Legislative update: House Rules Committee releases updated version of the “Build Back Better Act” (initial impressions)

Substantial number of changes to the tax-related provisions of the bill as approved by the House Budget Committee in September 2021

Substantial number of changes to the tax-related provisions of the bill

The House Rules Committee earlier today released a modified version of H.R. 5376, the “Build Back Better Act.” 

The modified version of the bill includes a substantial number of changes to the tax-related provisions of the bill as approved by the House Budget Committee in September 2021. Read TaxNewsFlash

Overview of changes

The version of the bill released today by the Rules Committee does not contain a number of tax-related items that were in the previous version of the bill.  The items not included (but not limited to) are as follows:

  • Corporate income tax rate increase
  • Individual ordinary income rate increases (but see surcharge below)
  • Individual capital gains and qualified dividends income rate increases (but see surcharge below)
  • Carried interest modifications
  • Limit on deduction of qualified business income of certain “high income” individuals
  • Changes to rules applicable to grantor trusts
  • Valuation rules for certain transfers of nonbusiness assets
  • Increase in limits on estate tax valuation reduction for certain real property
  • Termination of temporary increase in unified credit

Likewise, the following items reported to be under consideration for possible addition to the bill are not included in the most current version of the bill:

  • Mark to market regime for very high income individuals, trusts, and estates—read TaxNewsFlash
  • Financial institutions reporting on account flows
  • State and local tax (SALT) deduction relief

A number of provisions have been added to the prior version of the bill or were substantially modified, including the following:

  • Corporate alternative minimum tax—the bill would impose a 15% minimum tax on adjusted financial statement income for corporations with a three-year average of such income in excess of $1 billion.
  • Excise tax on repurchase of corporate stock—the bill would impose a 1% excise tax on publicly traded U.S. corporations based on the value of any of its stock that is repurchased by the corporation during the tax year.
  • The effective date of many business and international proposals would be deferred one year.
  • FDII and GILTI section 250 deduction—the bill would tax “global intangible low-taxed income” (GILTI) at 15% and “foreign-derived intangible income” (FDII) at 15.8%.
  • BEAT rate—the bill would increase the “base erosion and anti-abuse tax” (BEAT) rate to 12.5% for 2023, 15% for 2024, and 18% for 2025 and thereafter.
  • Surcharge on high income individuals, estate and trusts—the bill would impose a tax equal to 5% of a taxpayer’s modified adjusted gross income (MAGI) in excess of $10 million and an additional tax of 3% of a taxpayer’s MAGI in excess of $25 million.


  • Read text [PDF 3.47 MB] of the bill (1684 pages)
  • Read a section-by-section summary [PDF 824 KB] of the bill as provided by the Rules Committee 

What’s next?

The House has concluded work for the week but is expected to return to Washington next week to further consider legislative priorities.

The likely next step is for the bill to be considered by the House Rules Committee. The Rules Committee generally sets forth the parameters governing the consideration of legislation on the floor of the House of Representatives. It is possible that further modifications to the bill will be made during Rules Committee consideration of the bill or during possible consideration of the bill by the House of Representatives. The timing of a possible House vote on the Build Back Better Act remains unclear. 

In addition, the Senate would need to consider the legislation under the procedural rules governing budget reconciliation. It is possible that the Senate will further amend the legislation during its consideration. Any Senate amendment to the House legislation would then set up a process, formal or informal, whereby the House and Senate would resolve their differences.

Given the opportunities for further changes, items that are not in today’s bill may not necessarily be “off the table.”  For example, changes to the SALT limit might be anticipated prior to a House vote, given interest in that issue by a number of Democrats.  Likewise, revenue raisers that previously have been considered but are not in today’s version of the bill might be added later in the process.

The House and the Senate are currently scheduled to conclude legislative work for the year on December 10, 2021, though such dates are routinely extended to conclude year-end legislative priorities.


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