President Biden recently signed into law the $1.2 trillion bipartisan infrastructure bill that has been stalled in Congress for several months. Below is a summary of the tax provisions included in that bill that could impact producers.
Infrastructure Bill’s Takeaways for Ag
Elimination of Employee Retention Credit (ERC): The infrastructure bill eliminates the ERC effective Sept. 30, 2021, for all employers except in the case of an eligible “recovery startup business.” The credit had recently been enhanced and extended through the end of 2021, but this provision of the infrastructure bill ends that extension of the ERC one quarter earlier.
Possible action needed for producers: Under the bill, with the exception of recovery start-up businesses, wages paid after September 30, 2021 are no longer eligible for the ERC. It is not, however, too late to claim credits for 2020 or the first three quarters of 2021.
Automatic deadline extensions for taxpayers affected by federally declared disasters: The bill provides a longer 60-day extension after the declaration of a federal disaster.
- Rather than a 60-day extension from the date of the “incident” that caused the federally declared disaster, the extension is 60 days from the later of either (1) the earliest event that caused the disaster, or (2) the date a federal disaster declaration is issued.
- If multiple declarations are issued within the 60-day extension period, a separate extension period is determined with respect to each disaster declaration.
BBB Plan Expectations
The President’s “Build Back Better” bill is currently (at the time of this publication) awaiting the Congressional Budget Office’s complete cost estimate for the plan. Once this is completed it is expected to pass in the U.S. House of Representatives.
This $1.75 trillion proposal aims to expand the social safety net in the United States and boost climate change policy. Here are the key items that KCoe advisors are watching on the BBB Plan that could impact agribusinesses:
- Extension of renewable energy incentives. The Plan would extend for another ten years credits for producing electricity from renewable resources like solar and wind, and credits for investing in renewable energy production facilities.
- Payments administered by the USDA. The Plan provides funding for growers to invest in and implement cover crop practices – payment details are still unknown, but maximum payment in the text is $25 per acre for up to 1,000 acres.
- Expansion of Net Investment Income Tax. The Plan would expand the 3.8% Net Investment Income Tax to apply to all business income – even active income – for individuals with income in excess of $400,000.
It is expected that the House will receive the BBB Plan within the next several days (of this publication).