President Biden’s “Build Back Better” plan is in the hands of the U.S. Senate after having passed the House. The plan includes a variety of spending increases for social programs and it proposes a number of changes to tax laws. What could all this mean to “personal” finances? We asked Tom Wheelwright, CPA and author of the book “Tax-Free Wealth.”
Wheelwright said it is not as simple as the rich getting hit with higher taxes, but that small businesses are also at risk of potentially raised taxes.
“There’s this 3.8% net income tax that has never been assessed on small businesses that are in past entities or partnerships and now it is so that’s actually going to be a significant hit for anybody whose moderately successful in a small business,” Wheelwright said.
The state and local tax deduction limit has been rolled back in Build Back Better as well, and Wheelwright says it may be rolled back further.
“The House has said ‘We want it to be $80,000 instead of $10,000 for five more years, so it’s going to be $80,000 for ten years instead of $10,000 for five years,” Wheelwright said.
The bill could also include enhancements to earned income credit, which seems hard to argue against according to Wheelwright.
Solar credit will also be a factor of the bill, $500 billion is allocated towards this. We currently have a 26% credit for solar panels on houses, but this is about to go away after next year. The bill would extend it and increase it to 30%.
“I have not heard any fight on this, this is something that I think is going to happen, there’s also a credit for putting in a charging station,” Wheelwright said.