Highlights of President Biden’s Proposed Tax Plan

In late May, the Treasury Department released its General Explanations to the Administration’s Fiscal Year 2022 Revenue Proposals (also known as the “Green Book”). The 114-page document contains detailed information about President Biden’s proposed tax law changes: the American Jobs Plan and the American Families Plan. The American Jobs plan is geared more towards business while the American Families Plan focuses on individuals. Both individuals and businesses could see tax rate increases under the proposed plan.

Clearly, these are just proposals at this point, and it’s too early to tell exactly which parts of the plan will eventually make it into law, or the extent to which they will be modified if they do. You’ve no doubt already started hearing from clients wanting to know what you know. To help with that, we’ve compiled a list of some of the highlights to help you gain an understanding of the major tax proposals and answer questions your clients may have.

Note that this is NOT an all-inclusive list of the Green Book provisions.

The American Jobs Plan

Increase the Tax Rate on C Corporations. The Tax Cuts and Jobs Act (TCJA) established a 21% tax rate for C corporations. Under President Biden’s proposal, that rate would increase to 28%. The higher rate would go into effect for tax years beginning after 2021. For fiscal year C corporations whose tax year starts after 1/1/21, the new rate would be prorated. According to the Green Book, these corporations would be taxed at a rate equal to 21% plus 7% times the portion of the year that falls in 2022. For example, if a C corporation with a June 30 year-end had $1,000,000 of taxable income for the year ended 6/30/2022, the tax would be computed by first determining how many days in the corporation’s tax year fell in each calendar year. In this case, 184 days are in 2021 and 181 in 2022. The corporation’s tax rate would be 21% + (7% x 181 / 365) = 24.471%, resulting in total tax for the fiscal year of $244,710. This mirrors the treatment required by IRC Sec. 15 and Notice 2018-38 and should be a familiar to fiscal year C corporations that dealt with this issue when the rate was reduced under the TCJA.

Impose a 15% Minimum Tax on Large Corporations. Corporations with book income of $2 billion or more would be subject to a 15% minimum tax on their worldwide book income. This proposal is expected to impact roughly 120 taxpayers and would go into effect for tax years beginning after 2021.

Observation: Clearly, the devil is in the details when computing worldwide book income.

Promote U.S. Job Creation. The proposal calls for the creation of a new general business credit of up to 10% of the eligible cost of onshoring a trade or business. Onshoring means reducing or eliminating a trade or business (or a line of business) currently conducted outside the U.S. and starting up, expanding, or otherwise moving the same trade or business to the U.S. and creating jobs in the process. Also, the proposal would disallow deductions for expenses related to offshoring a trade or business (that is, reducing or eliminating a trade or business currently conducted in the U.S. and starting up or moving the same trade or business overseas, causing the elimination U.S. jobs). The new credit for onshoring and deduction disallowance related to offshoring would apply to expenses paid or incurred after the date of enactment.

Eliminate Fossil Fuel Tax Preferences. The President’s plan is clearly steered in the direction of non-fossil fuel energy. To that end, the proposal would repeal many of the tax benefits currently available to encourage the production of fossil fuels. Among other things, the credits for enhanced oil recovery and marginal oil and gas well production would be repealed, was well as the ability to deduct intangible drilling costs and to claim percentage depletion on oil and gas wells. In general, these changes would go into effect for tax years beginning after 2021.

The American Families Plan

Increase Highest Marginal Rate for Individuals. The President’s plan calls for a return to the pre-TCJA top income tax rate of 39.6%. For 2022, that rate would affect married filing joint taxpayers with taxable income over $509,300 (over $452,700 for single taxpayers, over $481,000 for heads of households, and over $254,650 for married filing separate). These thresholds would be adjusted for inflation and be effective for tax years beginning after 2021.

Tax High-income Individuals’ Capital Gains and Qualified Dividends at Ordinary Rates. For taxpayers with Adjusted Gross Income (AGI) over $1 million ($500,000 if married filing separate), the maximum tax on long-term capital gains and qualified dividends is proposed to increase from 20% to the top rate on ordinary income (which is proposed to be 39.6%). When factoring in the 3.8% net investment income tax, this effectively would raise the tax rate on long-term capital gains and qualified dividends to 43.4%. The $1 million threshold would be indexed for inflation.

Taxpayers would be subject to the higher rate on their long-term capital gains and qualified dividends only to the extent their income exceeds the threshold. For example, a taxpayer filing a joint return with $900,000 of ordinary income and $200,000 of long-term capital gains would have $100,000 of the capital gain taxed at the current preferential rate and $100,000 of the long-term capital gain taxed at the ordinary income tax rate.

Caution: This change is proposed to apply to gains recognized after the date of the announcement. The Green Book does not define that date, but the American Families Plan was announced on April 28, 2021, presumably meaning that any gain recognized after that date would potentially be subject to the higher rate. Unfortunately, we won’t know when this provision will be effective (if at all) until things move a little further along. While not impossible, it is generally more difficult to impose a tax retroactively since a majority of lawmakers will have to agree. However, this signals that the administration would like to prevent, as much possible, taxpayers from recognizing capital gains in anticipation of a rate increase.

Treat Transfers of Appreciated Property by Gift or at Death as Realization Events. Donors and deceased owners of an appreciated asset would realize a capital gain when the asset is transferred (either as a gift or at the taxpayer’s death). The appreciated asset would be treated as transferred at FMV on the date of the gift or the date of death. Taxpayers would have a $1 million (adjusted for inflation after 2022) per-person exemption available. The proposed change would be effective for property transferred by gift after 12/31/2021, and for property owned at death by decedents dying after that date.

In addition to the $1 million exemption, certain other exclusions would apply. Capital gain would not be realized on transfers to a spouse. But, the surviving spouse would take on the decedent’s basis and any gain would be recognized when the surviving spouse disposes of the asset or dies. No tax would be due on a transfer to charity. Additionally, the proposal would exclude from recognition any gain on tangible personal property such as household furnishings and personal effects, other than collectibles. The $250,000 per-person exclusion under current law for capital gains on a principal residence would apply to all residences and would be portable to a decedent’s surviving spouse. Finally, the current-law exclusion for gain on certain small business stock would also apply.

The tax on the appreciation of certain family-owned and operated businesses would be deferred until the business is sold or ceases to be family-owned and operated. Additionally, tax on appreciated nonliquid assets could be spread over a 15-year period with a fixed rate payment plan. This deferral would not apply to the tax on any appreciated liquid assets, such as publicly traded securities.

Tax Appreciation on Certain Assets Held in a Trust, Partnership, or Other Noncorporate Entity. An entity would be subject to tax if the assets it holds have not been subject to a recognition event within the prior 90 years. The 90-year period begins 1/1/1940, making 12/31/2030 the earliest date that a taxpayer might have to recognize gain in this situation.

Subject Certain Income to Either Net Investment Income or Self-employment Tax. Currently, married taxpayers filing a joint return with AGI over $250,000 ($200,000 for single and head of household, $125,000 for married filing separately) are subject to a 3.8% tax on their Net Investment Income (NII), which generally includes capital gains, interest, dividends, royalties, and income from passive activities. Self-employment (SE) income is not subject to the NII Tax (NIIT). The proposed changes are aimed at nonpassive S corporation shareholders and limited partners/LLC members whose share of pass-through ordinary income currently isn’t subject to SE tax or the NIIT. All income not subject to SE tax would be subject to NIIT for taxpayers with AGI over $400,000. Also, ordinary income passed through to S corporation shareholders and limited partners/LLC members who materially participate in the trade or business would be subject to SE tax to the extent it exceeds certain thresholds, effectively making this pass-through income subject to either NIIT or self employment tax. This change would be effective for tax years beginning after 2021.

Make Certain Tax Credit Changes Permanent. The American Rescue Plan Act of 2021 (ARPA) expanded and modified several credits available to individuals. However, the changes made by ARPA were generally for 2021 only. The President’s proposal would make the following ARPA changes permanent.
•Premium Tax Credit. This refundable credit is available to taxpayers who get health insurance through a Marketplace established under the Affordable are Act of 2010 (ACA). ARPA modified the income threshold for eligibility and decreased the contribution percentages for taxpayers.
•Earned Income Tax Credit. This refundable credit is available to taxpayers with low to moderate income levels. ARPA expanded eligibility to taxpayers as young as age 19 (age 18 for a qualified former foster youth or a qualified homeless youth), provided the taxpayer can’t be claimed as a dependent on their parent’s return and expanded the credit for workers without children.
•Child and Dependent Care Tax Credit. This credit is available to taxpayers who must pay for childcare to allow them to work. ARPA made the credit fully refundable for eligible taxpayers and increased allowable expenses (to $8,000 for taxpayers with one qualifying child and to $16,000 for those with two or more children).

Extend Child Tax Credit Changes. This credit is available to taxpayers with qualifying children. ARPA made this credit fully refundable for eligible taxpayers in 2021 and increased the credit amount to $3,000 (for children ages 6 through 17) and $3,600 (for children under 6). The Biden proposal would extend these ARPA changes to tax years beginning before 2026.

Limit Like-kind Exchange Deferrals. The TCJA limited the ability to defer gains using a like-kind exchange to exchanges of real property. The proposed law changes seeks to further restrict a taxpayer’s ability to delay paying tax when a property is exchanged. The proposed law caps the amount of gain that can be deferred in a Section 1031 like-kind exchange at $500,000 per taxpayer, per year ($1 million for MFJ). Gains from a like-kind exchange that exceed the cap will be subject to tax in the year the taxpayer transfers the real property subject to the exchange. This proposal would be effective for exchanges completed in tax years beginning after 2021.

Make Excess Business Loss Limit Permanent. The provision that limits a noncorporate taxpayer’s ability to claim excess business losses is set to expire at the end of 2026. The proposed law would make this a permanent provision.

Increase IRS Funding. According to the Treasury Department’s report, the IRS’s operating budget (in constant dollars) decreased roughly 20% between 2010 and 2020. Meanwhile, additional resources were needed by the Service to keep up with new areas of noncompliance, implement changes brought on by the TCJA and other recent law changes, and respond to the COVID-19 crisis. Long story short, the IRS wants more funding. Under the proposal, additional funding would be used to beef up enforcement and compliance efforts, enhance information technology functionality, and specifically allocate resources to enforcement activities for taxpayers with income of $400,000 and higher.

Improve Oversight of Tax Preparers.The IRS seeks to gain additional regulatory control over paid tax return preparers to reduce collection costs, increase revenue, and increase overall confidence in the voluntary compliance system. The proposed changes would establish minimum competency standards, effective on the date of enactment. It will also increase penalties on tax preparers who don’t sign the returns they prepare (“ghost preparers”). The proposal would increase the penalty to the greater of $500 per return or 100% of the fee received for preparing a ghost return and increase the time to assess the penalty from three to six years after a return was filed, effective for returns required to be filed after 2021.

Expand Crypto Asset Reporting for Brokers. Crypto currency is a huge hot button issue for the IRS. The service sees the crypto realm as ripe for tax evasion. The proposal would expand the scope of information reporting by brokers, including entities such as U.S crypto asset exchanges and hosted wallet providers, to require reporting related to gross proceeds, sales, and “substantial foreign owners” in passive entities. The plan would allow the U.S. to share this information with other global taxing jurisdictions. This change would be effective for returns required to be filed after 2022.

Guidance on Claiming the Employee Retention Credit for the First and Second Quarters

The IRS recently released Notice 2021-23, providing guidance on claiming the employee retention credit. The notice expands on information provided in Notice 2021-20, 2021-11 IRB 922 in light of amendments made to the Coronavirus Aid, Relief and Economic Security (CARES) Act by the Taxpayer Certainty and Disaster Relief Act of 2020.

Changes for first and second quarters. The notice details the changes for the first and second quarters of 2021. This includes:

  • The increase in the maximum credit amount from $5,000 per calendar quarter (for a total of $10,000) to $7,000 per calendar quarter (for a total of $14,000;
  • Expansion of definition of eligible employer, for example now including college or university, and businesses that have the principal purpose or function of providing medical or hospital care;
  • Changes to the definition of “qualified wages.” Certain exclusions from “employment,” related to certain services performed for governmental or educational entities, are disregarded for purposes of the employee retention credit for the first and second calendar quarters of 2021.

Additionally, employers can get the employee retention credit for the first two calendar quarters of 2021 before filing their employment tax returns by reducing employment tax deposits. Small employers may request advance payment of the credit on Form 7200, Advance of Employer Credits Due to COVID-19 after reducing deposits.

Under the American Rescue Plan Act of 2021 (ARPA), the employee retention credit is also available to eligible employers for wages paid during the third and fourth quarters of 2021. Guidance is expected to be provided at a future date.

SBA Announces the Closure of the Paycheck Protection Program

On June 1, 2021, Small Business Administrator Isabella Casillas Guzman announced the closure of the Paycheck Protection Program (PPP). Since the PPP was first introduced through the  “Coronavirus Aid, Relief, and Economic Security Act” (the CARES Act), it has dispersed $798 billion in loans to small businesses and nonprofit organizations.

Over 8.5 million employers received PPP loans to cover payroll costs and nonpayroll costs such as rent, mortgage interest, and utilities since the program began. The program was so popular that it was extended and modified on multiple occasions including the introduction of Second Draw PPP Loans through the Consolidated Appropriations Act, 2021 (CAA, 2021) and propped up with additional funding with the last COVID-19 relief bill, the American Rescue Plan Act (ARPA).

After some initial backlash that the smallest businesses were having difficulties obtaining a PPP loan, the SBA noted that in 2021, 96% of PPP loans went to business with fewer than 20 employees with the average loan at $42,000.

General PPP Funding Exhausted and Most Applications No Longer Accepted

A spokesperson for the U.S. Small Business Administration (SBA) has confirmed that the SBA is no longer accepting Paycheck Protection Program applications from lenders.

Background. The CARES Act established the Paycheck Protection Program (PPP) which permitted the SBA to provide loans to qualified businesses impacted by the coronavirus (COVID-19) pandemic. The 100% federally guaranteed loans must be used for payroll and certain non-payroll costs. The Consolidated Appropriations Act 2021 (CAA, 2021) included the Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act (the Economic Aid Act) that authorizes additional funding to the program and extended the program until March 31, 2021. The Economic Aid Act also expanded access to First Draw PPP Loans to other entities, expanded additional eligible expenses, clarified terms, and authorized Second Draw PPP Loans for smaller borrowers.

The CAA provided $284.45 billion and ARPA provided $7.25 billion in direct funding to the PPP.

PPP funding status. Cecelia Taylor, Deputy Press Director/Team Lead, SBA Press Office, has informed Thomson Reuters that after serving more than eight million small businesses, general funding for the PPP has been exhausted and the PPP application portal has been closed for applications from most lenders.

Taylor added that the SBA will continue funding outstanding approved PPP applications, but new qualifying applications will only be funded through $9.9 billion that is set aside for Community Financial Institutions, financial lenders that serve underserved communities.

This includes Community Development Financial Institutions (CDFIs), Minority Depository Institutions (MDIs), Certified Development Companies (CDCs), and Microloan Intermediaries.

IRS extends additional tax deadlines for individuals to May 17

The IRS has issued a Notice that extends, from April 15 to May 17, additional tax deadlines for individuals. Among other things, the Notice extends the time for filing Federal income tax refund claims due on April 15, 2021, and making IRA and HSA contributions. The Notice also provides that foreign trusts and estates that file Form 1040-NR, now have until May 17, 2021 to file their returns and pay any tax due.

Background. On March 17, 2021, the IRS extended, from April 15, 2021 to May 17, 2021, the federal income tax filing and payment deadline for individuals for the 2020 tax year. See IRS extends filing deadline to May 17 (03/18/2021).

More deadlines extended. The IRS has now extended to May 17, 2021 deadlines for the following:

IRAs and Roth IRAs. Making contributions to IRAs and Roth IRAs, the time for reporting and paying the 10% additional tax on 2020 distributions from IRAs or workplace-based retirement plans. Note though that the deadline for filing Form 5498 (IRA Contribution Information) series returns related to these accounts is extended to June 30, 2021.

Health and education accounts. Making contributions to health savings accounts (HSAs), Archer Medical Savings Accounts (Archer MSAs) and Coverdell education savings accounts.

2017 Refunds. Making refund claims for the 2017 tax year, which are normally due April 15. Taxpayers must properly address, mail, and ensure the refund claim (e.g., return) is postmarked on or before May 17, 2021.

Form 1040-NR. Returns of foreign trusts and estates with federal income tax filing or payment obligations that file Form 1040-NR.

Annual Filing Season Program. Applying to the Annual Filing Season Program (AFSP) for calendar year 2021. Tax preparers now have until May 17 to submit an application to participate in the AFSP.

Deadlines NOT extended. The IRS has not extended the April 15, 2021 estimated tax payment due date. These payments are still due on April 15.

Ohio Tax Deadline Extended

Ohio Tax Commissioner Jeff McClain today announced that Ohio will be following the federal government and IRS in extending the deadline to file and pay Ohio individual income and school district income taxes for tax year 2020.

The new deadline is May 17, an extension of approximately one month from the original deadline of April 15.

Commissioner McClain said the extension is intended to provide some relief to individuals impacted by the public safety measures adopted to contain the spread of the coronavirus.

As with the IRS extension, Ohio will be waiving penalty on tax due payments made during the extension. Also, as part of legislation passed addressing the continuing emergency, there will be no interest charges on payments made during the extension.

The filing extension, and waiver of penalty and interest, will be available to those filing Ohio individual income tax, and the school district income tax for tax year 2020.

(Please note that the first quarter estimated income tax payment for tax year 2021 is not impacted by this extension and must still be made by April 15.)

Tax Day for individuals extended to May 17

IR-2021-59, March 17, 2021

WASHINGTON — The Treasury Department and Internal Revenue Service announced today that the federal income tax filing due date for individuals for the 2020 tax year will be automatically extended from April 15, 2021, to May 17, 2021. The IRS will be providing formal guidance in the coming days.

“This continues to be a tough time for many people, and the IRS wants to continue to do everything possible to help taxpayers navigate the unusual circumstances related to the pandemic, while also working on important tax administration responsibilities,” said IRS Commissioner Chuck Rettig. “Even with the new deadline, we urge taxpayers to consider filing as soon as possible, especially those who are owed refunds. Filing electronically with direct deposit is the quickest way to get refunds, and it can help some taxpayers more quickly receive any remaining stimulus payments they may be entitled to.”

Individual taxpayers can also postpone federal income tax payments for the 2020 tax year due on April 15, 2021, to May 17, 2021, without penalties and interest, regardless of the amount owed. This postponement applies to individual taxpayers, including individuals who pay self-employment tax. Penalties, interest and additions to tax will begin to accrue on any remaining unpaid balances as of May 17, 2021. Individual taxpayers will automatically avoid interest and penalties on the taxes paid by May 17.

Individual taxpayers do not need to file any forms or call the IRS to qualify for this automatic federal tax filing and payment relief. Individual taxpayers who need additional time to file beyond the May 17 deadline can request a filing extension until Oct. 15 by filing Form 4868 through their tax professional, tax software or using the Free File link on IRS.gov. Filing Form 4868 gives taxpayers until October 15 to file their 2020 tax return but does not grant an extension of time to pay taxes due. Taxpayers should pay their federal income tax due by May 17, 2021, to avoid interest and penalties.

The IRS urges taxpayers who are due a refund to file as soon as possible. Most tax refunds associated with e-filed returns are issued within 21 days.

This relief does not apply to estimated tax payments that are due on April 15, 2021. These payments are still due on April 15. Taxes must be paid as taxpayers earn or receive income during the year, either through withholding or estimated tax payments. In general, estimated tax payments are made quarterly to the IRS by people whose income isn’t subject to income tax withholding, including self-employment income, interest, dividends, alimony or rental income. Most taxpayers automatically have their taxes withheld from their paychecks and submitted to the IRS by their employer.

State tax returns

The federal tax filing deadline postponement to May 17, 2021, only applies to individual federal income returns and tax (including tax on self-employment income) payments otherwise due April 15, 2021, not state tax payments or deposits or payments of any other type of federal tax. Taxpayers also will need to file income tax returns in 42 states plus the District of Columbia. State filing and payment deadlines vary and are not always the same as the federal filing deadline. The IRS urges taxpayers to check with their state tax agencies for those details.

ARPA modifications to the employee retention tax credit in 2021

We thought you might be interested in the modification and extension of the employee retention tax credit (ERTC) by the American Rescue Plan Act (ARPA), signed by President Biden on March 11, 2021. We would be happy to assist you in analyzing whether claiming the modified and extended ERTC might benefit your business.

Background. Congress originally enacted the ERTC in the Coronavirus Aid, Relief and Economic Security (CARES) Act in March of 2020 to encourage employers to hire and retain employees during the pandemic. At that time, the ERTC applied to wages paid after March 12, 2020 and before January 1, 2021. However, Congress later modified and extended the ERTC to apply to wages paid before July 1, 2021.

ARPA extension. ARPA extended and modified the ERTC to apply to wages paid after June 30, 2021 and before January 1, 2022. Thus, an eligible employer can claim the refundable ERTC against ‘‘applicable employment taxes’’ (as defined below) equal to 70% of the qualified wages it pays to employees in the third and fourth quarters of 2021.

Except as discussed below, qualified wages are generally limited to $10,000 per employee per calendar quarter in 2021. Thus, the maximum ERTC amount available is generally $7,000 per employee per calendar quarter or $28,000 per employee in 2021.

For purposes of the ERTC, a qualified employer is eligible for the ERTC if it experiences a significant decline in gross receipts or a full or partial suspension of business due to a governmental order. Employers with up to 500 full-time employees (i.e., small employers) can claim the credit without regard to whether the employees for whom the credit is claimed actually perform services. But, except as discussed below, employers with more than 500 full-time employees (i.e, large employers) can only claim the ERTC with respect to employees that do not perform services.

Employers who got a Payroll Protection Program (PPP) loan in 2020 can still claim the ERTC. But, the same wages cannot be used both for seeking PPP loan forgiveness or satisfying conditions of other COVID-relief programs (such as the restaurant revitalization grants enacted as part of the ARPA) and in calculating the ERTC.

ARPA modifications. Beginning in the third quarter of 2021, the following modifications apply will apply to the ERTC:

• Applicable employment taxes are the employer’s share of Medicare (also called hospitalization insurance or HI) taxes (equal to 1.45% of the wages) and the amount of the tax under the Railroad Retirement Tax Act payroll tax that is attributable to the employer’s HI tax rate. For the first and second quarters of 2021, ‘‘applicable employment taxes’’ were defined as the employer’s share of Social Security tax (equal to 6.2% of the wages) and the amount of the tax under the Railroad Retirement Tax Act payroll tax that was attributable to the employer’s Social Security tax rate.

• Recovery startup businesses are qualified employers. A recovery startup business is generally a business that began operating after February 15, 2020, and that meets certain gross receipts requirements. A recovery startup business will be eligible for an increased maximum credit of $50,000 per quarter, even if the business has not experienced a significant decline in gross receipts or been subject to a full or partial suspension under a government order.

• A ‘‘severely financially distressed’’ employer who has suffered a decline in quarterly gross receipts of 90% or more compared to the same calendar quarter in 2019 will be able to treat all wages (up to the $10,000 limitation) paid during those quarters as qualified wages. This rule will allow a large employer (i.e., an employer with over 500 employees) under severe financial distress to treat those wages as qualified wages whether or not its employees actually provide services.

• The statute of limitations for assessments relating to the ERTC will not expire until five years after the date that the original return claiming the credit is filed or treated as filed. For example, if the Form 941 for the fourth quarter of 2021 claiming the ERTC is treated as filed on April 15, 2022, the return could be audited with respect to the ERTC as late as April 14, 2027.

If you have any questions relating to how the extension or modifications will affect your business’s claiming the ERTC, please let us know.

IRS Commissioner again says tax season won’t be extended

At a March 3rd virtual tax conference hosted by the Federal Bar Association, IRS Commissioner Charles Rettig again said that IRS has no plans to extend the tax return filing deadline beyond April 15, 2021.

In February 23 testimony before the House Appropriations Committee Financial Services Subcommittee, Commissioner Rettig had said that IRS was not planning to extend the April 15 filing deadline despite requests from several House Democrats. At that time, he also noted that a final decision on the matter hasn’t yet been reached

President agrees to faster phaseout of $1,400 stimulus checks

President Joseph Biden has agreed to a compromise with moderate Senate Democrats to narrow the income eligibility for the next round of $1,400 stimulus checks by creating a faster phaseout based on adjusted gross income (AGI).

The American Rescue Plan Act of 2021 (Act), as passed on February 27 by the House of Representatives, contains a provision to provide a $1,400 stimulus payment. The amount of the payment phases out ratably for single filers with AGI over $75,000 ($112,750 for heads of households; $150,000 for joint filers). The payment phases out fully for single taxpayers with $100,000 of AGI ($150,000 for heads of household; $200,000 for joint filers). AGI, for this purpose is 2020 AGI, or 2019 AGI for taxpayers who have not already filed their 2020 return. (Act Sec. 9601)

President Biden has agreed to reduce the abovementioned $100,000, $150,000 and $200,000 full phaseout amounts to $80,000, $120,000, and $160,000, respectively.

Under the new agreement, the same households who would have received the full payment of $1,400 per person under the House bill will continue to receive the full payment. For example, individuals earning less than $75,000 and couples earning less than $150,000 will receive the full payment—just as in the House bill.