North Dakota Bankers
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House Democrats Release Draft Spending Bill

House Democrats Release Draft Spending Bill

Posted: Sep 15 2021
The House tax writing committee Monday released legislative text for the Biden administration’s $3.5 trillion spending plan, with committee votes expected to begin as soon as today. The draft legislation includes a number of tax provisions that will affect banks, including provisions that would: increase the corporate tax rate from 21% to 26.5% and limit the 20% 199A deduction for Subchapter S banks to $500,000.
 
Additional banking-related provisions would expand the net investment income tax to earnings for active participants in pass-through businesses; accelerate limitations on deductibility of compensation; and make significant international changes affecting both U.S. branches of overseas-based banks and U.S.-based banks with global activities.
 
The bill would also increase the top individual tax rate from 37% to 39.6%, add a surtax on modified income for taxpayers with income over $5 million and raise the capital gains tax from 20% to 25%. It also includes several ABA-supported provisions related to affordable housing and community development, including expanding and making permanent the New Markets Tax Credit and expanding housing and energy tax credits.
 
Importantly, the draft legislation does not include the industry-opposed requirements for financial institutions to report information to the IRS on all customers with gross inflows and outflows above a de minimis level of $600. However, this could still change.
 
To view the bill summary, visit: https://waysandmeans.house.gov/sites/democrats.waysandmeans.house.gov/files/documents/SubtitleISxS.pdf
 
 

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