How might they affect you, and what do we know for sure?
The only thing we know for certain at this point is that there will be a lot of changes. Over the last 36 years I’ve almost always refrained from writing about changes to the tax code until they actually become law. Often times, proposed changes put forward by politicians in Washington D.C. receive so much media attention that in the course of competition to see who can create the catchiest headline, the true facts get obscured with hyperbole.
In addition to the confusing reporting that surrounds tax law proposals, more times than not, the proposed change never makes into the final bills. Or the tax change as originally written and reported on, gets watered down or ratcheted up in the dead of night at the last minute. That’s politics in action. Big money lobbying efforts bringing pressure to the politicians.
Many of the tax cuts implemented during the Trump administration are set to expire in 2025. However, now that the Democrats have control, they absolutely cannot resist the temptation to roll-back some of those changes three short years early just so they can take credit for undoing them. Here’s an idea: focus your time and efforts on something more important and let those tax breaks sunset in 36 months.
Why won’t that happen? Well to be fair, if you recall the Bush tax cuts of 2001 and 2003 were scheduled to sunset in 2010 but were extended under the Obama administration with many of them becoming permanent. Sometimes it’s hard to take something away from the people once you’ve given it to them. And even though Bush signed the expiration, if the date the tax breaks expired had been on Obama’s watch, the appearance would have been that it was Obama’s fault.
There are relatively few tax provisions in the infrastructure legislation that was passed late Friday night.
- Employee Retention Credit ended early making wages paid after Sept. 30, 2021, ineligible for the credit.
- Imposed new cryptoasset information reporting requirements on brokers.
- Extension of various highway-related taxes,
- extension and modification of certain superfund excise taxes
- and allows private activity bonds for qualified broadband projects and carbon dioxide capture facilities.
Stay tuned. The real tax changes are coming as part of the Build Back Better bill.
Greg