On September 13th, the House Ways and Means committee released the text of the highly-anticipated tax legislation designed to fund the Biden administration’s ambitious agenda. The bill, over 800 pages, includes significant changes to corporate and individual taxes. The legislation is sweeping in scope, but it is important to note that this is unlikely to be the final version as the Senate has not yet weighed in. Given the makeup of the Senate, this is likely to represent the upper limit of potential tax changes; we are unlikely to see rates go higher than those contained in this bill or have additional tax changes added later.

Please keep in mind, these are proposals. The ultimate legislation that is passed (IF it is passed) may look very different.

Noteable Provisions in the Bill include:

Individual Income Tax
  • An increase of the top individual income tax rate from 37% to 39.6%.
  • An increase of the top capital gains tax rate from 20% to 25% -- with the increase effective to the date the bill was released (September 14, 2021).
  • An expansion of the Net Investment Income Tax (NIIT) to cover net investment income from income derived in the ordinary course of trade or business.
  • A 3% additional tax on income above $2.5 million (married filing separately), $5 million (single filers and married joint filers) or $100,000 (trusts and estates).
Retirement Accounts
  • Several changes to the treatment of Large Retirement Accounts, defined as those with a value of $10 million or greater (aggregated where multiple accounts are owned by one individual). These generally only apply for taxpayers with income greater than $400,000 (single filers) or $450,000 (joint filers). Specifically, the legislation includes:
    • A prohibition on further contributions to a Roth or traditional IRA if the total value of all defined contribution retirement accounts exceeds $10 million as of the end of the prior taxable years.
    • Where an individual’s combined traditional IRA, Roth IRA and defined contribution retirement account balances exceed $10m at the end of a taxable year, the required minimum distribution (RMD) for the following year will be 50% of the excess total account value over $10 million. (Example: If total value is $12 million at the end of the year, the additional RMD will be $1 million).
    • Where an individual’s traditional IRA, Roth IRA and defined contribution retirement account balances exceed $20 million, the RMD for the following year is the amount needed to bring the total balance in all accounts down to $20 million (or the entire account, whichever is less) PLUS the 50% rule for the amount between $10 million and $20 million.
    • An elimination of Roth IRA conversions for taxpayers with income greater than $400,000 (single filers) or $450,000 (joint filers).
    • A prohibition on IRAs holding investments open only to those with a certain level of assets – such as investments open only to Accredited Investors.
Gift/Estate/GST Tax
  • An acceleration to 2022 of the rollback of the gift/estate and GST lifetime exemptions from current levels (set in 2017) to the levels under prior law ($5 million exemption indexed for inflation starting in 2010).
  • A provision that would pull grantor trusts back into the grantor’s gross estate at death for all future trusts and make distributions during the life of the grantor gifts as of the date of distribution. Existing grantor trusts would still be out of the grantor’s estate and distributions from existing trusts would not be gifts.
  • The elimination of certain valuation discounts frequently used in connection with estate planning transactions.
Corporate Income Tax
  • An increase of the top corporate tax rate from 21% to 26.5%.
Carried Interests
  • An increase in the holding period for carried interests to qualify for capital gains treatment from three to five years.
International Tax
  • An increase to the current global intangible low-taxed income (GILTI) rate from 10.5% to 16.5625%;
  • A reduction of the current foreign-derived intangible income (FDII) deduction from 37.5% to 21.875%,
  • A limitation on interest deductions for domestic companies that are part of an international financial reporting group.
Qualified Small Business Stock (QSBS)


To discuss this tax legislation further, please reach out to your Brown Advisory Client team or
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