Individual Tax
1. SALT deduction (Itemized deduction)
- Increase from $10,000 to $80,000 through 2030
- The $80,000 cap amount would also apply to 2021 tax year
2. Credit for qualified plug-in electric drive motor vehicles
- Max: $12,500 credit and refundable
3. Child tax credit
- Extend the child tax credit expansion through 2022: $3,600/$3,000
- Make the entire CTC fully refundable on a permanent basis
4. New surcharge tax
- 5% if MAGI > $10M;
- 8% if MAGI > $25M
* MAGI = AGI – Investment interest expense
* For Trust, 5% if MAGI > $200K; 8% if MAGI > $500K
5. EITC: Expand “childless EITC” through 2022
6. Wash sale rule: also apply to foreign currencies, and related parties.
7. Worthless securities
- Securities expand to include partnership interest and partnership debt
- If a partner abandons a worthless partnership interest, the loss is a capital loss not an ordinary loss
8. Backdoor Roth IRA conversion: No longer available
- Current law: 1st make a nondeductible contribution to an IRA, then convert the IRA to Roth IRA
9. IRA contributions
- Limit IRA contributions when balances reach $10M and
- Accelerate required minimum distributions for these accounts
II. Business Tax
1. Apply 3.8% net investment income tax to active business income
- Include income derived in the ordinary course of business, even if the taxpayer actively participates in such business
- Not include income subject to SE taxes, wages on which FICA taxes are imposed
- Impact S Corp owners with MFJ > $500K or Single > $400K
2. Excess business loss limitation enacted in TCJA: permanent
- Carryforward EBLs will no longer become part of a taxpayer’s net operating loss
- Treat as a business deduction and is thus subject to testing and limitation in subsequent years