
Prior to the Supreme Court’s decision in United States v.
Windsor, Section 3 of the Defense of Marriage Act
(DOMA) prohibited the IRS from recognizing same-sex
marriages. Hence, same-sex couples could not file as
married filing jointly (or separately). In Windsor, the
Supreme Court held that Section 3 of DOMA was
unconstitutional. Section 3 had required that, for
purposes of federal enactments, marriage be defined as
the union of one man and one woman and the word
spouse be defined as someone of the opposite sex who is
a husband or wife. As a result of the Windsor decision, on
August 29, 2013, the IRS ruled that all legal same-sex
marriages would be recognized for federal tax purposes
under IRS Revenue Ruling 2013-17.
Congressional Research Service

54

Tax Provisions in the Build Back Better Act: Rules Committee Print 117-18

Section Title and
Number
Description
CRS Resources
Before the 2013 IRS ruling, all same-sex married couples
were required to file their federal income tax returns as
unmarried individuals. However, the IRS made clear that
taxpayers who were in same-sex marriages for one or
more open prior tax years could file amended returns to
change their filing status to that of a married couple. At
the time of the 2013 IRS ruling, this meant that amended
returns could be filed for 2010, 2011, and 2012. Same-sex
taxpayers lawful y married under state law before 2010
could not claim the benefits of federal recognition of
same-sex marriage for pre-2010 tax years.
This provision would provide lawful y married same-sex
couples with the option to file amended returns for
credits and refunds related to a change in marital status
back to their year of marriage (which could be as early as
2004).
This provision did not appear in H.R. 5376, as reported
on September 27, 2021.
Allowance of
This provision would allow an above-the-line deduction
For background, see
Deduction for
for up to $250 in dues paid to a labor organization

CRS Report RL30110,
Certain Expenses of described in Section 501(c)(5). Above-the-line deductions
Federal Individual Income
the Trade or
are available to eligible taxpayers irrespective of whether
Tax Terms: An
Business of Being an they claim the standard deduction or itemize their
Explanation, by Mark P.
Employee
deductions. This provision would apply in taxable years
Keightley.

2022 through 2025.
Section 138514
This provision is identical or nearly identical to Section
138514 in H.R. 5376, as reported on September 27, 2021.
Temporary Increase Under current law, employers are allowed to claim a tax
For background, see
in Employer-
credit equal to 25% of qualified child care expenditures

CRS Committee Print
Provided Child
plus 10% of qualified child care resource and referral
CP10004, Tax
Care Credit
expenditures. The maximum total credit that may be
Expenditures:

claimed by a taxpayer cannot exceed $150,000 per year.
Compendium of
The credit is reduced by the amount of any tax deduction
Section 138515
Background Material on
claimed for the same expenditures. Any credit claimed for
Individual Provisions — A
acquiring, constructing, rehabilitating, or expanding
Committee Print Prepared
property is subject to recapture if the facility ceases to
for the Senate Committee
operate as a qualified child care facility, or for certain
on the Budget, 2020, by
ownership transfers within the first 10 years. Qualified
Jane G. Gravelle et al.
child care expenditures include the cost of acquiring,
(pp. 781-783).
constructing, rehabilitating, or expanding property used
for a qualified child care facility; costs for the operation of

the facility (including training costs and certain
compensation for employees, and scholarship programs);
and costs for contracting with a qualified child care facility
to provide child care. A qualified child care facility must
have child care as its principal purpose and must meet all
applicable state and local laws and regulations. A facility
operated by a taxpayer is not a qualified child care facility
unless, in addition to these requirements, the facility is
open to all employees and, if qualified child care is the
principal trade or business of the taxpayer, at least 30% of
the enrol ees at the facility are dependents of employees
of the taxpayer. Qualified child care resource and referral
expenditures include amounts paid or incurred under a
contract to provide child care resource and referral
services to an employee of the taxpayer. Use of a qualified
Congressional Research Service

55

Tax Provisions in the Build Back Better Act: Rules Committee Print 117-18

Section Title and
Number
Description
CRS Resources
child care facility and use of child care resource and
referral services cannot discriminate in favor of highly paid
employees.
This provision would temporarily modify several
parameters of this credit. First, the credit rate for
qualified child care expenditures would increase from 25%
to 50%. Second, the overall credit limitation would
increase from $150,000 to $500,000. Third, the amount
of expenses that could be taken into account as qualified
child care resource and referral expenditures would be
limited to $1.5 mil ion per year. These three temporary
changes would apply beginning in 2022 through 2025.
This provision did not appear in H.R. 5376, as reported
on September 27, 2021.
Payrol Credit for
This provision would create a refundable credit against

Compensation of
the Medicare Hospital Insurance tax for local news
Local News
journalist employers for a portion of the wages paid to
Journalists
local news journalists.

Employers would be able to claim a credit against the
Section 138516
Medicare Hospital Insurance tax paid on the wages of
local news journalists who spend an average of 30 hours a
week on local news services during a calendar quarter and
reside within 50 miles of the local community served by
the employer.
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.
To qualify, employers must either be an eligible local news
organization or a qualifying broadcast station. Both types
must disclose their ownership to the public in ways
determined by the Treasury Secretary. Neither type of
employer can be a 501(c)(4) tax-exempt organization or a
527 political organization, nor may they receive more
than 50% of their gross receipts from 501(c)(4) or 527
organizations.
Local news organizations must publish at least one
qualifying publication per quarter. To qualify, a publication
must be primarily to provide the local community with
local news, be covered by media liability insurance, have
been published each of the four quarters before the
current quarter, and not have received services from
more than 1,500 people during the quarter. The
publication must be primarily distributed within the
metropolitan or micropolitan area that the local news
organization serves.
Broadcast stations must own or operate a broadcast
station that serves the local community, which it is
licensed to serve by the Federal Communications
Commission (FCC). The station’s services cannot exceed
those boundaries.
Employers would only be able to consider up to 1,500
workers for the credit. The U.S. government, state or
local governments, or any agencies of those governments
Congressional Research Service

56

Tax Provisions in the Build Back Better Act: Rules Committee Print 117-18

Section Title and
Number
Description
CRS Resources
do not qualify, with the exception of public broadcasting
entities. The provision would also prevent employers
from getting “double benefits” from this and other payrol
tax credits.
This provision is a modification of Section 138517 in H.R.
5376, as reported on September 27, 2021.
Above-the-Line
This provision would create a new temporary above-the-

Deduction for
line deduction for employee uniforms. The amount that
Employee Uniforms
could be deducted would equal the cost of the uniform,
up to $250 per taxpayer. Uniform costs eligible for the

deduction would be those for uniforms required as a
Section 138517
condition of employment and not suitable for everyday
wear. This provision would apply beginning in 2022
through 2024.

This provision did not appear in H.R. 5376, as reported
on September 27, 2021.
Expenses in
This provision allows plaintiffs’ attorneys to deduct out-

Contingency Fee
of-pocket costs when they are incurred rather than
Cases
waiting for the conclusion of the litigation. Any contingent

payment wil be included in income when received.
Section 138518
This provision did not appear in H.R. 5376, as reported
on September 27, 2021.
Increase in
Small businesses that have gross receipts of less than $5
For background, see
Research Credit
mil ion and no gross receipts in the previous five years

CRS Report RL31181,
Against Payrol Tax
may take up to $250,000 of research and experimentation
Research Tax Credit:
for Small Business
credits against payrol taxes. This provision would double
Current Law and Policy

that amount.
Issues for the 114th
Section 138519
This provision did not appear in H.R. 5376, as reported
Congress, by Gary
on September 27, 2021.
Guenther.
Imposition of Tax
This provision would impose a tax on nicotine products
For background, see
on Nicotine
(for use in vaping and other methods) calculated as the

CRS In Focus IF11941,

amount of nicotine in the product in mil igrams divided by
Proposed Tobacco Excise
1,810 mil igrams times the greater of the tax rate for
Section 138520
Tax Changes in H.R.
1,000 small cigarettes (currently $50.33), or $50.33. This
5376, the Reconciliation
provision would provide an exemption for nicotine used
Bill, by Anthony A.
in medical products approved by the Food and Drug
Cil uffo.
Administration.

The tax on nicotine would begin in the first calendar

CRS In Focus IF11321,
Federal Regulation of
quarter starting at least 180 days after the act is enacted.
Tobacco: Legal Framework
Existing manufacturers and importers of taxable nicotine
and Issues for the 116th
products who would first become subject to the bonding
Congress, by Jennifer A.
and permitting requirements for tobacco manufacturers
Staman.
and importers (Sections 5711-5713) would be able to
continue business operations while the IRS is processing

CRS Report RS22681,
their applications.
The Cigarette Tax Increase
to Finance SCHIP, by Jane
This provision is a modification of Section 138504 in H.R.
G. Gravelle.
5376, as reported on September 27, 2021.
Congressional Research Service

57

Tax Provisions in the Build Back Better Act: Rules Committee Print 117-18

Section Title and
Number
Description
CRS Resources
Termination of
Through 2025, employers can claim a tax credit of up to
For background, see
Employer Credit
25% of wages paid by employers providing paid leave to

CRS Report R46800,
for Paid Family and
employees under the Family and Medical Leave Act of
Temporary Business-
Medical Leave
1993 (FMLA; P.L. 103-3). The credit can only be claimed
Related Tax Provisions

for paid family and medical leave provided to certain
Expiring 2021-2027 and
employees with incomes below a fixed threshold (for
Section 138521
Business “Tax Extenders”,
credits claimed in 2021, employee compensation in 2020
coordinated by Jane G.
cannot have exceeded $78,000). This provision would
Gravelle and Mol y F.
accelerate the termination of this tax credit by two years,
Sherlock.
to December 31, 2023.

This provision is identical or nearly identical to Section

CRS In Focus IF11141,
Employer Tax Credit for
138506 in H.R. 5376, as reported on September 27, 2021.
Paid Family and Medical
Leave, by Mol y F.
Sherlock.

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.
Source: November 3, 2021, modified version of the Build Back Better Act (BBBA; H.R. 5376) as posted on the
House Rules Committee website.
Notes: Provisions are effective in 2022 unless otherwise noted. The changes that would be made by the
provision are permanent, unless otherwise noted. Within the description, “Section” citations refer to the section
within the Internal Revenue Code (IRC), 26 U.S.C., unless otherwise noted.

Congressional Research Service

58

Tax Provisions in the Build Back Better Act: Rules Committee Print 117-18

Appendix. Cost Estimates
On November 4, 2021, the Joint Committee on Taxation (JCT) released estimated revenue effects
associated with the tax provisions in the November 3, 2021, version of the Build Back Better Act.
This Appendix contains a series of tables reproducing the JCT revenue estimates.
Congressional Research Service

59

Table A-1. Estimated Budgetary Effects of Tax Provisions in Subtitle E “Infrastructure and Community Development” of H.R.
5376, “Build Back Better Act,” with Modifications
Fiscal Years, Millions of Dollars
2022-
Provision
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2031
Part 1—Low Income Housing Credit
Increases in State
allocations
-3
-20
-73
-252
-345
-359
-326
-264
-228
-213
-2,083
Tax-exempt bond financing
requirement
-57
-200
-424
-736
-1,010
-1,062
-1,226
-1,291
-1,305
-1,307
-8,617
Buildings designed to serve
extremely low-income
-7
-31
-75
-130
-183
-227
-275
-319
-362
-416
-2,025
households
Repeal of qualified contract
option
2
7
16
27
38
49
60
72
84
101
457
Modification and
clarification of rights
2
8
18
32
45
59
74
88
103
124
553
relating to building
purchase
Total of Part 1—Low Income
-63
-236
-538
-1,058
-1,454
-1,540
-1,693
-1,715
-1,708
-1,712
-11,716
Housing Credit
Part 2—Neighborhood Homes Investment Act
Total of Part 2—
Neighborhood Homes
-192
-481
-1,061
-1,170
-1,177
-1,086
-494
-198
⸺
⸺
-5,859
Investment Act
Part 3—Investments in Tribal Infrastructure
Treatment of Indian Tribes
as States with respect to
(i)
-1
-3
-4
-6
-8
-10
-12
-15
-17
-77
bond issuance
CRS-60

2022-
Provision
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2031
New Markets Tax Credit
for Tribal Statistical Areas
⸺
(i)
-2
-6
-13
-21
-29
-34
-37
-36
-178
Inclusion of Indian areas as
difficult development areas
for purposes of certain
(i)
-2
-4
-8
-11
-13
-16
-18
-21
-24
-117
buildings
Total of Part 3—Investments
in Tribal Infrastructure
(i)
-3
-9
-18
-30
-42
-55
-64
-73
-77
-372
Part 4—Other Provisions
Possessions economic
activity credit
-406
-853
-938
-1,017
-1,091
-1,169
-1,229
-1,270
-1,312
-1,356
-10,641
Tax treatment of certain
assistance to farmers, etc.
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
Exclusion of amounts
received from State-based
catastrophe loss mitigation
-8
-10
-10
-11
-12
-13
-14
-15
-16
-17
-126
programs
Total of Part 4—Other
Provisions
-414
-863
-948
-1,028
-1,103
-1,182
-1,243
-1,285
-1,328
-1,373
-10,767
TOTAL OF
SUBTITLE E
-668
-1,583
-2,556
-3,274
-3,764
-3,850
-3,485
-3,262
-3,109
-3,162
-28,715
Source: Joint Committee on Taxation, Estimated Budgetary Effects of the Revenue Provisions in Title XIII - Committee on Ways and Means, of H.R. 5376, the “Build Back Better
Act,” as Reported by the Committee on the Budget, with Modifications (Rules Committee Print 117-18), JCX-45-21, November 4, 2021, at
https://www.jct.gov/publications/2021/jcx-45-21/.
Notes: An “(i)” indicates a cost of less than $500,000. An “NA” 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. A “⸺” indicates no estimated budget effect.
CRS-61

Table A-2. Estimated Budgetary Effects of Tax Provisions in Subtitle F “Green Energy” of H.R. 5376, “Build Back Better Act,”
with Modifications
Fiscal Years, Millions of Dollars
2022-
Provision
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2031
Part 1—Renewable Electricity and Reducing Carbon Emissions
Extension and modification
of credit for electricity
-331
-1,087
-1,983
-3,014
-4,380
-5,846
-7,489
-9,306
-10,470
-10,981
-54,887
produced from certain
renewable resources
Extension and modification
-769
-1,380
-1,565
-2,655
-5,946
-7,557
-7,587
-7,795
-8,194
-8,633
-52,081
of energy credit
Increase in energy credit
for solar facilities placed in
service
Included in estimates of “Extension and modification of energy credit”
in connection with low-
income communities
Elective payment for
energy property and
Included in estimates of “Extension and modification of credit for electricity produced from certain renewable resources”
electricity produced from
“Extension and modification of energy credit” and “Increase in energy credit for solar facilities placed in service
certain renewable
in connection with low-income communities”
resources, etc
Investment credit for
electric transmission
⸺
⸺
⸺
-788
-1,213
-1,213
-1,213
-2,001
-2,426
-2,425
-11,279
property
Extension and modification
of credit for carbon oxide
-26
-103
-276
-426
-450
-222
-141
-161
-162
-160
-2,128
sequestration
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
-3,710
-3,838
-1,357
⸺
⸺
⸺
-22,975
CRS-62

2022-
Provision
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2031
Total of Part 1—Renewable
Electricity and Reducing
-5,657
-5,605
-7,214
-10,551
-15,798
-18,726
-17,843
-19,327
-21,324
-22,279
-144,324
Carbon Emissions
Part 2—Renewable Fuels
Extension of incentives for
biodiesel, renewable diesel
-149
-2,688
-3,721
-3,802
-3,816
-1,028
⸺
⸺
⸺
⸺
-15,205
and alternative fuels
Extension of second
generation biofuel
-10
-19
-20
-22
-24
-11
⸺
⸺
⸺
⸺
-106
incentives
Sustainable aviation fuel
credit
⸺
-7
-16
-24
-29
-13
⸺
⸺
⸺
⸺
-90
Credit for production of
clean hydrogen
-70
-195
-347
-550
-785
-1,027
-1,283
-1,565
-1,681
-1,690
-9,193
Total of Part 2—Renewable
Fuels
-229
-2,909
-4,104
-4,398
-4,654
-2,079
-1,283
-1,565
-1,681
-1,690
-24,594
Part 3—Green Energy and Efficiency Incentives for Individuals
Extension, increase, and
modifications of generally
nonbusiness energy
-274
-1,782
-1,511
-1,484
-1,508
-1,487
-1,432
-1,458
-1,473
-1,488
-13,898
property credit
Extension and modification
of residential energy
-46
-514
-1,216
-3,012
-3,098
-3,188
-3,283
-3,378
-3,459
-3,563
-24,756
efficient property credit
Energy efficient commercial
buildings deduction
-18
-72
-70
-68
-67
-66
-65
-66
-67
-69
-626
Extension, increase, and
modifications of new
energy efficient home
-132
-233
-258
-271
-289
-307
-321
-320
-305
-289
-2,724
credit
CRS-63

2022-
Provision
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2031
Modifications to income
exclusion for conservation
-6
-2
-2
-3
-4
-5
-6
-6
-7
-7
-48
subsidies
Credit for qualified wildfire
mitigation expenditures
-12
-28
-31
-36
-42
-44
-46
-48
-49
-50
-387
Total of Part 3—Green
Energy and Efficiency
-488
-2,631
-3,088
-4,874
-5,008
-5,097
-5,153
-5,276
-5,360
-5,466
-42,439
Incentives for Individuals
Part 4—Greening the Fleet and Alternative Vehicles
Refundable new qualified
plug-in electric drive motor
vehicle credit for
-96
-494
-576
-709
-832
-1,001
-1,171
-1,304
-1,447
-1,559
-9,192
individuals
Credit for previously-
owned qualified plug-in
electric drive motor
-33
-104
-119
-150
-166
-183
-202
-224
-247
-269
-1,696
vehicles
Qualified commercial
electric vehicles
-79
-171
-235
-303
-396
-516
-624
-717
-808
-914
-4,762
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
-20
-21
-23
-13
-16
-16
-18
-18
-19
-19
-183
bicycle commuting
Credit for certain new
electric bicycles
-254
-683
-889
-1,157
-1,126
-8
-7
-6
-6
-4
-4,139
CRS-64

2022-
Provision
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2031
Total of Part 4—Greening
the Fleet and Alternative
-579
-1,884
-2,311
-2,864
-3,138
-2,394
-2,771
-3,106
-3,459
-3,792
-26,299
Vehicles
Part 5—Investment in the Green Workforce
Extension of the advanced
energy project credit
-1,476
-2,053
-1,184
-787
-796
-528
-380
-240
-169
-36
-7,649
Labor costs of installing
mechanical insulation
-371
-745
-939
-1,099
-813
-532
-480
-428
-326
-207
-5,940
property
Advanced manufacturing
investment credit
-1,501
-2,706
-2,931
-2,842
-913
115
130
145
151
157
-10,197
Advanced manufacturing
production credit
-214
-336
-348
-372
-401
-353
-256
-151
-40
⸺
-2,472
Total of Part 5—Investment
in the Green Workforce
-3,562
-5,840
-5,402
-5,100
-2,923
-1,298
-986
-674
-384
-86
-26,258
Part 6—Qualified Environmental Justice Credit
Total of Part 6—Qualified
Environmental Justice Credit
⸺
-400
-700
-800
-900
-1,000
-1,000
-1,000
-1,000
-1,000
-7,800
Part 7—Reinstatement of Superfund
Total of Part 7—
Reinstatement of Superfund
622
2,116
2,406
2,506
2,601
2,698
2,800
2,906
3,017
3,132
24,804
Part 8—Incentives for Clean Electricity and Clean Transportation
Clean electricity
production credit
⸺
⸺
⸺
⸺
⸺
⸺
-19
-546
-1,878
-3,558
-6,002
Clean electricity
investment credit
⸺
⸺
⸺
⸺
⸺
-723
-1,082
-8,774
-13,127
-13,519
-37,225
CRS-65

2022-
Provision
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2031
Increase in clean electricity
investment credit for
facilities placed in service in
Included in estimates of “Clean electricity investment credit”
connection with low-
income communities
Cost recovery for qualified
facilities, qualified property,
and grid improvement
⸺
⸺
⸺
⸺
⸺
-26
-83
-134
-171
-211
-624
property
Clean fuel production
credit
⸺
⸺
⸺
⸺
⸺
-1,499
-2,104
-2,204
-2,320
-1,590
-9,716
Total of Part 8—Incentives
for Clean Electricity and
⸺
⸺
⸺
⸺
⸺
-2,248
-3,288
-11,659
-17,496
-18,878
-53,567
Clean Transportation
TOTAL OF
SUBTITLE F
-9,893
-17,154
-20,414
-26,081
-29,820
-30,143
-29,523
-39,701
-47,687
-50,059
-300,477
Source: Joint Committee on Taxation, Estimated Budgetary Effects of the Revenue Provisions in Title XIII - Committee on Ways and Means, of H.R. 5376, the “Build Back Better
Act,” as Reported by the Committee on the Budget, with Modifications (Rules Committee Print 117-18), JCX-45-21, November 4, 2021, at
https://www.jct.gov/publications/2021/jcx-45-21/.
Notes: An “(i)” indicates a cost of less than $500,000. An “NA” 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. A “⸺” indicates no estimated budget effect.
CRS-66

Table A-3. Estimated Budgetary Effects of Tax Provisions in Subtitle G “Social Safety Net” of H.R. 5376, “Build Back Better
Act,” with Modifications
Fiscal Years, Millions of Dollars
2022-
Provision
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2031
Part 1—Child Tax Credit
Total of Part 1—Child Tax
-101,390
-28,936
-12,236
-11,714
-12,669
-3,604
-3,527
-3,503
-3,515
-3,551
-184,646
Credit
Part 2—Earned Income Tax Credit
Certain improvements to
the earned income tax
-578
-12,693
credit extended through
⸺
⸺
⸺
⸺
⸺
⸺
⸺
⸺
-13,271
2022
Funds for administration of
earned income tax credits
⸺
-5
-5
-5
-5
-5
-5
-5
-5
-5
-45
in the territories
Total of Part 2—Earned
-578
-12,698
-5
-5
-5
-5
-5
-5
-5
-5
-13,316
Income Tax Credit
Part 3—Expanding Access to Health Coverage and Lowering Costs
Improve affordability and
reduce premium costs of
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
health insurance for
consumers
Modification of employer
sponsored coverage
affordability test in health
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
insurance premium tax
credit
Treatment of lump-sum
Social Security benefits in
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
determining household
income
CRS-67

2022-
Provision
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2031
Temporary expansion of
health insurance premium
tax credits for certain low-
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
income populations
Special rule for individuals
receiving unemployment
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
compensation
Permanent credit for
health insurance costs
-8
-18
-19
-20
-31
-44
-47
-49
-52
-56
-344
Exclusion of certain
dependent income for
purposes of premium tax
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
credit
Requirements with respect
to cost-sharing for certain
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
insulin products
Oversight of pharmacy
benefit manager services
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
Total of Part 3—Expanding
Access to Health Coverage
-8
-18
-19
-20
-31
-44
-47
-49
-52
-56
-344
and Lowering Costs
Part 4—Pathway to Practice Training Programs
Total of Part 4—Pathway to
Practice Training Programs
—
—
-74
-165
-262
-387
-589
-844
-1,136
-1,420
-4,877
Part 5—Higher Education
Credit for public university
research infrastructure
-33
-37
-36
-36
-26
-9
⸺
⸺
⸺
⸺
-177
Treatment of Federal Pell
Grants for income tax
-6
-229
-225
-215
-205
⸺
⸺
⸺
⸺
⸺
-880
purposes
CRS-68

2022-
Provision
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2031
Repeal of denial of
American Opportunity Tax
Credit on basis of felony
-3
-21
-21
-20
-20
-20
-20
-19
-18
-18
-180
drug conviction
Total of Part 5—Higher
Education
-42
-287
-282
-271
-251
-29
-20
-19
-18
-18
-1,237
Part 6—Limit Itemized Deductions for State and Local Taxes (SALT) to $72,500
Total of Part 6—Limit
Itemized Deductions for SALT
-50,627
-50,314
-52,431
-54,597
-14,002
45,966
42,028
43,592
45,265
47,159
2,037
to $72,500
TOTAL OF
-152,645
-92,253
-65,047
-66,772
-27,220
41,897
37,840
39,172
40,539
42,109
-202,383
SUBTITLE G
Source: Joint Committee on Taxation, Estimated Budgetary Effects of the Revenue Provisions in Title XIII - Committee on Ways and Means, of H.R. 5376, the “Build Back Better
Act,” as Reported by the Committee on the Budget, with Modifications (Rules Committee Print 117-18), JCX-45-21, November 4, 2021, at
https://www.jct.gov/publications/2021/jcx-45-21/.
Notes: An “(i)” indicates a cost of less than $500,000. An “NA” 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. A “⸺” indicates no estimated budget effect.
CRS-69

Table A-4. Estimated Budgetary Effects of Tax Provisions in Subtitle H “Responsibly Funding Our Priorities” of H.R. 5376,
“Build Back Better Act,” with Modifications
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
A. Corporate Provisions

Corporate alternative
4,481
55,753
49,165
32,588
24,695
22,747
25,789
30,535
34,969
38,189
318,911
minimum tax
Excise tax on repurchase
8,212
11,782
12,011
12,343
13,149
13,632
13,569
13,208
13,051
13,267
124,226
of corporate stock
B. Limitations on
Deduction for Interest
⸺
1,520
3,123
3,285
3,254
3,173
3,279
3,398
3,435
3,430
27,896
Expense
C. Outbound International

Provisions
Modifications to deduction
for foreign-derived
intangible income and
⸺
12,597
26,422
28,687
20,624
11,481
11,432
11,109
11,000
10,926
144,278
global intangible low-taxed
income
Repeal of election for 1-
month deferral in
determination of taxable
⸺
3,353
3,353
(i )
⸺
⸺
⸺
⸺
⸺
⸺
6,706
year of specified foreign
corporations
Modifications of foreign tax
credit rules applicable to
certain taxpayers receiving
217
438
469
619
802
769
903
941
772
791
6,721
specific economic benefits
Modifications to foreign tax
credit limitations
-18
698
1,621
2,010
2,006
1,597
1,207
966
850
1,064
12,000
CRS-70

2022-
Provision
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2031
Foreign oil and gas
extraction income and
foreign oil related income
Estimates included in “Modifications to inclusion of global intangible low-taxed income”
to include oil shale and tar
sands
Modifications to inclusion
of global intangible low-
150
1,273
4,102
6,175
5,997
5,896
6,837
8,022
8,838
9,691
56,980
taxed income
Modifications to
determination of deemed
paid credit for taxes
⸺
-1,514
-3,155
-3,250
-3,057
-3,022
-3,194
-3,350
-3,397
-3,255
-27,194
properly attributable to
tested income
Deduction for foreign
source portion of dividends
limited to control ed
21
42
44
45
46
48
49
51
52
54
451
foreign corporations, etc
Limitation on foreign base
company sales and services
9
814
1,754
1,913
1,534
1,144
1,162
1,190
1,232
1,287
12,041
income
D. Inbound International
Provisions: Modifications to
-1,633
-2,531
1,529
7,233
9,260
9,412
10,191
10,578
11,144
11,904
67,088
base erosion and anti-abuse
tax
E. Other Business Tax

Provisions
Credit for clinical testing of
orphan drugs limited to
88
186
208
234
260
286
314
346
380
418
2,720
first use or indication
Modifications to treatment
25
165
172
179
186
193
201
209
217
226
1,773
of certain losses
CRS-71

2022-
Provision
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2031
Adjusted basis limitation
for divisive reorganization
689
1,294
1,769
1,917
1,944
1,975
2,006
2,037
2,069
2,103
17,803
Rents from prison facilities
not treated as qualified
income for purposes of
5
9
10
10
6
3
3
3
3
3
55
REIT income tests
Modifications to exemption
for portfolio interest
576
876
405
118
25
20
16
13
10
8
2,067
Certain partnership
interest derivatives
4
9
9
9
9
10
10
10
10
10
90
Adjustments to earnings
and profits of control ed
150
325
375
425
475
525
575
625
675
725
4,875
foreign corporations
Certain dividends from
control ed foreign
corporations to United
Estimates included in “Modifications to foreign tax credit limitations”
States shareholders treated
as extraordinary dividends
Limitation on certain
special rules for section
69
470
517
572
639
698
705
710
677
661
5,718
1202 gains
Constructive sales
Estimates included in “Modification of wash sale rules”
Rules relating to common
628
1,267
1,276
1,313
1,434
1,601
1,788
2,011
2,248
2,457
16,023
control
Modification of wash sale
3,226
4,946
2,725
1,626
1,074
804
653
587
562
559
16,762
rules
Research and experimental
-29,091
-39,856
-32,161
-24,133
19,284
38,009
29,958
19,853
9,269
4,851
-4,016
expenditures
Total of Part 1—Corporate
and International Tax
-12,192
53,916
75,743
73,918
103,646
111,001
107,453
103,052
98,066
99,369
813,974
Reforms
CRS-72

2022-
Provision
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2031
Part 2—Tax Increases for High-Income Individuals
Application of net
investment income tax to
trade or business income
12,742
19,543
21,734
24,050
25,861
27,966
28,997
29,675
30,439
31,156
252,163
of certain high income
individuals
Limitations on excess
business losses of
noncorporate taxpayers
3,127
2,046
2,123
2,204
2,288
21,665
31,221
30,130
31,909
33,563
160,276
made permanent, with
carryforward modification
Surcharge on high income
individuals, estates, and
trusts (initial surtax on AGI
of 5% in excess of
40,035
-18,667
22,215
23,436
24,332
24,223
25,465
27,540
28,779
30,413
227,771
$10,000,000 and additional
surtax of 3% on AGI in
excess of $25,000,000)
Total of Part 2—Tax
Increases for High-Income
55,904
2,922
46,072
49,690
52,481
73,854
85,683
87,345
91,127
95,132
640,210
Individuals
Part 3—Modifications of Rules Relating to Retirement Plans
A. Limitations on High-

Income Taxpayers with
Large Retirement Account
Balances
Contribution limit for
individual retirement plans
of high-income taxpayers
Estimates included in “Increase in minimum required distributions for high-income taxpayers with large retirement account balances”
with large account balances
CRS-73

2022-
Provision
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2031
Increase in minimum
required distributions for
high-income taxpayers with
⸺
⸺
⸺
⸺
⸺
⸺
⸺
3,269
2,713
1,362
7,344
large retirement account
balances
B. Other Provisions
Relating to Individual

Retirement Plans
Tax treatment of rol overs
to Roth IRAs and accounts
73
151
177
195
211
227
239
251
322
878
2,724
Statute of limitations with
respect to IRA
(i )
1
1
1
1
1
1
1
1
1
7
noncompliance
IRA owners treated as
disqualified persons for
purposes of prohibited
⸺
1
1
1
1
1
2
2
2
2
13
transaction rules
Total of Part 3—
Modifications of Rules
73
153
179
196
213
229
241
3,522
3,038
2,242
10,087
Relating to Retirement Plans
Part 4—Funding the Internal Revenue Service and Improving Taxpayer Compliance
Enhancement of Internal
Revenue Service resources
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
Application of backup
withholding with respect to
third party network
-2
-1
(i)
(i)
(i)
(i)
(i)
(i)
(i)
(i)
-4
transactions
Modification of procedural
requirements relating to
201
221
113
116
119
122
125
128
132
135
1,414
assessment of penalties
CRS-74

2022-
Provision
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2031
Total of Part 4—Funding the
Internal Revenue Service and
Improving Taxpayer
199
220
113
116
119
122
125
128
132
135
1,410
Compliance
Part 5—Other Provisions
Modifications to limitation
on deduction of excessive
315
639
656
674
683
692
868
881
893
905
7,205
employee remuneration
Extension of tax to fund
Black Lung Disability Trust
101
137
135
131
32
⸺
⸺
⸺
⸺
⸺
536
Fund
Prohibited transactions
relating to holding DISC or
FSC in individual
39
95
126
157
187
217
249
277
292
301
1,940
retirement account
Clarification of treatment
of DISC gain and
distributions of certain
41
86
92
95
96
97
99
101
103
106
915
foreign shareholders
Treatment of certain
qualified sound recording
-310
-59
6
43
112
86
43
21
11
12
-35
productions
Payment to certain
individuals who dye fuel
(i)
(i)
(i)
(i)
(i)
(i)
(i)
(i)
(i)
(i)
-4
Treatment of financial
guaranty insurance
companies as qualifying
(i)
-2
-4
-5
-8
-9
-12
-14
-14
-14
-81
insurance corporations
under passive foreign
investment company rules
CRS-75

2022-
Provision
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2031
Extension of period of
limitation for certain legally
-33
-22
⸺
⸺
⸺
⸺
⸺
⸺
⸺
⸺
-55
married couples
Allow an above-the-line
deduction of up to $250 in
-66
-442
-442
-443
-377
⸺
⸺
⸺
⸺
⸺
-1,770
union dues paid
Temporary increase in
employer-provided child
-30
-41
-42
-43
-11
⸺
⸺
⸺
⸺
⸺
-166
care credit
Payrol credit for
compensation of local news
-207
-366
-310
-308
-320
-162
⸺
⸺
⸺
⸺
-1,674
journalists
Allow an above-the-line
deduction of up to $250
-111
-742
-756
-650
⸺
⸺
⸺
⸺
⸺
⸺
-2,259
for employee uniforms
Expenses in contingency
fee cases
-172
-659
-532
-390
-231
-101
-105
-101
-95
-66
-2,453
Increase in research credit
against payrol tax for small
-51
-81
-85
-89
-94
-98
-102
-107
-111
-113
-932
businesses
Imposition of tax on
180
1,129
1,173
1,126
1,028
940
865
792
720
654
8,606
nicotine
Termination of employer
credit for paid family and
⸺
⸺
101
219
168
77
44
26
7
⸺
642
medical leave
Total of Part 5—Other
-304
-328
118
517
1,265
1,740
1,949
1,876
1,806
1,785
10,415
Provisions
TOTAL OF
43,680
56,883 122,225 124,437
157,725
186,945 195,452
195,923 194,169 198,663
1,476,096
SUBTITLE H
CRS-76

Source: Joint Committee on Taxation, Estimated Budgetary Effects of the Revenue Provisions in Title XIII - Committee on Ways and Means, of H.R. 5376, the “Build Back Better
Act,” as Reported by the Committee on the Budget, with Modifications (Rules Committee Print 117-18), JCX-45-21, November 4, 2021, at
https://www.jct.gov/publications/2021/jcx-45-21/.
Notes: An “(i)” indicates a cost of less than $500,000. An “(i )” indicates a gain of less than $500,000. An “NA” 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. A “⸺” indicates no
estimated budget effect.

CRS-77

Tax Provisions in the Build Back Better Act: Rules Committee Print 117-18

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
Bernadette Fernandez, Specialist in Health Care Financing, contributed to content related to provisions in
Subtitle G, Part 3, “Expanding Access to Health Coverage and Lowering Costs.”

Disclaimer
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Congressional Research Service
R46960 · VERSION 1 · NEW
78