ABA-Congress Debates Significant Tax Changes.

ENPNewswire-October 7, 2021--ABA-Congress Debates Significant Tax Changes

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Release date- 06102021 - As part of its budgetary process known as 'reconciliation,' the House of Representatives has outlined a series of income tax proposals that could have a significant effect on banks and their customers.

These include increases in the corporate tax rate to 26.5% for taxpayers with income over $5 million, the top individual rate to 39.6% for married taxpayers with income over $450,000 and the capital gains tax rate to 25% for taxpayers with income over $400,000.

In addition to the top individual tax rate hike, important changes could impact shareholders of banks that have elected S Corporation tax status, including a cap on the current 20% Section 199A deduction at $500,000 for married taxpayers and an expansion of the 3.8% net investment tax for owners who are active participants in the trade or business.

There is a laundry list of other changes in the proposals including enhancement to municipal finance, additional tax credits for housing, energy and community investment, as well as significant revisions in international taxation, to highlight a few.

Of particular importance to bank operations is a potential significant increase in required tax information reporting. The Biden administration has proposed that banks report annual gross inflows and outflows on all financial accounts flows that exceed $600. Amid the strong concerns that have been raised by customers and bankers on privacy, data security, and the ability of the IRS...

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