Changes To President Biden’s Build Back Better Package
President Biden presented his revised framework for the Build Back Better reconciliation package this morning, eliminating the previously proposed revisions to the Federal Estate Tax laws that were part of the previous versions of the package, including (1) the accelerated drop in the Federal Estate Tax Exemption from $11.7 million to $6 million beginning as of January 1, 2022, (2) the elimination of Intentionally Defective Grantor Trusts, and (3) the elimination of discounts for lack of control and lack of marketability on certain business interests.
Instead, the new tax reform package focuses on revenue generation through:
- 15% Corporate Minimum Tax on Large Corporations
- 1% Surcharge on Corporate Buy-Backs
- Global Minimum Tax
- Penalty for Foreign Corporations
- Surtax on Multi-Millionaires and Billionaires
- Close Medicare Self-Employment Tax Loophole
- Continue Limitation on Excess Business Losses
- Investing in IRS Enforcement
It is unclear whether this revised framework will garner the votes necessary to get through Congress and whether the estate tax is revisited as a target for tax reform in the future. At least for now, the President’s revised package provides welcome relief to many clients that were working to complete significant gifting transactions prior to the enactment of any new legislation.
The need for planning is still important as the Federal Estate Tax Exemption remains likely to “sunset” in the year 2026, based on current law. Therefore, we will continue to move forward with our strategic planning efforts, although the timing for completion has thankfully been extended.