Photo by Jessica Rockowitz on Unsplash
What is the American Families Plan? New presidents bring new administrations and they bring new policies, budgets, and proposals. In May, the Biden administration revealed their 2022 budget for the fiscal year. The $6 trillion-dollar budget includes a focus on clean energy, research and developments, infrastructures, and tax changes/proposals.
Among these tax proposals is the American Families Plan, which increases the taxes on high-income families, continues the tax credit expansions seen previously, and addresses many tax administration issues.
Also part of the 2022 budget is the American Jobs Plan, which includes clean energy incentives, corporate tax changes and increases, and tax incentives for housing and other infrastructures.
The breakdown of the American Families Plan for high-income families:
- Increasing the income tax rate from 37% to 39.6% for married and jointly filed taxpayers making over $509,300 and over $452,700 for single filers
- Taxing capital gains of high-income individuals (with AGI over $1 million) at a 37% rate
- Imposing capital gain tax on property transferred by gift and on property owned at death
The breakdown of other parts of the American Families Plan for all:
- The American Rescue Plan Act (ARPA) a permanent expansion
- The EITC for workers without qualifying children permanent
- Extending and making permanent ARPA’s child tax credit increase through 2025
- Increasing the employer-provided child care tax credit for businesses to 50% of the first $1 million of qualified care expenses
- The excess business loss limitation for noncorporate taxpayers permanent
The breakdown of the American Families Plan financial information:
- Comprehensive financial account reporting: all business and personal accounts above a $600 threshold, including bank, loan, and investment accounts
- Giving the Treasury the authority to regulate federal tax return preparers including establishing minimum competency standards
- Expanding the Treasury’s authority to require e-filing and improving information reporting
- Expanding broker information reporting with respect to crypto-assets;
- Modifying tax administration rules
- Authorizing limited sharing of business tax return information to assess the economy better