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On September 13, 2021, the Biden Administration announced a proposal called the Build Back Better plan. It’s still in its early stages, but here are some of the changes that could affect businesses if implemented.

Corporations

Under the Build Back Better plan proposal, the graduated tax rate could return for corporations with rates ranging from

• 18% for those with $400,000 of taxable income

• 21% for those with $400,000 to $5 million of taxable income

• 26% for those with $5 million to $10 million of taxable income

Interest Expense

The Build Back Better plan could shift the calculation of interest expense from the partnership level to the partner level. The shift would be aimed at simplifying the application and administrative burden of the current law.

S Corporations

The proposal includes a change to how S corporations formed before May 13, 1996, are organized. Under the plan, these S corporations could be allowed to convert to a tax-free partnership provided they transfer all assets and liabilities to the new partnership within 2 years.

What Comes Next? 

While there is a long way to pass the legislation in its current form, we will closely monitor the situation to bring you the latest updates.  

Have Questions?  

Have questions about how these proposed changes could affect your business’s unique tax situation? Our business advisory experts are ready to help. Contact us.