Walter & Shuffain - Certified Public Accountants & Business Advisors

Congress Has Approved the Infrastructure Bill: What’s In It For You?

The long-awaited $1 trillion Infrastructure Investment and Jobs Act (IIJA) received the U.S. House of Representatives’ approval Friday, November 5, 2021, to provide funding for improvements to highways, bridges, and other road safety measures. The bill also offers plans to reconnect communities previously divided by highway building and expand national broadband networks.

According to White House projections, investments outlined in the infrastructure act will add approximately 2 million jobs per year over the next decade.

A portion of the original bill was held back, and there were not as many tax provisions as originally expected, which could mean additional changes may be coming in a fiscal year 2022 budget reconciliation.

What’s in the $1T Infrastructure Act?

There are several key tax provisions found in the IIJA.

  • Employee Retention Credit: The infrastructure act ends the employee retention credit (ERC) early, repealing the fourth-quarter extension. Wages paid after September 30, 2021, are ineligible for the credit unless paid by an eligible recovery startup business.
  • Crypto asset Reporting: The IIJA clearly defines the terms broker and digital assets to clarify capital gains or losses from cryptocurrency. It also provides new reporting requirements for crypt currency exchanges. The following information must be reported to the IRS and customers effective January 1, 2023:
    • Name, address, and phone number of each customer,
    • Gross proceeds from any sale of digital assets, and
    • Capital gains or losses (short-term or long-term)
  • Disaster relief: The IIJA modifies the automatic extension of specific deadlines for taxpayers impacted by federally declared disasters. It amends the definition of a disaster area as “an area in which a major disaster for which the President provides financial assistance under section 408 of the Robert T. Stafford Disaster Relief and Emergency Assistance Act (42 U.S.C. 5174) occurs.”

Other Tax Provisions

  • Extension of highway-related taxes
  • Extension and modification of superfund excise taxes
  • Allowance of private activity bonds for qualified broadband projects and carbon dioxide capture facilities

What Else is Included?

Here’s a breakdown of what’s included:

  • Roads and bridges: $110 billion to repair the nation’s highways, bridges, and roads and invest in other transportation programs.
  • Public transit: $39 billion to expand and modernize transportation systems, improve access for people with disabilities, provide dollars to state and local governments to purchase zero-emission buses, and repair buses, rail cars, and train tracks.
  • Passenger and freight rail: $66 billion to reduce Amtrak’s maintenance backlog and improve rail service routes, including the Northeast Corridor.
  • Electric vehicles: $7.5 billion for electric vehicle charging stations, $5 billion to purchase electric buses, and $2.5 billion for ferries.
  • Modernizing the electric grid: $65 billion to protect against power outages.
  • Airports: $25 billion to improve runways, gates, taxiways, terminals, and air traffic control towers.
  • Water and wastewater: $55 billion to spend on water and wastewater infrastructure, including replacing lead pipes and addressing water contamination.
  • Broadband internet: $65 billion to bolster the country’s broadband infrastructure, including ensuring every American has access to high-speed internet. Additionally, one in four households is expected to become eligible for a $30 per month subsidy to pay for internet access.
  • Great Lakes Restoration Initiative: $1 billion for the cleanup of rivers and lakes, including a special target of areas with heavy industrial pollution.
  • Road safety: $11 billion for transportation safety programs.

Where does the Build Back Better (BBB) plan stand?

The BBB is set to be the largest social policy bill brought to a vote in recent years, bringing funding to address issues such as climate change, health, education, and paid family and medical leave.

This bill has gone through substantial changes from its original goals.  On both the spending and tax sides.  The latest version of the bill reduces the spending to around $1.85 Trillion and has taken out all of the estate & gift changes and does not include an increase in the ordinary or capital gain income rates, except for those earning above $10 million per year.  This bill is still subject to many changes as is winds it way through the House and Senate.  House leaders hope to pass the Build Back Better plan later when they return November 15 after a weeklong recess.

The Build Back Better plan and IIJA have many intricate details. We’ll continue to provide more information as it becomes available.

If you need help understanding how the changes will impact your individual or business tax strategy, please reach out to our team of experts. We’ll help you navigate these changes and make any necessary adjustments to your plan.