Wash-sale rules

The bill would amend Sec. 1091 to make commodities, foreign currencies, and crypto assets subject to the wash-sale rules.

Net investment income tax

The bill would amend Sec. 1411 to apply the tax to net investment income derived in the ordinary course of a trade or business for taxpayers with taxable income over $400,000 (single filers), $500,000 (married taxpayers filing jointly or surviving spouses) or $250,000 (married taxpayers filing separately).

Excess business losses

The bill would make permanent the Sec. 461 limitation on excess losses of noncorporate taxpayers.

High-income surcharge

The bill would create a new Sec. 1A, imposing a surcharge (in addition to any other income tax imposed) on high-income individuals, estates, and trusts. The surcharge tax would equal the sum of 5% of the amount of the taxpayer’s AGI that exceeds $10 million ($5 million for married taxpayers filing separately; $200,000 for an estate or trust), plus 3% of the amount of the taxpayer’s AGI that exceeds $25 million ($12.5 million for married taxpayers filing separately; $500,000 for an estate or trust).

Green energy incentives

The bill covers a wide variety of new and existing green energy incentives, which it generally arranges as two-tiered incentives, providing either a base rate or a bonus rate. The bonus rate is five times the base rate, and it would apply to projects that meet certain prevailing wage and apprenticeship requirements.

The bill extends the production tax credit for the production of energy from renewable sources and the Sec. 48 investment tax credit for certain energy properties. The incentive for solar and wind energy under Sec. 48 is increased.

Taxpayers are given the option to elect to be treated as having made a payment of tax equal to the value of the credit they would otherwise be eligible for under various energy credits, rather than opting to carry the credit forward.

The bill also provides various other green energy production tax incentives, including a nuclear power production credit and a credit for the production of clean hydrogen.

Individual taxpayers would be eligible for various green energy and energy-efficiency incentives under the bill. The bill extends the Sec. 25C nonbusiness energy property credit to property placed in service before the end of 2031. It also modifies and extends the credit.

The bill would extend the Sec. 25D credit for the residential energy-efficient property through 2033 (it is currently scheduled to expire after 2023). It would be a refundable credit for years after 2023. Qualified battery storage technology expenditures would be made eligible for the credit. The Sec. 45L credit for new energy-efficient homes would be extended through 2031 and would be increased and modified.

The bill extends the Sec. 48C qualified advanced energy property credit through 2031 and provides a new investment tax credit worth up to 25% for advanced manufacturing facilities. The bill also creates a credit for the production of solar polysilicon wafers, cells, and modules, and wind blades, nacelles, towers, and offshore wind foundations.

The bill also creates an emissions-based incentive for electricity-generating facilities. Taxpayers are able to choose between a production tax credit under new Sec. 45BB or an investment tax credit under new Sec. 48F.

The bill also creates a technology-neutral tax credit for the domestic production of clean fuels.

Electric vehicle tax credits

The bill provides for a refundable income tax credit of up to $8,500 for new qualified plug-in electric drive motor vehicles. The credit would be available for qualified electric vehicles that cost up to $80,000 (for vans, SUVs, and trucks) or $55,000 (for other vehicles). The bill would also provide a credit of up to $7,500 for two- or three-wheeled plug-in electric vehicles. The credit would phase out for taxpayers with AGI over $500,000 (married taxpayers filing jointly) or $250,000 (single taxpayers). A smaller credit would be available for the purchase of qualifying used electric vehicles. The bill also provides a credit for the purchase of certain new electric bicycles.

The bill would provide a credit for any qualified commercial electric vehicle placed in service by a taxpayer. The credit would equal up to 30% of the basis of a fully electric vehicle or 15% of the basis of a hybrid vehicle.

The bill also extends the credit for the purchase of a qualified fuel cell motor vehicle and the alternative fuel vehicle refueling property credit through 2031.

The bill eliminates the temporary suspension of the exclusion for qualified bicycle commuting benefits and increases the maximum benefit from $20 per month to $81 per month.

Retirement plans

The bill prohibits further contributions to a Roth or traditional IRA for a tax year if the contributions would cause the total value of an individual’s IRA and defined contribution retirement accounts as of the end of the prior tax year to exceed (or further exceed) $10 million. The limitation would apply to individuals with income over $400,000 (single filers and married filing separately), $425,000 (heads of household), or $450,000 (married taxpayers filing jointly).

If an individual’s combined traditional IRA, Roth IRA, and defined contribution retirement account balances generally exceed $10 million at the end of a tax year and the individual meets these same income thresholds, a minimum distribution would be required for the following year.

These provisions would be effective for tax years beginning after Dec. 31, 2028.

The bill prohibits all employee after-tax contributions in qualified plans and after-tax IRA contributions from being converted to a Roth IRA regardless of income level, effective for distributions, transfers, and contributions made after Dec. 31, 2021.

The bill also eliminates Roth conversions for both IRAs and employer-sponsored plans for single taxpayers (or taxpayers married filing separately) with taxable income over $400,000, married taxpayers filing jointly with taxable income over $450,000, and heads of household with taxable income over $425,000 (all indexed for inflation). This provision applies to distributions, transfers, and contributions made in tax years beginning after Dec. 31, 2031.

Housing credits

The bill would increase the 9% housing credit and small state minimums under the low-income housing credit for the years 2022–2025 and makes other changes to the credit. It also creates a new neighborhood homes credit to encourage rehabilitation of deteriorated homes in distressed neighborhoods. The new credit would be administered by the states, and rehabilitated homes would have to be owner-occupied in order for investors to receive the credit.

IRS

The bill would repeal the Sec. 6751(b) requirement for written supervisory approval of IRS penalties. The bill would also provide more funding for IRS enforcement, technology, and customer service.