Recently, Congress passed the Build Back Better Act, which includes a range of budget provisions, including tax changes. It is important to be aware of changing tax laws, but it can be difficult to stay on top of ever-changing regulations. At Bennett CPA, Merrill Bennett is an experienced and expert tax professional in Colorado Springs who understands these amended laws well. Bennett is able to provide you with the knowledge so you can stay informed and better understand the particulars of your taxes. Here are three of the recent tax changes included in the Build Back Better plan to be mindful of when it comes time to file.
1. Child Tax Credit
Under the Build Back Better plan, the child tax credit enacted under the American Rescue Plan Act would be extended an additional year through 2022. The bill would also extend the refundability of the child tax credit beyond the year 2022. Taxpayers whose adjusted gross income exceeds $150,000 for joint filers, $112,500 for head of household filers, or $75,000 for single filers would not be eligible for payments in advance.
2. Premium Tax Credit
The bill would increase the amount of premium assistance and extend the premium tax credit to taxpayers whose household income exceeds 400 percent of the federal poverty line through 2025. Other provisions in the Build Back Better plan include:
- Lower the percentage of annual income that eligible Americans have to contribute to their premium through 2025.
- Modify the threshold of employer-sponsored coverage used to determine insurance affordability through 2025.
- Allow some low-income employees who are offered employer-sponsored coverage to claim the credit through 2025.
The plan would also make the health coverage tax credit permanent for qualifying individuals. Individuals who are eligible for Trade Adjustment Assistance allowances due to qualifying job loss would be eligible for the health coverage tax credit. Additionally, individuals between 55 and 64 with a defined benefit pension plan under the Pension Benefit Guaranty Corporation would be eligible, too.
3. Renewable Energy Tax Credits
As the Biden administration focuses on combating climate change, the Build Back Better plan includes a series of energy tax credits to encourage the use of renewable energy. Under the Residential Renewable Energy Tax Credit, solar, wind, geothermal, and fuel cell technology would qualify for the tax credit through 2033. Energy equipment that meets the standards of the Department of Energy can also qualify for the Nonbusiness Energy Property Credit, which will be extended to 2031. This credit will increase from 10 percent to 30 percent of the cost of installing qualified equipment, and the $500 lifetime cap on equipment would increase to a $1,200 annual credit limit instead.
Some other clean energy proposals in the Build Back Better plan include:
- Create a tax credit up to $12,500 for the purchase of a new electric motor vehicle.
- Create a tax credit up to $4,000 for a purchase of a used electric motor vehicle.
- Initiate a tax credit up to $900 for the purchase for an electric bicycle.
- Create a 30 percent tax credit for qualifying wildfire mitigation projects.
Certified Tax Strategist | Bennett CPA
The Build Back Better framework will bring numerous tax changes, and while it is vital to stay up to date on recent tax amendments, navigating complicated tax laws can be frustrating and time consuming for both individuals and businesses. At Bennett CPA, Merrill Bennett’s goal is to help you file taxes in an affordable, efficient, and simple way. Bennett’s knowledge and experience enables him to assist you with tax planning, preparation, and consulting to save you time and money. Contact Bennett today for all of your tax planning needs and questions!