# Tax Provisions in the Build Back Better Act: Rules Committee Print 117-18 > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/crs%3AR46960 ## Record - **Collection:** Congressional research report - **Document type:** CRS Report - **Published:** November 9, 2021 - **Citation:** R46960 ## Text Tax Provisions in the Build Back Better Act: Rules Committee Print 117-18 November 9, 2021 Congressional Research Service https://crsreports.congress.gov R46960 Tax Provisions in the Build Back Better Act: Rules Committee Print 117-18 Contents Tables Table 1. Subtitle E—Infrastructure Financing and Community Development ............................... 4 Table 2. Subtitle F—Green Energy ................................................................................................. 8 Table 3. Subtitle G—Social Safety Net ......................................................................................... 28 Table 4. Subtitle H—Responsibly Funding Our Priorities ............................................................ 40 Table A-1. Estimated Budgetary Effects of Tax Provisions in Subtitle E “Infrastructure and Community Development” of H.R. 5376, “Build Back Better Act,” with Modifications ............................................................................................................................. 60 Table A-2. Estimated Budgetary Effects of Tax Provisions in Subtitle F “Green Energy” of H.R. 5376, “Build Back Better Act,” with Modifications ...................................................... 62 Table A-3. Estimated Budgetary Effects of Tax Provisions in Subtitle G “Social Safety Net” of H.R. 5376, “Build Back Better Act,” with Modifications ............................................. 67 Table A-4. Estimated Budgetary Effects of Tax Provisions in Subtitle H “Responsibly Funding Our Priorities” of H.R. 5376, “Build Back Better Act,” with Modifications ............... 70 Appendixes Appendix. Cost Estimates ............................................................................................................. 59 Contacts Author Information........................................................................................................................ 78 Tax Provisions in the Build Back Better Act: Rules Committee Print 117-18 n October 28, 2021, and again on November 3, 2021, the House Rules Committee released text of a modified version of H.R. 5376, commonly referred to as the Build Back Better Act.1 Subtitles E, F, G, and H of Title XIII of the Build Back Better Act contain tax provisions, and are hereby identified as the “tax provisions in the Build Back Better Act,” pursuant to the reconciliation instructions provided in S.Con.Res. 14, the Concurrent Budget Resolution for FY2022. The October 28 and November 3 texts modify an earlier version of H.R. 5376. For more on the provisions in the earlier version of this legislation, see CRS Report R46923, Tax Provisions in the “Build Back Better Act:” The House Ways and Means Committee’s Legislative Recommendations, coordinated by Molly F. Sherlock.2 O This report summarizes the tax provisions in the November 3, 2021, version of the Build Back Better Act. A number of the provisions are designed to raise additional federal tax revenue, and those with the largest revenue effects include  modifications to individual income taxes levied on high-income individuals, including  the application of the net investment income tax to trade or business income for certain filers;     making limitations on excess business losses of noncorporate taxpayers permanent; and  establishing a surcharge on high-income individuals, trusts, and estates; the addition of a 15% alternative minimum corporate tax based on financial statement income; a new excise tax on corporate stock repurchases; and modifications to the treatment of international taxes, including changes to  the deduction for foreign-derived intangible income;  the base erosion and anti-abuse tax; and  the tax on global intangible low-taxed income. Other provisions would reduce tax liability for individual taxpayers or businesses engaged in certain types of economic activities. Among these provisions, those with the largest revenue effects include   for individuals, a temporary extension of enhancements made to the child tax credit in the American Rescue Plan Act of 2021 (ARPA; P.L. 117-2) through 2022, with a permanent extension of full refundability beginning in 2023; and for businesses, tax credits for investment in or production of renewable electricity. All tax provisions in the November 3, 2021, modification of the Build Back Better Act are summarized in a series of tables below. References to relevant CRS reports are included where applicable.  Table 1 includes the provisions in Subtitle E; 1 The modified legislative text is available at https://rules.house.gov/bill/117/hr-5376. 2 A section-by-section staff summary of the Build Back Better Act as reported by the House Committee on the Budget and a comparative staff print showing subsequent modifications are available for both the October 28 and November 3 versions of the legislation at https://rules.house.gov/bill/117/hr-5376. Congressional Research Service 1 Tax Provisions in the Build Back Better Act: Rules Committee Print 117-18    Table 2 includes the provisions in Subtitle F; Table 3 includes the provisions in Subtitle G; and Table 4 includes the provisions in Subtitle H. Revenue estimates from the Joint Committee on Taxation (JCT) are included in the Appendix.3 JCT estimates that the tax provisions in the November 3 modification will generate $944.5 billion in additional revenue between 2022 and 2031. It estimates that Subtitle H, Responsibly Funding Our Priorities, will increase revenue by $1,476.1 billion between 2022 and 2031. Provisions in the other subtitles are estimated to result in a reduction in revenues, on net, with Subtitle E, Infrastructure Financing and Community Development, reducing revenue by $28.7 billion; Subtitle F, Green Energy, reducing revenue by $300.5 billion; and Subtitle G, Social Safety Net, reducing revenue by $202.4 billion, all over the 2022 through 2031 budget window. The effective date for most of the proposed tax provisions would be after December 31, 2021. This is generally the case unless otherwise noted in the description of the provision. Additionally, provisions would be permanent unless otherwise noted. As previously noted, the November 3, 2021, version of the Build Back Better Act modifies text previously released on October 28, 2021.4 Key changes made between the two versions are discussed in the text box below. Table 1 through Table 4 note how the tax provisions in the November 3 version of the Build Back Better Act compare to H.R. 5376, as reported by the House Committee on the Budget on September 27, 2021.5 3 Joint Committee on Taxation, Estimated Budget Effects Of The Revenue Provisions Of Title XIII—Committee On Ways And Means, Of H.R. 5376, The “Build Back Better Act,” As Reported By The Committee On The Budget, With Modifications (Rules Committee Print 117-18), JCX-45-21, November 4, 2021, at https://www.jct.gov/publications/2021/jcx-45-21/. 4 The version of the text released October 28 is available at https://rules.house.gov/bill/117/hr-5376. 5 For the purposes of this comparison, a provision is identified as being identical or nearly identical if the change would not have had a substantial or substantive policy impact. Congressional Research Service 2 Tax Provisions in the Build Back Better Act: Rules Committee Print 117-18 Comparing the November 3 Build Back Better Act Tax Provisions to Earlier Versions The November 3, 2021, version of the Build Back Better Act modifies text previously released on October 28, 2021. Newly Added Provisions Several provisions were added to the November 3, 2021, legislation that did not appear in the October 28 version or in H.R. 5376 as reported by the House Committee on the Budget. These provisions include a proposal to raise the current limit on deductions for state and local taxes paid (the SALT deduction), and then extend the new, higher deduction to apply after the current-law deduction was scheduled to expire. The November 3 text also includes additional funding for the IRS and Treasury to administer the child tax credit and advance payments of the child tax credit and energy-related tax credits. Another newly added proposal would create a temporary abovethe-line deduction for employee uniforms. Provisions from H.R. 5376 as Reported by the House Committee on the Budget Several provisions or groups of provisions that were in the Build Back Better Act (H.R. 5376), as reported by the House Committee on the Budget, but were not included in the October 28, 2021, version of the legislation, were included in the November 3 version. These include provisions that would modify the low-income housing tax credit (LIHTC) and enact the Neighborhood Homes Investment Act. Five provisions that collectively raise revenue modifying rules related to individual retirement plans were added back to the November 3 version of the Build Back Better legislation. Modified taxes on nicotine that would raise revenue were also added back to the November 3 version. Another provision that was added back would allow an above-the-line deduction for up to $250 in union dues; it had appeared in the initial Build Back Better legislation before being excluded in the October 28 modification. Modifications Many provisions were modified between the October 28, 2021, and November 3, 2021, versions of the tax provisions in the Build Back Better Act (the House Rules Committee provides resources to facilitate detailed comparison, at https://rules.house.gov/bill/117/hr-5376). There were numerous technical changes to various parameters associated with the energy-related tax credits. Separately, changes to the health insurance premium tax credit that would have been permanent in the October 28 version of the bill were made temporary in the November 3 version. Deletions The November 3 bill does not include a proposed reduction in the excise tax on investment income for certain colleges and universities that was included in the October 28 version of the bill. Congressional Research Service 3 Tax Provisions in the Build Back Better Act: Rules Committee Print 117-18 Table 1. Subtitle E—Infrastructure Financing and Community Development Section Title Description CRS Resources Part 1—Low Income Housing Credit Increases in State Allocations Section 135101 Tax Exempt Bond Financing Requirement Section 135102 Buildings Designated to Serve Extremely Low-Income Households Section 135103 This provision would increase state low-income housing credit allocation authority for calendar years 2022 through 2024. States would receive $3.14 per person in 2022, with a small population state allocation of $3,629,096; $3.54 per person in 2023, with a small population state allocation of $4,081,825; $3.97 per person in 2024, with a small population state allocation of $4,582,053. In 2025, the allocation amount would be reduced to $2.65 per person, with a small population state allocation of $3,120,000. The 2025 allocation amounts are lower than the current law 2021 allocation amounts of $2.8125 per person, with a small population state allocation of $3,245,625. The allocation amounts for calendar years after 2025 would be the 2025 allocation amount, adjusted for inflation. This provision is a modification of Section 135501 in H.R. 5376, as reported on September 27, 2021. For background, see This provision would reduce the 50% tax-exempt bond financing requirement to 25% for bond obligations issued in calendar years 2022 through 2026. Credits awarded to projects where the bond financing threshold is met do not reduce a state’s annual housing credit. This provision is a modification of Section 135502 in H.R. 5376, as reported on September 27, 2021. For background, see This provision would require that at least 8% of a state’s annual low-income housing credit allocation authority be set-aside for projects that serve extremely low-income households. The set-aside would apply to projects where at least 20% of the units are rent-restricted and occupied by households whose income does not exceed the greater of 30% of area median income or 100% of the federal poverty line. Projects requiring an increase in credits to be financially feasible would receive a 50% basis boost. A state could not award more than 13% of its credit authority to such projects, and, if such a project utilizes tax-exempt bond financing (and meets the bond financing threshold), a state could not award more than 8% of its private activity bond authority. This provision would apply to allocations made after December 31, 2021. This provision is a modification of Section 135503 in H.R. 5376, as reported on September 27, 2021. For background, see Congressional Research Service  CRS Report RS22389, An Introduction to the Low-Income Housing Tax Credit, by Mark P. Keightley.  CRS In Focus IF11335, The Low-Income Housing Tax Credit: Policy Issues, by Mark P. Keightley.  CRS Report RS22389, An Introduction to the Low-Income Housing Tax Credit, by Mark P. Keightley.  CRS In Focus IF11335, The Low-Income Housing Tax Credit: Policy Issues, by Mark P. Keightley.  CRS Report RS22389, An Introduction to the Low-Income Housing Tax Credit, by Mark P. Keightley.  CRS In Focus IF11335, The Low-Income Housing Tax Credit: Policy Issues, by Mark P. Keightley. 4 Tax Provisions in the Build Back Better Act: Rules Committee Print 117-18 Section Title Repeal of Qualified Contract Option Section 135104 Modification and Clarification of Rights Relating to Building Purchase Section 135105 Description CRS Resources This provision would repeal the qualified contract option, and thus limit the ability of a property owner to exit the low-income housing tax credit (LIHTC) program after the first 15 years. The qualified contract option allows a property owner to sell a LIHTC property after 15 years. To exercise this option, a property owner must request that the state housing credit authority locate a buyer who will purchase the property and keep it in the program for another 15 years. The purchase price is determined by statute. If the housing credit authority cannot locate a qualified buyer, the affordability restrictions on the property are phased out over three years. This provision would apply to buildings that received a credit allocation before January 1, 2022, or, in the case of properties utilizing tax-exempt bonds, that received a determination that the building was eligible to receive tax credits. This provision is identical or nearly identical to Section 135505 in H.R. 5376, as reported on September 27, 2021. For background, see Under current law, a property may exit the lowincome housing tax credit program after 15 years if a right of first refusal option is exercised whereby the holder of the right (typically, a nonprofit organization who helped develop the property) purchases the property. There appears to be a lack of clarity under current law over whether a third-party offer to purchase the property is a necessary prerequisite to the authority to exercise the right of first refusal. This provision would clarify that a third party offer is not needed by changing the right of first refusal to a purchase option. Among other changes, the provision would also clarify that establishing a qualified purchase option would not disallow any of the federal tax benefits of the low-income housing tax credit. This provision is identical or nearly identical to Section 135506 in H.R. 5376, as reported on September 27, 2021. For background, see  CRS Report RS22389, An Introduction to the Low-Income Housing Tax Credit, by Mark P. Keightley.  CRS In Focus IF11335, The Low-Income Housing Tax Credit: Policy Issues, by Mark P. Keightley.  CRS Report RS22389, An Introduction to the Low-Income Housing Tax Credit, by Mark P. Keightley.  CRS In Focus IF11335, The Low-Income Housing Tax Credit: Policy Issues, by Mark P. Keightley. Part 2—Neighborhood Homes Investment Act Neighborhood Homes Credit Section 135201 This provision would provide new federal tax credits to offset the cost of constructing or rehabilitating owner-occupied homes. The credits would be awarded to project sponsors (e.g., developers), which would either use the credits directly to offset development and rehabilitation costs or sell the credits to investors to raise capital for home construction. Each state would be allowed to annually award an amount of credits equal to the greater of $6 multiplied by its population, or $8 million. Annual allocation authority would be adjusted for inflation. The credit amount would be limited to no more than 35% of the lesser of qualified development costs or 80% of the national median sales price for new homes as determined by the Congressional Research Service For background, see  CRS In Focus IF11884, Neighborhood Homes Investment Act: Overview and Policy Considerations, by Mark P. Keightley. 5 Tax Provisions in the Build Back Better Act: Rules Committee Print 117-18 Section Title Description CRS Resources most recent census data. Credits would be restricted to properties with occupants whose income did not exceed 140% of an area’s or state’s median income, and to properties located in a qualified census tract. This provision is identical or nearly identical to Section 135511in H.R. 5376, as reported on September 27, 2021. Part 3—Investments in Tribal Infrastructure Treatment of Indian Tribes as States with Respect to Bond Issuance Section 135301 New Markets Tax Credit for Tribal Statistical Areas Section 135302 Inclusion of Indian Areas as Difficult Development Areas for Purposes of Certain Buildings Section 135303 This provision would modify the treatment of Indian tribes so that they are generally treated as states for the purposes of issuing qualified private activity bonds. This provision would direct the Secretary of the Treasury to establish a national bond volume cap based on tribal population data for qualifying bonds issued in tribal areas. This provision is identical or nearly identical to Section 135511 in H.R. 5376, as reported on September 27, 2021. For background, see This provision would create a temporary New Markets Tax Credit (NMTC) allocation for lowincome tribal areas and for projects that serve or employ tribal members. The annual allocation amount would be $175 million per year for calendar years 2022-2025. This provision is a modification of Section 138146 in H.R. 5376, as reported on September 27, 2021. For background, see   CRS Report RL31457, Private Activity Bonds: An Introduction, by Steven Maguire and Joseph S. Hughes. CRS Report RL34402, New Markets Tax Credit: An Introduction, by Donald J. Marples and Sean Lowry. This provision would modify the definition of difficult development areas (DDAs) for purposes of the lowincome housing tax credit to include “Indian areas.” Projects in DDAs are eligible for a 30% basis boost under current law. An Indian area would be any Indian area as defined in Section 4(11) of the Native American Housing Assistance and Self Determination Act of 1996. If an area were to be a DDA solely because it is an Indian area, then a project would not be treated as being located in a DDA unless it were assisted or financed under the Native American Housing Assistance and Self Determination Act of 1996, or the project sponsor were an Indian tribe, a tribally designated housing entity, or wholly owned or controlled by an Indian tribe or a tribally designated housing entity. This provision would apply to buildings placed in service after December 31, 2021. This provision is identical or nearly identical to Section 135603 in H.R. 5376, as reported on September 27, 2021. Congressional Research Service 6 Tax Provisions in the Build Back Better Act: Rules Committee Print 117-18 Section Title Description CRS Resources Part 4—Other Provisions Possessions Economic Activity Credit Section 135401 Tax Treatment of Certain Assistance to Farmers, Etc. Section 135402 Exclusion of Amounts Received from State-Based Catastrophe Loss Mitigation Programs Section 135403 This provision would create a new tax credit for certain domestic corporations actively conducting business in American Samoa, the Commonwealth of the Northern Mariana Islands, Puerto Rico, Guam, and the Virgin Islands. For these corporations, the credit amount would be equal to 20% of wage and benefit expenses in the possessions. The amount of creditable wages and benefits would be capped at $50,000 per full time equivalent employee per year. The credit is increased to 50% with a cap of $142,800 for certain small businesses. This provision is identical or nearly identical to Section 135701 in H.R. 5376, as reported on September 27, 2021. Under normal tax rules, recipients of loan repayment programs must recognize the amounts repaid as either income or a reduction in the basis of the asset. This provision would exclude from recognition certain payments to socially disadvantaged farmers and others enacted in the American Rescue Plan Act of 2021 (P.L. 117-2). The provision would also provide that no deduction would be denied by reason of the exclusion. This provision did not appear in H.R. 5376, as reported on September 27, 2021. Current law excludes qualified disaster relief and qualified disaster mitigation payments from gross income (Section 139). Starting in 2021, this provision would exclude qualified catastrophe mitigation payments made by state or local government programs from gross income. Qualified catastrophe mitigation payments would be amounts received by individuals to make improvements to the individual's residence that would reduce the damage that would be done to the residence by a windstorm, earthquake, or wildfire. Taxpayers receiving these payments would not be required to adjust their basis in property for which payment is received. This provision is a modification of Section 135401 in H.R. 5376, as reported on September 27, 2021. For background, see  CRS Report R45864, Tax Policy and Disaster Recovery, by Molly F. Sherlock and Jennifer Teefy. Source: November 3, 2021, modified version of the Build Back Better Act (BBBA; H.R. 5376) as posted on the House Rules Committee website. Notes: Provisions are effective in 2022 unless otherwise noted. The changes that would be made by the provision are permanent, unless otherwise noted. Within the description, “Section” citations refer to the section within the Internal Revenue Code (IRC), 26 U.S.C., unless otherwise noted. Congressional Research Service 7 Tax Provisions in the Build Back Better Act: Rules Committee Print 117-18 Table 2. Subtitle F—Green Energy Section Title and Number Description CRS Resources Part 1—Renewable Energy and Reducing Carbon Emissions Extension and Modification of Credit for Electricity Produced from Certain Renewable Resources Section 136101 Current law provides a production tax credit (PTC), at a rate of 2.5 cents or 1.3 cents per kilowatt hour (kWh) depending on the technology used, for the first 10 years of production at qualifying renewable electricity production facilities that begin construction before 2022. The credit amount is adjusted annually for inflation from a statutory rate of 1.5 cents per kWh, with some technologies qualifying for a half-credit amount. This provision would extend the PTC for wind, biomass, geothermal, solar (which previously expired at the end of 2005), landfill gas, trash, qualified hydropower, and marine and hydrokinetic resources through 2026. The base credit amount for the PTC would be set in statute at 0.3 cents per kWh (0.5 cents per kWh in 2021, or 0.3 cents for half-credit technologies, after being adjusted for inflation). Facilities that pay prevailing wages during the construction phase and first 10 years of operation and meet registered apprenticeship requirements are eligible for a PTC that is five times the base amount, or 2.5 cents or 1.3 cents per kWh after being adjusted for inflation. Facilities with a maximum net output of less than one megawatt are also eligible for the five times base credit amount (e.g., 2021 rates of 2.5 cents or 1.3 cents per kWh). A “bonus credit” amount would be provided for projects that meet domestic content requirements to certify that certain steel, iron, and manufactured products used in the facility were domestically produced. The bonus credit amount would be 10% of the credit amount. The credit amount could be increased by 10% for facilities located in an energy community. An energy community is defined as being a census tract or any adjoining tract in which a coal mine closed after December 31, 1999, or a coal-fired electric power plant was retired after December 31, 2009. Large facilities not meeting domestic content requirements would be limited in the amount of the credit that could be received as direct pay (see “Elective Payment for Energy Property and Electricity Produced from Certain Renewable Resources, Etc.”). The limit would be 90% in 2024, 85% in 2025, and zero afterward. This limit could be waived if materials are not available domestically or if including domestic materials would increase the facility’s construction cost by more than 25%. The provision provides that for facilities financed with taxexempt bonds, the credit amount would be reduced by the lesser of (1) 15%; or (2) the fraction of the proceeds of a tax-exempt obligation used to finance the project over the aggregate amount of the project’s financing costs. The proposal also extends the option to claim the energy investment tax credit (ITC) in lieu of the PTC. This provision is a modification of Section 136101 in H.R. 5376, as reported on September 27, 2021. Congressional Research Service For background, see  CRS Report R43453, The Renewable Electricity Production Tax Credit: In Brief, by Molly F. Sherlock.  CRS Report R46865, Energy Tax Provisions: Overview and Budgetary Cost, by Molly F. Sherlock.  CRS Report R46451, Energy Tax Provisions Expiring in 2020, 2021, 2022, and 2023 (“Tax Extenders”), by Molly F. Sherlock, Margot L. Crandall-Hollick, and Donald J. Marples.  CRS Report R45171, Registered Apprenticeship: Federal Role and Recent Federal Efforts, by Benjamin Collins.  CRS In Focus IF11927, Federally Funded Construction and the Payment of Locally Prevailing Wages, by David H. Bradley and Jon O. Shimabukuro. 8 Tax Provisions in the Build Back Better Act: Rules Committee Print 117-18 Section Title and Number Extension and Modification of Energy Credit Section 136102 Description Current law provides a temporary investment tax credit (ITC) for investments in certain energy property. This provision would extend and modify the ITC, with the credit generally extended through the end of 2026, with the credit for certain technologies extended through 2033. The ITC would be extended through 2026 at a base rate of 6% for solar, fuel cells, and small wind property and 2% for microturbine property. These amounts would be increased to 30% and 10%, respectively, if projects pay prevailing wages during the construction phase and during the first five years of operation and meet registered apprenticeship requirements. The higher credit rates are also available to any project with a maximum net output of less than one megawatt of electrical or thermal energy. The ITC for geothermal heat pumps, combined heating and power (CHP), and waste energy recovery property would be extended through 2031 with a 6% base credit rate with the 30% credit rate allowed for projects meeting wage and workforce requirements or for projects below the maximum net output threshold. The credit would phase down after 2031, with the rates being 5.2% and 26% in 2032 and 4.4% and 22% in 2033, with no credit allowed for property beginning construction after 2033. This list of qualifying property would be expanded to include energy storage technology, qualified biogas property, electrochromic glass, and microgrid controllers at the 6% or 30% rate. Linear generator assemblies would be added to the definition of qualifying fuel cells. The credit would also be available for interconnection property. A “bonus credit” amount would be provided for projects that meet domestic content requirements to certify that certain steel, iron, and manufactured products used in the facility were domestically produced. The bonus credit amount would be 2% of the credit amount, or 10% for projects that meet wage and workforce requirements. An increased credit amount would be available to projects in an energy community, with the credit increase being 10 percentage points for projects meeting wage and workforce requirements or 2 percentage points otherwise. An energy community is defined as being a census tract or any adjoining tract in which a coal mine closed after December 31, 1999, or a coal-fired electric power plant was retired after December 31, 2009. Large facilities not meeting domestic content requirements would be limited in the amount of the credit that could be received as direct pay (see “Elective Payment for Energy Property and Electricity Produced from Certain Renewable Resources, Etc.”). The limit would be 90% in 2024, 85% in 2025, and zero afterward. This limit could be waived if materials are not available domestically or if including domestic materials would increase the facility’s construction cost by more than 25%. The provision provides that for facilities financed with taxexempt bonds, the credit amount would be reduced by the lesser of (1) 15%; or (2) the fraction of the proceeds of a Congressional Research Service CRS Resources For background, see  CRS In Focus IF10479, The Energy Credit or Energy Investment Tax Credit (ITC), by Molly F. Sherlock.  CRS Report R46865, Energy Tax Provisions: Overview and Budgetary Cost, by Molly F. Sherlock.  CRS Report R46451, Energy Tax Provisions Expiring in 2020, 2021, 2022, and 2023 (“Tax Extenders”), by Molly F. Sherlock, Margot L. Crandall-Hollick, and Donald J. Marples.  CRS Report R45171, Registered Apprenticeship: Federal Role and Recent Federal Efforts, by Benjamin Collins.  CRS In Focus IF11927, Federally Funded Construction and the Payment of Locally Prevailing Wages, by David H. Bradley and Jon O. Shimabukuro. 9 Tax Provisions in the Build Back Better Act: Rules Committee Print 117-18 Section Title and Number Description CRS Resources tax-exempt obligation used to finance the project over the aggregate amount of the project’s financing costs. This provision is a modification of Section 136102 in H.R. 5376, as reported on September 27, 2021. Increase in Energy Credit for Solar Facilities Placed in Service in Connection with Low-Income Communities Section 136103 Elective Payment for Energy Property and Electricity Produced from Certain Renewable Resources, Etc. Section 136104 This provision would allow for the allocation of 1.8 gigawatts for “environmental justice solar and wind capacity” credits annually from 2022 through 2026. Taxpayers receiving a capacity allocation may be entitled to tax credits in addition to otherwise allowed ITCs. Specifically, projects receiving an allocation that are located in a low-income community or on Indian land would be eligible for a 10% bonus investment tax credit, while projects that are part of a low-income residential building project or qualified low-income economic benefit project would be eligible for a 20% bonus investment credit. No facility could receive more than a maximum 20% bonus investment credit under this provision. Qualifying solar and wind facilities would include those with a nameplate capacity of 5 megawatts or less, and qualifying property would include energy storage property installed in connection with the solar property and interconnection property. When determining which facilities to select for allocations, the Treasury Secretary would be directed to consider which facilities would result in the greatest health and economic benefits for individuals in low-income communities, including the ability to withstand extreme weather events; the greatest employment and wages for individuals in lowincome communities; and the greatest engagement with, outreach to, or ownership by, individuals in low-income communities. Facilities receiving an allocation would have certain information disclosed to the public and be required to have the facility placed in service within four years. This provision is a modification of Section 136103 in H.R. 5376, as reported on September 27, 2021. For background on the ITC, see This provision would allow taxpayers to treat certain tax credit amounts as payments of tax. Payments in excess of tax liability can be refunded to the taxpayer, allowing the credits to be received as “direct pay.” This direct payment would be allowed for the Section 30C credit for alternative fuel refueling property, the Section 45 renewable electricity production credit, the Section 45Q carbon oxide sequestration credit, the Section 48 energy investment tax credit, and the Section 48C qualifying advanced energy project credit. The direct pay election would also be available for the new Section 48D investment credit for electric transmission property; new Section 48E advanced manufacturing investment credit; new Section 48F clean electricity investment credit; new Section 45W zeroemission nuclear power production credit; new Section 45X clean hydrogen production credit; new Section 45AA advanced manufacturing production credit; new Section 45BB clean electricity production credit; and new Section 45CC clean fuel production credit. Tax-exempt entities, including state and local governments and Indian tribal governments, would be treated as For background, see Congressional Research Service  CRS In Focus IF10479, The Energy Credit or Energy Investment Tax Credit (ITC), by Molly F. Sherlock CRS In Focus IF10479. For background on housing assistance programs, see   CRS Report RL34591, Overview of Federal Housing Assistance Programs and Policy, by Maggie McCarty, Libby Perl, and Katie Jones. CRS Report R45693, Tax Equity Financing: An Introduction and Policy Considerations, by Mark P. Keightley, Donald J. Marples, and Molly F. Sherlock. 10 Tax Provisions in the Build Back Better Act: Rules Committee Print 117-18 Section Title and Number Description CRS Resources taxpayers eligible to elect a direct payment. There would be a gross-up of payments in the case of budget sequestration. This provision would not apply to territories with mirrorcode tax systems. This provision is a modification of Section 136104 in H.R. 5376, as reported on September 27, 2021. Investment Credit for Electric Transmission Property Section 136105 Extension and Modification of Credit for Carbon Oxide Sequestration Section 136106 This provision would create a new ITC for qualifying electric transmission property, which includes property that is capable of transmitting at least 275 kilovolts or is a superconducting line, with a capacity of not less than 500 megawatts. Upgrades of existing lines would be treated as replacements. The new ITC would be 6% of qualifying investments, with a 30% ITC available for projects that pay prevailing wages during the construction phase and during the first five years of operation and that meet registered apprenticeship requirements. “Bonus credit” amounts for domestic content and limits on direct pay related to domestic content would apply, similar to those applying to the ITC (see “Extension and Modification of Energy Credit”). Projects financed with taxexempt bonds would have the credit amount reduced by the lesser of (1) 15%; or (2) the fraction of the proceeds of a tax-exempt obligation used to finance the project over the aggregate amount of the project’s financing costs. The credit would be available for property placed in service before December 31, 2031, unless the property began construction prior to January 1, 2022, or was selected for cost allocation in a regional transmission plan. This provision is a modification of Section 136105 in H.R. 5376, as reported on September 27, 2021. For background, see Under current law, industrial carbon capture or direct air capture facilities that begin construction by December 31, 2025, can qualify for the Section 45Q tax credit for carbon oxide sequestration. This tax credit can be claimed for carbon oxide captured during the 12-year period following a qualifying facility’s being placed in service. Currently, the per metric ton tax credit for geologically sequestered carbon oxide is set to increase to $40 per ton by 2026 ($35 per ton for carbon oxide that is reused, such as for enhanced oil recovery) and adjusted for inflation thereafter. This provision would extend the start of construction deadline to December 31, 2031. The amount of carbon oxide that must be captured at a qualifying facility would be reduced to 1,000 metric tons annually for a direct air capture (DAC) facility, 18,750 metric tons annually (not less than 75% of which would otherwise have been released into the atmosphere) for an electricity generating facility, and 12,500 metric tons for any other facility (not less than 50% of which would otherwise have been released into the atmosphere). Base credit amounts would be $17 per metric ton for carbon oxide that is captured and geologically sequestered and $12 per metric ton for carbon oxide that is reused. Increased credit amounts of $85 per ton and $60 per ton, respectively, would be available for facilities that pay For background, see Congressional Research Service  CRS Report R45171, Registered Apprenticeship: Federal Role and Recent Federal Efforts, by Benjamin Collins.  CRS In Focus IF11927, Federally Funded Construction and the Payment of Locally Prevailing Wages, by David H. Bradley and Jon O. Shimabukuro.  CRS In Focus IF11455, The Tax Credit for Carbon Sequestration (Section 45Q), by Angela C. Jones and Molly F. Sherlock.  CRS Insight IN11710, Carbon Capture and Sequestration Tax Credit (“Section 45Q”) Legislation in the 117th Congress, by Molly F. Sherlock and Angela C. Jones.  CRS Report R46451, Energy Tax Provisions Expiring in 2020, 2021, 2022, and 2023 (“Tax Extenders”), by Molly F. Sherlock, Margot L. Crandall-Hollick, and Donald J. Marples.  CRS Report R45171, Registered Apprenticeship: Federal Role and Recent 11 Tax Provisions in the Build Back Better Act: Rules Committee Print 117-18 Section Title and Number Green Energy Publicly Traded Partnerships Section 136107 Zero-Emission Nuclear Power Production Credit Section 136108 Description CRS Resources prevailing wages during the construction phase and during the first 12 years of operation and meet registered apprenticeship requirements. The credit amount for DAC would be increased to a base rate of $36 per metric ton, with a credit of $180 per metric ton for projects that meet wage and workforce requirements. These amounts would be $26 and $130 per metric ton for carbon oxide captured using DAC that is beneficially reused. Projects financed with tax-exempt bonds would have the credit amount reduced by the lesser of (1) 15%; or (2) the fraction of the proceeds of a tax-exempt obligation used to finance the project over the aggregate amount of the project’s financing costs. The provision would also provide flexibility with respect to the period in which credits can be claimed for projects affected by federally declared disasters. This provision is a modification of Section 136107 in H.R. 5376, as reported on September 27, 2021. Federal Efforts, by Benjamin Collins.  CRS In Focus IF11927, Federally Funded Construction and the Payment of Locally Prevailing Wages, by David H. Bradley and Jon O. Shimabukuro. If 90% of a business’s gross income is qualifying income, the business can elect to be treated as a master limited partnership (MLP), allowing the business to be taxed as a partnership while ownership interests are tradable in financial markets. Qualifying income currently includes mining and natural resource income. This provision would expand the definition of qualifying income to include income derived from green and renewable energy. These additions include income from certain activities related to energy production eligible for the PTC, energy property eligible for the ITC, renewable fuels, and carbon sequestration projects eligible for credits under Section 45Q. This provision is identical or nearly identical to Section 136108 in H.R. 5376, as reported on September 27, 2021. For background, see This provision would create a new tax credit for qualifying zero-emission nuclear power produced and sold after December 31, 2021. Qualified nuclear power facilities are taxpayer-owned facilities that use nuclear power to generate electricity that did not receive an advanced nuclear production tax credit allocation under Section 45J, and are placed in service before the date of enactment (i.e., are existing nuclear power plants). The PTC amount would be 0.3 cents per kWh. Taxpayers that satisfy prevailing wage and registered apprenticeship requirements would be eligible for a tax credit of 1.5 cents per kWh. The credit would be reduced when the price of electricity increases. Credits would be reduced by a “reduction amount,” which is 16% of the excess of gross receipts (excluding certain state and local zero-emissions grants) from electricity produced by the facility and sold over the product of 2.5 cents times the amount of electricity sold during the taxable year. Credit amounts and amounts in the phaseout formula would be adjusted for inflation. Taxpayers could elect to receive the credit as direct pay (discussed above). For background, see Congressional Research Service  CRS Report R41893, Master Limited Partnerships: A Policy Option for the Renewable Energy Industry, by Molly F. Sherlock and Mark P. Keightley.  CRS Report R42853, Nuclear Energy: Overview of Congressional Issues, by Mark Holt.  CRS Insight IN10725, The Advanced Nuclear Production Tax Credit, by Molly F. Sherlock and Mark Holt.  CRS Report R45171, Registered Apprenticeship: Federal Role and Recent Federal Efforts, by Benjamin Collins.  CRS In Focus IF11927, Federally Funded Construction and the Payment of Locally Prevailing Wages, by David H. Bradley and Jon O. Shimabukuro. 12 Tax Provisions in the Build Back Better Act: Rules Committee Print 117-18 Section Title and Number Description CRS Resources The credit would terminate on December 31, 2027. This provision is a modification of Section 136109 in H.R. 5376, as reported on September 27, 2021. Part 2—Renewable Fuels Extension of Incentives for Biodiesel, Renewable Diesel, and Alternative Fuels Section 136201 Extension of Second Generation Biofuel Incentives Section 136202 Sustainable Aviation Fuel Credit Section 136203 Current law provides a 50-cents-per-gallon tax credit for alternative fuels and alternative fuel mixtures through 2021 and a $1.00-per-gallon tax credit for biodiesel and renewable diesel (with an additional $0.10-per-gallon tax credit for agri-biodiesel) through 2022. The biodiesel and renewable diesel mixtures tax credit may be claimed as an immediate excise tax credit against the blender’s motor and aviation fuels excise taxes. Credits in excess of excise tax liability may be refunded. The biodiesel and small agribiodiesel credits may be claimed as income tax credits. The alternative fuels credit can be claimed as an excise tax credit or received as an outlay. The alternative fuels mixture credit is an excise tax credit. This provision would extend the existing tax credits for alternative fuels and alternative fuel mixtures and biodiesel and renewable diesel through December 31, 2026. This provision is a modification of Section 136201 in H.R. 5367, as reported on September 27, 2021. For background, see Current law provides a $1.01-per-gallon income tax credit for second-generation biofuel production through 2021. This provision would extend the second-generation biofuel producer tax credit through December 31, 2026. This provision is a modification of Section 136202 in H.R. 5276, as reported on September 27, 2021. For background, see This provision would create a new tax credit for the sale or mixture of sustainable aviation fuel starting in 2023. The tax credit would have a base amount of $1.25 per gallon, with a supplemental credit amount of $0.01 per gallon for each percentage point by which the lifecycle greenhouse gas emissions reduction percentage for the fuel exceeds 50% (with a maximum supplemental credit of $0.50 per gallon). Sustainable aviation fuel is defined as liquid fuel that (1) meets the requirements of either ASTM International Standard D7566 or the Fischer Tropsch provisions of ASTM International Standard D1655, Annex; (2) is not derived from palm fatty acid distillates or petroleum; and (3) has been certified to achieve at least a 50% lifecycle greenhouse gas reduction percentage as defined according to the most recent Carbon Offsetting and Reduction Scheme for International Aviation adopted by the International Civil Aviation Organization and agreed to by the United States Congressional Research Service  CRS Report R46865, Energy Tax Provisions: Overview and Budgetary Cost, by Molly F. Sherlock.  CRS Report R46451, Energy Tax Provisions Expiring in 2020, 2021, 2022, and 2023 (“Tax Extenders”), by Molly F. Sherlock, Margot L. Crandall-Hollick, and Donald J. Marples.  CRS Report R46865, Energy Tax Provisions: Overview and Budgetary Cost, by Molly F. Sherlock.  CRS Report R46451, Energy Tax Provisions Expiring in 2020, 2021, 2022, and 2023 (“Tax Extenders”), by Molly F. Sherlock, Margot L. Crandall-Hollick, and Donald J. Marples. For background, see  CRS In Focus IF11696, Aviation and Climate Change, by Richard K. Lattanzio. 13 Tax Provisions in the Build Back Better Act: Rules Committee Print 117-18 Section Title and Number Description CRS Resources (or a similar methodology which satisfies criteria in the Clean Air Act), as compared with petroleum-based jet fuel. The sustainable aviation fuel credit would require claimants to be registered with the Secretary of the Treasury, and could be used to offset fuel excise tax liability or, in the case of insufficient fuel excise tax liability, be received as a payment. Like the tax credit for biodiesel and renewable diesel, there would be a coordinated income tax credit. Credit amounts would be included in a taxpayer’s gross income for income tax purposes. The credit would expire after December 31, 2026. This provision is a modification of Section 136203 of H.R. 5376, as reported on September 27, 2021. Clean Hydrogen Section 136204 This provision would create a new credit for the qualified production of clean hydrogen. The credit would be available for qualified clean hydrogen produced at a qualifying facility during the facility’s first 10 years of operation. The base credit amount would be $0.60 per kilogram (kg) times the applicable percentage. The credit would be $3.00 per kg times the applicable percentage if the clean hydrogen is produced at a facility that meets prevailing wage and registered apprenticeship requirements. Credit amounts would be indexed for inflation. The applicable percentage would be determined by the lifecycle greenhouse gas emissions rate achieved in producing clean hydrogen. The applicable percentage would be 100% for hydrogen achieving a lifecycle greenhouse gas emissions rate of less than 0.45 kilograms of carbon dioxide equivalent (CO2e) per kg. The applicable percentage would be 33.4% for hydrogen achieving a lifecycle greenhouse gas emission rate of less than 1.5 kilograms of CO2e per kg (but not less than 0.45 kilograms). For hydrogen with a lifecycle greenhouse gas emission rate of less than 2.5 kgs of CO2e per kg (but not less than 1.5), the applicable percentage would be 25%, and for hydrogen with a lifecycle greenhouse gas emissions rate of less than 4 kgs of CO2e per kg (but not less than 2.5), the applicable percentage would be 20%. For facilities placed into service before 2027 producing hydrogen with a greenhouse gas emissions rate of no more than 6 kg of CO2e per kg (but not less than 4), the applicable percentage would be 15%. Taxpayers could elect to receive the credit as direct pay (see “Elective Payment for Energy Property and Electricity Produced from Certain Renewable Resources, Etc.”). Taxpayers could not claim credits for clean hydrogen produced at facilities that claimed credits under Section 45Q. Taxpayers could elect to claim the energy investment tax credit (ITC) in lieu of the clean hydrogen production credit. Taxpayers may claim the Section 45 PTC for electricity produced from renewable resources by the taxpayer if the electricity is used at a qualified clean hydrogen facility to produce qualified clean hydrogen. The provision would terminate the alternative fuel excise tax credit for hydrogen after December 31, 2021. Congressional Research Service For background, see  CRS Report R45171, Registered Apprenticeship: Federal Role and Recent Federal Efforts, by Benjamin Collins.  CRS In Focus IF11927, Federally Funded Construction and the Payment of Locally Prevailing Wages, by David H. Bradley and Jon O. Shimabukuro. 14 Tax Provisions in the Build Back Better Act: Rules Committee Print 117-18 Section Title and Number Description CRS Resources The provision provides that for facilities financed with taxexempt bonds, the credit amount would be reduced by the lesser of (1) 15%; or (2) the fraction of the proceeds of a tax-exempt obligation used to finance the project over the aggregate amount of the project’s financing costs. The credit would not be available to facilities that start construction after December 31, 2028. This provision is a modification of Section 136204 of H.R. 5376, as reported on September 27, 2021. Part 3—Green Energy and Efficiency Incentives for Individuals Extension, Increase, and Modifications of Nonbusiness Energy Property Credit Section 136301 Residential Energy Efficient Property Section 136302 Current law provides a 10% tax credit for qualified energyefficiency improvements and expenditures for residential energy property on a taxpayer’s primary residence through 2021. The credit is subject to a $500 per taxpayer lifetime limit. This provision would extend the tax credit through December 31, 2031, and make additional modifications. The proposed modifications would increase the credit rate to 30% with an annual per-taxpayer limit of $1,200 and a $600 per item limit (geothermal and air source heat pumps and biomass stoves would be excluded from this cap). The credit would be allowed for expenditures made on any dwelling unit used by the taxpayer (not limited to primary residences). Limits for expenditures on windows and doors would also be increased. Required energy efficiency standards would be modified, and changed to update over time without additional legislative action. Qualifying building envelope components would no longer include roofs, but would include air sealing insulation. Biomass stoves would be made eligible for tax credits. A 30% credit, up to $150, would be allowed for home energy audits. Treasury would be given the authority to treat errors related to this section as mathematical or clerical errors. Starting in 2024, taxpayers would be required to submit a product identification number to claim the tax credit. This provision is a modification of Section 136301 in H.R. 5376, as reported on September 27, 2021. For background, see Current law provides a tax credit for the purchase of solar electric property, solar water heating property, fuel cells, geothermal heat pump property, small wind energy property, and qualified biomass fuel property. The credit rate is 26% through 2022 (it was 30% through 2019), and is scheduled to be reduced to 22% in 2023 before expiring. This provision would extend the credit through December 31, 2033, restoring the 30% credit rate after 2021 and through 2031, and then reducing the credit rate to 26% in 2032 and 22% in 2033. Qualified battery storage technology would be added to the list of eligible property. The credit would be made refundable after 2023. Starting in 2024, only property installed by qualified installers would be eligible for the credit and taxpayers would be required to report the qualified installation identification number to claim the credit. For background, see Congressional Research Service  CRS Report R42089, Residential Energy Tax Credits: Overview and Analysis, by Margot L. Crandall-Hollick and Molly F. Sherlock.  CRS Report R46451, Energy Tax Provisions Expiring in 2020, 2021, 2022, and 2023 (“Tax Extenders”), by Molly F. Sherlock, Margot L. Crandall-Hollick, and Donald J. Marples.  CRS Report R42089, Residential Energy Tax Credits: Overview and Analysis, by Margot L. Crandall-Hollick and Molly F. Sherlock.  CRS Report R46451, Energy Tax Provisions Expiring in 2020, 2021, 2022, and 2023 (“Tax Extenders”), by Molly F. Sherlock, Margot L. Crandall-Hollick, and Donald J. Marples. 15 Tax Provisions in the Build Back Better Act: Rules Committee Print 117-18 Section Title and Number Description CRS Resources Payments would be made to territories for the revenue loss associated with providing the residential energy efficient property credit. This provision is a modification of Section 136302 in H.R. 5376, as reported on September 27, 2021. Energy Efficient Commercial Building Deduction Section 136303 Extension, Increase, and Modifications of New Energy Efficient Home Credit Section 136304 Under current law, a permanent deduction of up to $1.80 per square foot is allowed for certain energy-saving commercial building property installed as part of (1) the interior lighting system; (2) the heating, cooling, ventilation, or hot water system; or (3) the building envelope. This provision would temporarily modify the energy-efficient commercial building deduction, with the modifications effective through 2031. The temporary modifications would reduce the amount by which a building must increase its efficiency relative to a reference building, from 50% to 25%. They would further provide that the per-square-foot deduction of $0.50 be increased by $0.02 for each percentage point by which the certified efficiency improvements reduce energy and power costs, with a maximum amount of $1.00 per square foot. For projects that meet prevailing wage requirements and registered apprenticeship requirements, the base credit is $2.50, which would be increased by $0.10 for each percentage point increase in energy efficiency, with a maximum credit amount of $5.00 per square foot. The maximum credit amount would be the total deduction a building can claim over a four-year period (the current tax year plus the three preceding tax years). Taxpayers making energy-efficiency retrofits that are part of a qualified retrofit plan on a building that is at least five years old would be able to deduct their adjusted basis in the retrofit property (so long as that amount does not exceed a per-square foot value determined on the basis of energy usage intensity). Any taxexempt organization would be allowed to allocate the deduction to the designer or the building or retrofit plan. This provision is a modification of Section 136303 in H.R. 5376, as reported on September 27, 2021. For background, see Under current law, through 2021, a tax credit is available for eligible contractors for building and selling qualifying energyefficient new homes. The credit is equal to $2,000, with certain manufactured homes qualifying for a $1,000 credit. This provision would extend the energy-efficient new home credit through December 31, 2031, and increase and modify the credit amount. For homes acquired after 2021, a $2,500 credit would be available for new homes that meet certain Energy Star efficiency standards, and a $5,000 credit would be available for new homes that are certified as zero-energy ready homes. Multifamily dwellings that meet certain Energy Star efficiency standards could be eligible for a $500 credit per unit, with a $1,000 per unit credit available for eligible zero-energy ready multifamily dwellings. The credits for multifamily dwelling units would be increased to $2,500 and $5,000, respectively, if the taxpayer ensures that the laborers and mechanics employed by contractors and For background, see Congressional Research Service  CRS Committee Print CP10004, Tax Expenditures: Compendium of Background Material on Individual Provisions — A Committee Print Prepared for the Senate Committee on the Budget, 2020, by Jane G. Gravelle et al. (pp. 99-104).  CRS Report R45171, Registered Apprenticeship: Federal Role and Recent Federal Efforts, by Benjamin Collins.  CRS In Focus IF11927, Federally Funded Construction and the Payment of Locally Prevailing Wages, by David H. Bradley and Jon O. Shimabukuro.  CRS Report R46451, Energy Tax Provisions Expiring in 2020, 2021, 2022, and 2023 (“Tax Extenders”), by Molly F. Sherlock, Margot L. Crandall-Hollick, and Donald J. Marples.  CRS In Focus IF11927, Federally Funded Construction and the Payment of Locally Prevailing Wages, by David H. Bradley and Jon O. Shimabukuro. 16 Tax Provisions in the Build Back Better Act: Rules Committee Print 117-18 Section Title and Number Description CRS Resources subcontractors in the construction of the residence are paid prevailing wages. This provision is identical or nearly identical to Section 136304 in H.R. 5376, as reported on September 27, 2021. Modifications to Income Exclusion for Conservation Subsidies Section 136305 Credit for Qualified Wildfire Mitigation Expenditures Section 136306 Under current law, subsidies provided by public utilities to customers for the purchase or installation of energy conservation measures are excluded from taxable income. This provision would provide that amounts provided for water conservation or efficiency, storm water management, or wastewater management could also be excluded. For wastewater management, the property purchased or installed would need to be on the taxpayer’s principal residence. The provision would be effective for amounts received after December 31, 2018. This provision is identical or nearly identical to Section 136305 in H.R. 5376, as reported on September 27, 2021. For background, see This provision would create a tax credit for 30% of qualified wildfire mitigation expenditures made after the date of enactment. Qualified wildfire mitigation expenditures would be specified wildfire mitigation expenditures made under a state wildfire mitigation program that requires wildfire mitigation expenditures be paid by the taxpayer and the state, for property owned or leased by the taxpayer. The credit rate would be reduced below 30% if the taxpayer’s percentage of the wildfire mitigation expenditure (as opposed to the state’s share) were to fall below 30%. For business expenditures, the credit would be part of the general business credit. For nonbusiness expenditures, the credit would be a nonrefundable individual income tax credit. If basis of property includes qualified wildfire mitigation expenditures, the property’s basis would be reduced by the amount of any tax credits claimed. This provision is identical or nearly identical to Section 135403 in H.R. 5376, as reported on September 27, 2021. For background, see  CRS Committee Print CP10004, Tax Expenditures: Compendium of Background Material on Individual Provisions — A Committee Print Prepared for the Senate Committee on the Budget, 2020, by Jane G. Gravelle et al. (pp. 121-124).  CRS In Focus IF10244, Wildfire Statistics, by Katie Hoover and Laura A. Hanson.  CRS In Focus IF10732, Federal Assistance for Wildfire Response and Recovery, by Katie Hoover. Part 4—Greening the Fleet and Alternative Vehicles Refundable New Qualified Plug-In Electric Drive Motor Vehicle Credit for Individuals Section 136401 This provision would create a new refundable tax credit for plug-in electric vehicles (EVs), effective beginning in 2022. The credit would be $4,000 for vehicles with a battery capacity of 10 kilowatt hours that can be charged by an external source of electricity, plus $3,500 for vehicles with a battery capacity of at least 40 kilowatt hours (50 kilowatt hours after 2026) that have a gas tank capacity of no more than 2.5 gallons. An additional amount of $4,500 would be available for domestically assembled vehicles assembled at a facility that operates under a union-negotiated collective bargaining agreement, and an additional amount of $500 would be available for vehicles powered by battery cells meeting domestic content requirements. The maximum pervehicle credit would be up to $12,500, not to exceed 50% of the vehicle purchase price. Vehicles subject to depreciation would be ineligible. Taxpayers would be allowed to claim the credit for one vehicle per year. The credit would phase out for married taxpayers filing a joint return with modified AGI above $500,000 ($375,000 in Congressional Research Service For background, see  CRS In Focus IF11017, The Plug-In Electric Vehicle Tax Credit, by Molly F. Sherlock.  CRS Report R46864, Alternative Fuels and Vehicles: Legislative Proposals, by Melissa N. Diaz.  CRS Report R46231, Electric Vehicles: A Primer on Technology and Selected Policy Issues, by Melissa N. Diaz. 17 Tax Provisions in the Build Back Better Act: Rules Committee Print 117-18 Section Title and Number Description CRS Resources the case of head of household filers; $250,000 in the case of other filers). The credit would be reduced by $200 for each $1,000 (or fraction thereof) by which the taxpayer’s modified AGI exceeds the threshold amount. The taxpayer’s modified AGI would be the lesser of modified AGI in the taxable year or prior year. Credits would only be allowed for vehicles that have a manufacturer’s suggested retail price of less than $80,000 for vans, SUVs, or pickup trucks, and $55,000 for other vehicles. Starting in 2027, the $4,000 plus $3,500 base credit would be available only for EVs with final assembly occurring in the United States. Two- and three-wheeled electric vehicles would be allowed a 30% tax credit, up to $7,500. Starting in 2022, taxpayers purchasing eligible vehicles could elect to transfer the tax credit to the dealer, so long as the dealer meets registration, disclosure, and other requirements. Taxpayers would be required to include the vehicle identification number (VIN) on their tax return to claim a tax credit. Payments would be made to territories for the revenue loss associated with providing the EV credit. The existing nonrefundable tax credit for plug-in electric vehicles under Section 30D would be repealed. The credit would not apply to vehicles acquired after December 31, 2031. This provision is a modification of Section 136401 in H.R. 5376, as reported on September 27, 2021. Credit for Previously Owned Qualified Plug-In Electric Drive Motor Vehicles Section 136402 This provision would create a new refundable tax credit for previously owned qualified plug-in electric and fuel cell vehicles. The credit would be up to $4,000 (a base credit of $2,000 plus $2,000 for vehicles propelled by a battery with a capacity of 40 kilowatt hours [50 kilowatt hours after 2026] having a gas tank with a capacity of less than 2.5 gallons). The credit would be limited to 50% of the vehicle purchase price. The credit would phase out for married taxpayers filing a joint return with modified AGI above $150,000 ($112,500 in the case of head of household filers; $75,000 in the case of other filers). The credit would be reduced by $200 for each $1,000 (or fraction thereof) by which the taxpayer’s modified AGI exceeds the threshold amount. The taxpayer’s modified AGI would be the lesser of modified AGI in the taxable year or prior year. Credits would only be allowed for vehicles with a sale price of $25,000 or less with a model year that is at least two years earlier than the calendar year in which the vehicle is sold. This credit could only be claimed for the first transfer of a qualifying vehicle. Taxpayers would be required to include the VIN on their tax return to claim a tax credit. Congressional Research Service For background, see  CRS In Focus IF11017, The Plug-In Electric Vehicle Tax Credit, by Molly F. Sherlock.  CRS Report R46864, Alternative Fuels and Vehicles: Legislative Proposals, by Melissa N. Diaz.  CRS Report R46231, Electric Vehicles: A Primer on Technology and Selected Policy Issues, by Melissa N. Diaz. 18 Tax Provisions in the Build Back Better Act: Rules Committee Print 117-18 Section Title and Number Description CRS Resources Taxpayers purchasing eligible vehicles could elect to transfer the tax credit to the dealer, so long as the dealer meets registration, disclosure, and other requirements. Payments would be made to territories for the revenue loss associated with providing the EV credit. The credit would not apply to vehicles acquired after December 31, 2031. This provision is a modification of Section 136402 in H.R. 5376, as reported on September 27, 2021. Qualified Commercial Electric Vehicles Section 136403 Qualified Fuel Cell Motor Vehicles Section 136404 Alternative Fuel Refueling Property Credit Section 136405 This provision would create a new tax credit for qualified commercial electric vehicles. The credit would be the lesser of (1) 15% of the vehicle’s cost (30% for vehicles not powered by a gasoline or diesel internal combustion engine); or (2) the incremental cost of the vehicle relative to a comparable vehicle. Eligible vehicles would have a battery capacity of not less than 15 kilowatt hours and be charged by an external source of electricity. Mobile machinery and qualified commercial fuel cell vehicles would also be eligible for this credit. Leasing companies could elect to determine the credit using the rules under Section 36C for individuals if the vehicle is leased to an individual. Qualifying vehicles would be depreciable property. Tax-exempt entities would have the option of electing to receive direct payments. Taxpayers would be required to include the VIN on their tax return to claim a tax credit. The credit would not apply to vehicles acquired after December 31, 2031. This provision is a modification of Section 136403 in H.R. 5376, as reported on September 27, 2021. Current law allows, through 2021, a tax credit of up to $8,000 for fuel cell vehicles (the base credit amount is $4,000, with up to an additional $4,000 available based on fuel economy). Heavier vehicles qualify for up to a $40,000 credit. This provision would modify the definition of qualified fuel cell motor vehicles to exclude vehicles subject to depreciation (commercial vehicles), and extend the credit through December 31, 2031. Commercial fuel cell vehicles would be eligible for the new credit for qualified commercial electric vehicles. This provision is identical or nearly identical to Section 136404 in H.R. 5376, as reported on September 27, 2021. For background, see Current law allows, through 2021, a tax credit for the cost of any qualified alternative fuel vehicle refueling property installed by a business or at a taxpayer’s principal residence. The credit is equal to 30% of these costs, limited to $30,000 for businesses at each separate location with qualifying property, and $1,000 for residences. This provision would extend the credit through December 31, 2031, and make additional modifications. For residential property, the credit would be extended at the 30% rate, with the credit limit For background, see Congressional Research Service  CRS Report R46451, Energy Tax Provisions Expiring in 2020, 2021, 2022, and 2023 (“Tax Extenders”), by Molly F. Sherlock, Margot L. Crandall-Hollick, and Donald J. Marples.  CRS Report R46864, Alternative Fuels and Vehicles: Legislative Proposals, by Melissa N. Diaz.  CRS Report R46451, Energy Tax Provisions Expiring in 2020, 2021, 2022, and 2023 (“Tax Extenders”), by Molly F. Sherlock, Margot L. Crandall-Hollick, and Donald J. Marples. 19 Tax Provisions in the Build Back Better Act: Rules Committee Print 117-18 Section Title and Number Description increased to $3,333.33. For business property (property subject to depreciation), the credit would be extended at a rate of 6% (30% if prevailing wage and registered apprenticeship requirements were met), with the credit limit increased to $100,000. A supplemental 4% credit (20% if prevailing wage and registered apprenticeship requirements are met) would be available for costs above the $100,000 limit for business property that refuels using only electricity or fuel consisting of at least 85% hydrogen by volume. To qualify for the supplemental credit, the property would need to be intended for general public use (i.e., no fee or payment arrangement required) and accept payments via a credit card reader (including contactless technology) or be exclusively used by commercial or government vehicles. The definition of qualifying property would be modified to include bidirectional charging equipment. The credit would not apply to property placed in service after December 31, 2031. This provision is a modification to Section 136405 in H.R. 5376, as reported on September 27, 2021. Reinstatement and Expansion of Employer-Provided Fringe Benefit for Bicycle Commuting Section 136406 Credit for Certain New Electric Bicycles Section 136407 CRS Resources  CRS Report R46864, Alternative Fuels and Vehicles: Legislative Proposals, by Melissa N. Diaz.  CRS Report R46231, Electric Vehicles: A Primer on Technology and Selected Policy Issues, by Melissa N. Diaz.  CRS Report R45171, Registered Apprenticeship: Federal Role and Recent Federal Efforts, by Benjamin Collins.  CRS In Focus IF11927, Federally Funded Construction and the Payment of Locally Prevailing Wages, by David H. Bradley and Jon O. Shimabukuro. Before 2018, up to $20 per month in employer reimbursements for qualifying bicycle commuting expenses were excludable from an employee’s income and wages and hence not subject to income or employment taxes. P.L. 11597, commonly called the Tax Cuts and Jobs Act (TCJA), temporarily suspended, through 2025, the exclusion for employer-provided bicycle commuter fringe benefits. This provision would repeal the suspension and expand the exclusion for bicycle commuting benefits to include employer provision or reimbursement for purchase, lease or rental (including bikeshare), improvement, repair, or storage of bikes or scooters for commuting purposes. The amount excluded could be up to 30% of the monthly dollar limit on qualified transportation fringe benefits ($270 in 2021). This provision would allow employees to elect a salary contribution for bicycle commuting benefits (similar to other qualified transportation fringe benefits). This provision is identical or nearly identical to Section 136406 in H.R. 5376, as reported on September 27, 2021. This provision would create a new refundable 30% tax credit for qualified electric bicycles. The maximum credit amount would be $900. The credit could be claimed for one bike per three-year period per taxpayer (two bikes in the case of a joint return). Qualified electric bicycles include those made by a qualified manufacturer and that include a VIN, cost no more than $4,000, have an electric motor of less than 750 watts, and where the motor does not provide assistance at higher speeds. Qualified manufacturers are those that assign a VIN to electric bicycles produced and provide that information to the Secretary of the Treasury. The credit would phase out for married taxpayers filing a joint return with modified AGI above $150,000 ($112,500 in Congressional Research Service 20 Tax Provisions in the Build Back Better Act: Rules Committee Print 117-18 Section Title and Number Description CRS Resources the case of head of household filers; $75,000 in the case of other filers). The credit would be reduced by $200 for each $1,000 (or fraction thereof) by which the taxpayer’s modified AGI exceeds the threshold amount. Prior-year modified AGI could be used for the purposes of determining the phaseout if it was less than current-year modified AGI. Taxpayers would be required to include the VIN on their tax return to claim a tax credit. Payments would be made to territories for the revenue loss associated with this credit. Beginning after December 31, 2022, taxpayers purchasing qualified electric bicycles could elect to transfer the credit to the retailer selling the bicycle if the retailer is registered with the Secretary of the Treasury, reports certain information to the taxpayer, and makes a payment to the taxpayer equal to the amount of the credit. Such payments would be excluded from the taxpayer’s gross income. The credit would not apply to bicycles acquired after December 31, 2025. This provision is a modification of Section 136407 in H.R. 5376, as reported on September 27, 2021. Part 5—Investment in the Green Workforce and Manufacturing Extension of the Advanced Energy Project Credit Section 136501 This provision would provide additional allocations of the qualified advanced energy manufacturing tax credit, which is a 30% tax credit for investments in projects that reequip, expand, or establish certain energy manufacturing facilities. The American Recovery and Reinvestment Act (P.L. 111-5) provided $2.3 billion in allocations, which have been fully allocated. An additional $5 billion in allocations would be provided in 2022 and 2023 and an additional $1.875 billion would be allocated in each year from 2024 through 2031. In 2022 and 2023, $800 million in annual allocations would be for projects in automotive communities, with $300 million set aside in each of the subsequent years. The same amounts would be set aside for projects in energy communities (defined as communities in or adjacent to a census tract that had a coal mine close after 1999, or a coal-fired electric generating unit retired after 2009). The base rate for the credit would be 6%, with the 30% credit rate allowed for projects meeting prevailing wage and registered apprenticeship requirements. The Secretary would be directed to consider which projects will have the greatest net impact on avoiding or reducing emissions; will provide the greatest domestic job creation; will provide the greatest job creation in the vicinity of projects in low-income communities and communities with dislocated manufacturing or coal-industry workers; and will provide the greatest job creation in areas with populations more at risk for adverse health or environmental effects, where a significant portion of such population is comprised of communities of color, low-income communities, tribal and Indigenous communities, or individuals formerly employed in the fossil fuel industry; and to give the highest Congressional Research Service For background, see  CRS Committee Print CP10004, Tax Expenditures: Compendium of Background Material on Individual Provisions — A Committee Print Prepared for the Senate Committee on the Budget, 2020, by Jane G. Gravelle et al. (pp. 221-224).  CRS Report R45171, Registered Apprenticeship: Federal Role and Recent Federal Efforts, by Benjamin Collins.  CRS In Focus IF11927, Federally Funded Construction and the Payment of Locally Prevailing Wages, by David H. Bradley and Jon O. Shimabukuro. 21 Tax Provisions in the Build Back Better Act: Rules Committee Print 117-18 Section Title and Number Description CRS Resources priority to projects that manufacture (rather than assemble) products and have the greatest potential for commercial deployment. Recipients of tax credit allocations will be publicly disclosed. This provision is a modification of Section 136501 in H.R. 5376, as reported on September 27, 2021. Labor Costs of Installing Mechanical Insulation Property Section 136502 Advanced Manufacturing Investment Credit Section 136503 Advanced Manufacturing Production Credit Section 136504 This provision would create a new tax credit for 2% of the labor cost of installing mechanical insulation (10% if prevailing wage and registered apprenticeship requirements are met). The credit would not apply to costs incurred after December 31, 2027. This provision is a modification of Section 136502 in H.R. 5376, as reported on September 27, 2021. This provision would create a new advanced manufacturing investment tax credit for taxpayers investing in advanced manufacturing facilities to manufacture semiconductors or semiconductor tooling equipment. The tax credit would have a base amount of 5%, with the credit rate increasing to 25% for facilities that pay prevailing wages and meet registered apprenticeship requirements. Taxpayers would be able to elect to receive the credit as direct pay. For property for which construction began before January 1, 2022, only the basis attributable to construction taking place after December 31, 2021, would be eligible for the credit. To qualify for this credit, construction on a facility must begin by December 31, 2025. This provision did not appear in H.R. 5376, as reported on September 27, 2021. For background, see  CRS Report R46581, Semiconductors: U.S. Industry, Global Competition, and Federal Policy, by Michaela D. Platzer, John F. Sargent Jr., and Karen M. Sutter. This provision would create a new production tax credit that could be claimed for the domestic production and sale of qualifying solar and wind components. Credits for solar components would include (1) for a thin photovoltaic cell or crystalline photovoltaic cell, 4 cents per direct current watt of capacity; (2) for photovoltaic wafers, $12 per square meter; (3) for solar grade polysilicon, $3 per kilogram; and (4) for solar modules, 7 cents per direct current watt of capacity. Credits for wind components would be computed as an applicable amount times the total rated capacity of the completed wind turbine for which the component was designed. The applicable amount would be 2 cents for blades, 5 cents for nacelles, 3 cents for towers, 2 cents for fixed platform offshore wind foundations, and 4 cents for floating platform offshore wind foundations. The total credit amount would be increased by 10% for components manufactured in facilities operating under a collective bargaining agreement. Taxpayers would be able to elect to receive the credit as direct pay. The credit would phase out for components sold after December 31, 2026. Components sold in 2027 would be Congressional Research Service 22 Tax Provisions in the Build Back Better Act: Rules Committee Print 117-18 Section Title and Number Description CRS Resources eligible for 75% of the full credit amount. Components sold in 2028 and 2029 would be eligible for 50% and 25% of the full credit amount, respectively. No credit would be available for components sold after December 31, 2029. This provision did not appear in H.R. 5376, as reported on September 27, 2021. Part 6—Environmental Justice Qualified Environmental Justice Program Credit Section 136601 This provision would create a new refundable tax credit for eligible educational institutions that received an allocation from the Treasury and incur costs associated with a qualified environmental justice program. The credit would be 30% for a program involving material participation of faculty and students of an institution described in Section 371(a) of the Higher Education Act of 1965, and 20% otherwise. The Secretary would be directed to select programs for allocations from (1) institutions with high participation in Section 371(a) of the Higher Education Act of 1965; (2) programs where expected health and economic outcomes would benefit low-income areas or areas that experience or are at risk for environmental stressors; and (3) applicants that would create or significantly expand qualified environmental justice programs. Applications would be made public and the Secretary would disclose allocation recipients. Up to $1 billion per year could be allocated from 2022 through 2031. The program would be effective upon the date of enactment. There would be a gross-up of payments in the case of budget sequestration. This provision is a modification of Section 136601 in H.R. 5376, as reported on September 27, 2021. Part 7—Superfund Reinstatement of Superfund Section 136701 This provision would permanently reinstate the Hazardous Substance Superfund financing rate for certain excise taxes starting on July 1, 2022, but would not reauthorize the Superfund special environmental tax on corporate income that also once financed this trust fund. This provision would permanently reinstate Superfund excise taxes on domestic crude oil and imported petroleum products at the rate of 16.4 cents per barrel in 2022, with adjustments for inflation annually thereafter. The previous tax rate was 9.7 cents per barrel when this tax last expired at the end of 1995. Generally, the tax is paid by refineries that receive crude oil or by the person using or importing a petroleum product. The Infrastructure Investment and Jobs Act (H.R. 3684) separately renews other excise taxes that contribute to the Superfund. H.R. 3684 increases the tax rate on domestically produced chemical feedstocks and imported chemical derivatives and renews those taxes from July 1, 2022, through December 31, 2031. H.R. 3684 also removes the statutory link between the dates of applicability of the crude oil and chemical products taxes. Congressional Research Service For background, see  CRS Report R41039, Comprehensive Environmental Response, Compensation, and Liability Act: A Summary of Superfund Cleanup Authorities and Related Provisions of the Act, by David M. Bearden. 23 Tax Provisions in the Build Back Better Act: Rules Committee Print 117-18 Section Title and Number Description CRS Resources Revenues from the excise tax finance the Hazardous Substance Superfund Trust Fund. Borrowing would be authorized through repayable advances from the General Fund of the U.S. Treasury until the end of 2031. This provision is a modification of Section 136701 in H.R. 5376, as reported on September 27, 2021. Part 8—Incentives for Clean Electricity and Clean Transportation Clean Electricity Production Credit Section 136801 This provision would create a new clean electricity production tax credit (PTC). This new PTC would be for the sale of domestically produced electricity with a greenhouse gas emissions rate not greater than zero. To qualify for a tax credit, electricity would need to be produced at a qualifying facility for which construction began after December 31, 2026. The base PTC amount would be 0.3 cents per kWh, with the tax credit amount increased to 1.5 cents per kWh for facilities that pay prevailing wages and meet registered apprenticeship requirements (0.5 cents and 2.5 cents, respectively, in 2021, applying the inflation adjustment factor; the amounts would be adjusted for inflation annually). Facilities with a maximum net output of less than 1 megawatt would also qualify for the full 1.5 cents per kWh amount. The PTC would be available for electricity produced during the facility’s first 10 years of operation. The credit amount would be increased by 10% for electricity produced in energy communities. An energy community is defined as being a census tract or any adjoining tract in which a coal mine closed after December 31, 1999, or a coal-fired electric power plant was retired after December 31, 2009. A 10% domestic content bonus would be available for electricity produced at facilities that certify that certain steel, iron, and manufactured products used in the facility were domestically produced. The provision would provide that for facilities financed with tax-exempt bonds, the credit amount is reduced by the lesser of (1) 15%; or (2) the fraction of the proceeds of a tax-exempt obligation used to finance the project over the aggregate amount of the project’s financing costs. Taxpayers would be able to elect to receive the credit as direct pay, effectively making the tax credit refundable. Taxpayers would not be able to claim the clean electricity production credit if the facility or electricity produced from the facility claimed certain other energy-related investment or production tax credits. Taxpayers would choose between the clean electricity PTC and ITC, and could not claim both. The tax credit would phase out when emissions reduction target levels are achieved or after 2031 (the later of the two). The emissions target phaseout will begin after the calendar year in which greenhouse gas emissions from the electric power sector are equal to or less than 25% of 2021 electric power sector emissions. Once phaseout begins, the full credit amount would remain available for facilities that begin construction the following year. The credit amount for facilities beginning construction in the second year would be Congressional Research Service 24 Tax Provisions in the Build Back Better Act: Rules Committee Print 117-18 Section Title and Number Description CRS Resources 75% of the full credit amount. This would be reduced to 50% for facilities beginning construction in the third year, and zero afterward. This provision did not appear in H.R. 5376, as reported on September 27, 2021. Clean Electricity Investment Credit Section 136802 Increase in Clean Electricity Investment Credit for Facilities Placed in Service in Connection with Low-Income Communities Section 136803 This provision would create a new clean electricity investment tax credit (ITC). This new ITC would be for investment in qualifying zero-emissions electricity generation facilities or grid improvement property. Qualifying grid improvements would include stand-alone energy storage. Costs of interconnection property are eligible for clean electricity projects smaller than 5 megawatts. This credit would be available for facilities and property for which construction begins after December 31, 2026. The base ITC amount would be 6%, with the tax credit rate increased to 30% for facilities that pay prevailing wages and meet registered apprenticeship requirements. Facilities with a maximum net output of less than 1 megawatt would also qualify for the 30% credit. The clean electricity ITC is increased by one-third (2 percentage points or 10 percentage points) for property placed in service in an energy community (as defined above for the purposes of the clean electricity PTC). Similarly, a 10% domestic content bonus also applies for the clean electricity ITC. The provision would provide that for facilities financed with tax-exempt bonds, the credit amount is reduced by the lesser of (1) 15%; or (2) the fraction of the proceeds of a tax-exempt obligation used to finance the project over the aggregate amount of the project’s financing costs. Taxpayers would be able to elect to receive the credit as direct pay, effectively making the credit refundable. Taxpayers would not be able to claim the clean electricity production credit if the facility or electricity produced from the facility claimed certain other energy-related investment or production tax credits. Taxpayers would choose between the clean electricity PTC and ITC, and could not claim both. The clean electricity ITC would phase out according to the same schedule as would apply to the clean electricity PTC. This provision did not appear in H.R. 5376, as reported on September 27, 2021. For background, see This provision would allow for the allocation of 1.8 gigawatts for “environmental justice solar and wind capacity” credits annually from 2027 through 2031. Taxpayers receiving a capacity allocation may be entitled to tax credits in addition to otherwise allowed clean electricity ITCs. Specifically, projects receiving an allocation that are located in a lowincome community or on Indian land would be eligible for a 10% bonus investment tax credit, while projects that are part of a low-income residential building project or qualified low-income economic benefit project would be eligible for a 20% bonus investment credit. No facility could receive more than a maximum 20% bonus investment credit under this provision. For background, see Congressional Research Service  CRS Report R45171, Registered Apprenticeship: Federal Role and Recent Federal Efforts, by Benjamin Collins.  CRS In Focus IF11927, Federally Funded Construction and the Payment of Locally Prevailing Wages, by David H. Bradley and Jon O. Shimabukuro.  CRS Report R45171, Registered Apprenticeship: Federal Role and Recent Federal Efforts, by Benjamin Collins.  CRS In Focus IF11927, Federally Funded Construction and the Payment of Locally Prevailing Wages, by David H. Bradley and Jon O. Shimabukuro. 25 Tax Provisions in the Build Back Better Act: Rules Committee Print 117-18 Section Title and Number Description CRS Resources Qualifying clean electricity projects would include those with a nameplate capacity of 5 megawatts or less (other than facilities producing electricity through combustion or gasification). The Secretary of the Treasury would consult with the Secretary of Energy and EPA Administrator in determining allocations. In selecting facilities for allocations, the Secretary would be directed to consider which facilities would result in the greatest health and economic benefits for individuals in low-income communities, including the ability to withstand extreme weather events; the greatest employment and wages for individuals in low-income communities; and the greatest engagement with, outreach to, or ownership by, individuals in low-income communities. Facilities receiving an allocation would have certain information disclosed to the public and be required to have the facility placed in service within four years. This provision would take effect on January 1, 2027. This provision did not appear in H.R. 5376, as reported on September 27, 2021. Cost Recovery for Qualified Facilities, Qualified Property, and Grid Improvement Property Section 136804 Clean Fuel Production Credit Section 136805 This provision would provide that any facility qualifying for the clean electricity PTC or any facility or property qualifying for the clean electricity ITC would be treated as 5year property under the modified accelerated cost recovery system (MACRS), making it so that cost recovery for renewable energy investments is generally similar to current law. This provision would apply to facilities and property placed in service after December 31, 2026. This provision did not appear in H.R. 5376, as reported on September 27, 2021. This provision would create a tax credit for domestic clean fuel production starting in 2027. The tax credit per gallon of transportation fuel would be calculated as the applicable amount multiplied by the emissions factor of the fuel. To qualify, the fuel must be produced by the taxpayer at a qualified facility (excluding facilities that receive credits for producing clean hydrogen or carbon oxide sequestration) and sold by the taxpayer. Qualified producers must be registered with the IRS. The “applicable amount” would be determined by the type of fuel and the producer’s labor practices. The base credit amount for zero-emissions fuels would be $0.20 for nonaviation fuel and $0.35 for aviation fuel. If the producer meets prevailing wage and registered apprenticeship requirements, then the applicable amount would be $1.00 for nonaviation fuel and $1.75 for aviation fuel. These amounts would be adjusted annually for inflation. The “emissions factor” would be calculated according to the formula: [(50 kilograms of CO2-equivalent (CO2e) global warming potential per metric million British Thermal Units (mmBTU) – emissions rate of fuel produced) / 50 kilograms of CO2e per mmBTU]. For example, suppose a producer met the labor practices and other requirements and Congressional Research Service For background, see  CRS Report R45171, Registered Apprenticeship: Federal Role and Recent Federal Efforts, by Benjamin Collins.  CRS In Focus IF11927, Federally Funded Construction and the Payment of Locally Prevailing Wages, by David H. Bradley and Jon O. Shimabukuro. 26 Tax Provisions in the Build Back Better Act: Rules Committee Print 117-18 Section Title and Number Description CRS Resources produced a nonaviation fuel with an emissions factor of 25 kg of CO2e emissions per mmBTU. That producer’s credit per gallon would be $1.00 * [(75-25)/75] = $0.70 per gallon. The Treasury Secretary would publish tables of emissions rates for various fuel types that would be used in the calculation. Qualifying transportation fuel would be fuel with an emissions rate not greater than 50 kilograms of CO2e per mmBTU for fuel sold in 2027 through 2030. For sustainable aviation fuel the emission rate could not be greater than 35 kilograms of CO2e per mmBTU. For fuel sold after 2030, qualifying fuel could not have an emissions rate greater than 25 kilograms of CO2e per mmBTU. The tax credit would phase out when emissions reduction target levels are achieved or after 2031 (the later of the two). The emissions target phaseout would begin after the calendar year in which greenhouse gas emissions from the transportation sector are equal to or less than 25% of 2021 transportation sector emissions. Once phaseout begins, the full credit amount would remain available for facilities that begin construction the following year. The credit amount for facilities beginning construction in the second year would be 75% of the full credit amount. This would be reduced to 50% for facilities beginning construction in the third year, and zero afterward. Taxpayers would be able to elect to receive the credit as a direct payment. This provision did not appear in H.R. 5376, as reported on September 27, 2021. Source: November 3, 2021, modified version of the Build Back Better Act (BBBA; H.R. 5376) as posted on the House Rules Committee website. Notes: Part 9 of Subtitle F would appropriate $4,073,433,000 billion to the IRS, to remain available through 2031, to administer the provisions in this subtitle. Provisions are effective in 2022 unless otherwise noted. The changes that would be made by the provisions are permanent, unless otherwise noted. Within the description, “Section” citations refer to the section within the Internal Revenue Code (IRC), 26 U.S.C., unless otherwise noted. Congressional Research Service 27 Tax Provisions in the Build Back Better Act: Rules Committee Print 117-18 Table 3. Subtitle G—Social Safety Net Section Title and Number Description CRS Resources Part 1—Child Tax Credit Modifications Applicable Beginning in 2021 Section 137101 The bill would make several changes to current law applicable to the 2021 child credit (and the 2022 credit as described in Section 137102 below), including: Safe Harbor Under current law, low- and moderate-income taxpayers who receive excess advance child credit payments may, in certain situations, be protected from repayment as a result of a safe harbor provision. Excess advance payments are equal to the value of the credit a taxpayer is eligible to claim on their tax return minus amounts received as advance payments. The safe harbor applies in cases where there is a change in the number of qualifying children used to estimate the advance payment in comparison to the number of children taken into account when claiming and calculating the credit on the applicable income tax return (assuming this information is not updated with the IRS during the year).a This provision would amend the existing safe harbor such that the safe harbor would not apply in cases where the qualifying child taken into account in determining the advance payment amount was done so either fraudulently or due to intentional disregard of the rules and regulations. This would include cases where two taxpayers knowingly set up an arrangement whereby one taxpayer receives advance payments (equaling up to 50% of the 2021 credit), while the other claims the full amount of the credit on their 2021 return. Joint Returns Under current law, to determine the amount of the credit a taxpayer will receive when they file their 2021 tax return, the taxpayer first calculates the total amount of the 2021 child credit they are eligible for. The taxpayer then subtracts from this amount the sum of all the advance payments of the 2021 credit they received. The difference is the amount they will receive with their 2021 return (generally filed in 2022). For the purposes of calculating the amount of the credit a taxpayer will receive with their 2021 return, the provision would provide that each spouse would be assumed to have received half of the advance amount. This may be relevant, for example, in cases where the taxpayer’s marital status differs between the year used to calculate the advance payments (2020 or 2019) and 2021. The provision would apply to advance payments issued by territorial governments. Information Used to Determine Advance Payment Amounts The provision would clarify that the data available to the IRS to calculate advance payments of the 2021 credit include “any information known to the [Treasury] Secretary.” Congressional Research Service For more information, see  CRS Insight IN11786, The Child Tax Credit in the November 3 Modified Version of the Build Back Better Act: Summary Table, by Margot L. Crandall-Hollick. For background, see  CRS Report R46900, The Expanded Child Tax Credit for 2021: Frequently Asked Questions (FAQs), by Margot L. CrandallHollick.  CRS Insight IN11752, The Impact of a “Fully Refundable” Child Tax Credit, by Margot L. Crandall-Hollick.  CRS Insight IN11656, The Child Tax Credit: How Would the Biden Administration’s Proposed American Families Plan Change the Child Tax Credit?, by Margot L. Crandall-Hollick. 28 Tax Provisions in the Build Back Better Act: Rules Committee Print 117-18 Section Title and Number Description CRS Resources Disclosure of Information Relating to Joint Returns and Advanced Payments In the case of an individual who receives an advance payment, and who was a married joint filer during the reference year (e.g., generally 2020 for the 2021 expanded child credit, or 2019 if data for 2020 are not available), the Treasury may disclose to their spouse information used to determine eligibility for and the amount of the advanced payment (including principal place of abode). These provisions are generally applicable beginning in 2021 (including to advance payments made in 2021). The provision related to disclosure of information relating to joint returns and advance payments shall take effect after the date of enactment. Overall, these provisions are a modification of Section 137101 in H.R. 5376, as reported on September 27, 2021. Extensions and Modifications Applicable Beginning in 2022 Section 137102 The American Rescue Plan Act of 2021 (ARPA; P.L. 1172) temporarily increased (for 2021) the child credit for many taxpayers with children. Specifically, the law increased the maximum child credit from $2,000 per child to $3,000 per child ($3,600 for children under 6 years old); expanded the eligibility age for children to include 17-year-olds; and made the credit “fully refundable.” The bill would extend the 2021 ARPA-expanded child credit to 2022 (as modified by Section 137101 above), with additional changes to the 2021 credit in effect for 2022 summarized below.b The parameters of the credit in 2022 would not be adjusted for inflation. Modifications of Advance Payment Program Under current law, the advance payment program for the 2021 child credit advances up to 50% of the estimated 2021 credit amount in equal periodic payments between July 1, 2021, and December 31, 2021. (The IRS is issuing advance payments in six monthly payments between July 15, 2021, and December 15, 2021.) This provision would advance all (100%) of the estimated 2022 child credit through the end of December 31, 2022, in 12 monthly payments. Under current law, otherwise-eligible taxpayers are automatically issued an advance payment, irrespective of their income level, though they may opt out of advance payments with the IRS. This provision would generally limit eligibility for the advance payment program to taxpayers whose income in the reference year is below the initial phaseout. (The reference taxable year is generally the prior taxable year, or if such data are not available, the year preceding the prior year. For the 2022 child tax credit, the reference taxable year would be 2021, or if data from that year are not available, 2020.) Those initial phaseout thresholds are $150,000 for married joint filers, $112,500 for head of household filers, and $75,000 for single filers. Congressional Research Service For more information, see  CRS Insight IN11786, The Child Tax Credit in the November 3 Modified Version of the Build Back Better Act: Summary Table, by Margot L. Crandall-Hollick. For background, see  CRS Report R46900, The Expanded Child Tax Credit for 2021: Frequently Asked Questions (FAQs), by Margot L. CrandallHollick.  CRS Insight IN11752, The Impact of a “Fully Refundable” Child Tax Credit, by Margot L. Crandall-Hollick.  CRS Insight IN11656, The Child Tax Credit: How Would the Biden Administration’s Proposed American Families Plan Change the Child Tax Credit?, by Margot L. Crandall-Hollick.  CRS Report R43840, Federal Income Taxes and Noncitizens: Frequently Asked Questions, by Erika K. Lunder and Margot L. Crandall-Hollick. 29 Tax Provisions in the Build Back Better Act: Rules Committee Print 117-18 Section Title and Number Description CRS Resources Under current law, residents of Puerto Rico are generally ineligible to receive advance payments. Instead, they must file a 2021 tax return with the IRS to receive their 2021 child credit. The provision would allow the Treasury Secretary to make advanced payments of the 2022 child credit to residents of Puerto Rico between July and December of 2022. If in effect, this would effectively allow Puerto Rican residents to receive up to half of their total 2022 credit in advance payments, and claim the remainder on their 2022 tax return, filed in early 2023. Repeal of Temporary SSN Requirement for Qualifying Children Under current law (enacted as part of P.L. 115-97 and in effect from 2018 to 2025), a taxpayer can only receive the child credit for an otherwise-eligible child if they provide the child’s Social Security Number (SSN). This SSN must be associated with work authorization, meaning an SSN issued solely to receive a public benefit does not qualify. These types of work-authorized SSNs are generally provided to all U.S. citizen children and certain noncitizen children, including legal permanent residents (i.e., “green card holders”), refugees, and asylees. As a result of this provision, for example, taxpayers cannot claim the child credit for otherwise-eligible children with individual taxpayer identification numbers (ITINs). The provision would repeal the temporary “workauthorized” SSN requirement for qualifying children. Hence, eligible taxpayers with children with ITINs could claim the credit for those children (assuming those children meet all the other eligibility requirements). This would apply for 2022-2025. Since this temporary requirement is scheduled to expire at the end of 2025, this provision would effectively permanently repeal the temporary SSN requirement for children. Income Lookback Under current law, when a taxpayer calculates their child credit for a given year on their income tax return, they use the income for that year to determine whether and to what extent the credit is subject to phaseout.c For example, a taxpayer would generally use their annual 2022 income to calculate their 2022 child credit amount, if subject to the phaseout. The provision would allow taxpayers to elect to use the preceding year’s income to determine their current year’s credit amount, if subject to the phaseout. Specifically, under this provision a taxpayer could elect to use their 2021 income to calculate their 2022 credit for purposes of the phaseout. This provision would limit the amount taxpayers would need to pay back in advance payments of the credit due to annual fluctuations in their income. Modification of Safe Harbor Under current law, low- and moderate-income taxpayers who receive excess advance payments may, in certain situations, be protected from repayment as a result of a Congressional Research Service 30 Tax Provisions in the Build Back Better Act: Rules Committee Print 117-18 Section Title and Number Description CRS Resources safe harbor provision in Section 137101 of the bill, as described above. The maximum amount of the safe harbor for 2021 is $2,000 multiplied by the difference in the number of qualifying children between 2021 and 2020 (2019, if 2020 data are unavailable). This amount then gradually phases out as income rises. The prior-year data—in this case 2020 data, or if they are unavailable 2019 data—used to administer the advance payments is generally referred to as the “reference year” data. For 2022, the maximum safe harbor would be larger. Specifically, the maximum safe harbor would be calculated as $3,600 times the number of young children taken into consideration during the reference year to determine the advance payment amounts who are not claimed on 2022 returns plus $3,000 times the number of older children taken into consideration during the reference year (to determine the advance payment amounts) who are not claimed on 2022 returns. (In this case, the reference year would be 2021, or if those data are unavailable, 2020.)d The phaseout of the safe harbor would be unchanged under the law in effect for 2021. Overall, these provisions are a modification of Section 137102 in H.R. 5376, as reported on September 27, 2021. Refundable Child Tax Credit After 2022 Section 137103 Under current law, the child credit is scheduled to revert to levels in effect under prior law, including as amended by P.L. 115-97. The changes made by P.L. 115-97 were in effect from 2018 to 2025, and most of them would be in effect for 2023-2025 under this bill. Specifically, under current law from 2023 to 2025, the credit is scheduled to equal a maximum of $2,000 per qualifying child. Lowerincome taxpayers will receive their credit, whether all or part of the credit, as the refundable portion of the credit. From 2023 to 2025, the refundable portion will generally be calculated under the earned income formula as 15% of earned income above $2,500, not to exceed $1,400 per qualifying child.e From 2023 to 2025, the credit will begin to phase out when a taxpayer’s income exceeds $400,000 for married joint filers and $200,000 for unmarried taxpayers (e.g., head of household). From 2023 to 2025, taxpayers can only receive the credit for children for whom they have furnished a work-authorized SSN. Beginning in 2026, the child credit is scheduled to revert to levels in effect before P.L. 115-97 under current law. In other words, beginning in 2026 the credit is scheduled to equal a maximum of $1,000 per qualifying child. Beginning in 2026, the refundable portion of the credit would generally be calculated as 15% of earned income over $3,000, not to exceed $1,000 per qualifying child.e Beginning in 2026, the credit starts to phase out when income exceeds $110,000 for married joint filers and $75,000 for unmarried taxpayers (e.g., head of household). Beginning in 2026, taxpayers can only receive the credit for children for whom they have furnished a taxpayer ID, which includes an SSN, an ITIN, or an adoption taxpayer ID number (ATIN). Congressional Research Service For more information, see  CRS Insight IN11786, The Child Tax Credit in the November 3 Modified Version of the Build Back Better Act: Summary Table, by Margot L. Crandall-Hollick. For background, see  CRS Report R46900, The Expanded Child Tax Credit for 2021: Frequently Asked Questions (FAQs), by Margot L. CrandallHollick.  CRS Insight IN11752, The Impact of a “Fully Refundable” Child Tax Credit, by Margot L. Crandall-Hollick.  CRS Report R45124, The Child Tax Credit: Legislative History, by Margot L. CrandallHollick. 31 Tax Provisions in the Build Back Better Act: Rules Committee Print 117-18 Section Title and Number Appropriations Section 137104 Description CRS Resources Finally, under current law, beginning in 2023, a qualifying child will revert permanently to being a dependent child 0-16 years old, meaning 17-year-olds would not be eligible. (This age limit of a qualifying child is a permanent provision that was not temporarily changed by P.L. 11597.) This provision would modify current law beginning in 2023 by making the credit “fully refundable.” Specifically, for taxpayers with a principal place of abode in the United States for more than half the year, the provision would eliminate the formula(s) for calculating the refundable portion of the child credit. Hence, the child credit would be the same amount per child for low- and moderateincome taxpayers, irrespective of their income. The maximum credit would be $2,000 per child from 2023 to 2025 and $1,000 per child beginning in 2026. (Higherincome taxpayers would still be subject to a phaseout of the credit, as scheduled to be in effect for a given year.) Full refundability would also be available to taxpayers who are residents of Puerto Rico. The temporary SSN requirement for qualifying children would be repealed for 2023-2025 by Section 137102 of this bill. Under this provision, the credit’s advance payment program would no longer be in effect beginning in 2023. This provision is a modification of Sections 137103 and 137104 in H.R. 5376, as reported on September 27, 2021. The provision would provide for an additional appropriation of $3.9633 billion for the IRS for administrative expenses of the child tax credit and advance payments of the child tax credit, and $1 billion for the Treasury Department for outreach efforts to increase enrollment of eligible families in the child tax credit and the advance payments of the child tax credit. These amounts would be available upon enactment and through September 30, 2026. This provision is a modification of Section 137105 in H.R. 5376, as reported on September 27, 2021. Part 2—Earned Income Tax Credit Certain Improvements to the Earned Income Tax Credit Extended Through 2022 Section 137201 ARPA (P.L. 117-2) temporarily increased for 2021 the earned income tax credit (EITC) for workers without qualifying children (often referred to as the “childless EITC”). Specifically, the law modified several parameters of the credit that in combination tripled the maximum amount of the childless EITC from about $500 to about $1,500 per taxpayer. The law also temporarily reduced the eligibility age of the childless EITC for young workers and eliminated the age limit for older workers. The bill would temporarily extend the changes to the childless EITC enacted by the ARPA for one year—2022, as described below Regarding the credit amount, for 2022 this provision would increase the childless EITC amount by making several modifications to the credit formula: (1) increasing—to $9,820—the minimum earned income Congressional Research Service For background, see  CRS Insight IN11610, The “Childless” EITC: Temporary Expansion for 2021 Under the American Rescue Plan Act of 2021 (ARPA; P.L. 117-2), by Margot L. CrandallHollick.  CRS Report R43805, The Earned Income Tax Credit (EITC): How It Works and Who Receives It, by Margot L. Crandall- 32 Tax Provisions in the Build Back Better Act: Rules Committee Print 117-18 Section Title and Number Funds for Administration of Earned Income Tax Credits in the Territories Section 137202 Description CRS Resources necessary to receive the maximum credit amount (i.e., “the earned income amount”); (2) increasing—to $11,610—the highest income level at which taxpayers receive the maximum credit amount before it begins to phase out; and (3) doubling the phase-in and phaseout rates from 7.65% to 15.3%.f Combined, these changes would effectively triple the maximum EITC for childless workers. (Like other aspects of the EITC under current law, the $9,820 and $11,610 amounts would be indexed for inflation in 2022.) Regarding eligibility age, for 2022, this provision would temporarily expand eligibility for the childless EITC—by reducing the minimum eligibility age from 25 to 19 for most workers. In other words, this change would allow most eligible workers ages 19 to 24 to claim the childless EITC for 2022. For students who are attending school at least part-time, the age limit would be reduced from 25 to 24 for 2022.g For former foster children and youth who are homeless, the minimum age would be reduced from 25 to 18. The provision would also temporarily eliminate the upper age limit for 2022, so workers aged 65 and older would be eligible. The provision also includes a temporary earned income lookback for 2022 (a similar provision was temporarily enacted for 2021 under ARPA whereby taxpayers could use their 2019 income). Under this provision, if a taxpayer’s earned income in 2022 was less than their earned income in 2021, the taxpayer could elect to use their 2021 earned income in calculating their EITC. This income lookback would be applicable to all EITC recipients—those with and without children. This provision is a modification of Section 137401 in H.R. 5376, as reported on September 27, 2021. Hollick, Gene Falk, and Conor F. Boyle. Under current law, residents of the territories may be eligible to receive an EITC under their own territorial tax law. These territories are Puerto Rico, American Samoa, the Commonwealth of the Northern Mariana Islands (CNMI), the United States Virgin Islands (USVI), and Guam. These territorial EITCs are paid by the local territorial government, with the Treasury making aggregate payments to territorial governments for the total cost of these benefits. (Territorial residents are generally ineligible for the federal EITC.) From 2021 to 2025 under current law, the Treasury is also required to pay to territorial governments amounts that these governments spend on education efforts regarding the EITC—up to $1 million per year for Puerto Rico, and up to $50,000 per year for the other territories. This provision would permanently provide additional funding for territorial governments to cover administrative expenses of their territorial EITCs—up to $4 million per year for Puerto Rico and up to $200,000 per year for the other territories. This provision would apply beginning in 2022. Congressional Research Service 33 Tax Provisions in the Build Back Better Act: Rules Committee Print 117-18 Section Title and Number Description CRS Resources This provision is identical or nearly identical to Sections 137402 in H.R. 5376, as reported on September 27, 2021. Part 3—Expanding Access to Health Coverage and Lowering Costsh Improve Affordability and Reduce Premium Costs of Health Insurance for Consumers Section 137301 Modification of EmployerSponsored Coverage Affordability Test in Health Insurance Premium Tax Credit Section 137302 Under current law, certain individuals without access to subsidized health insurance coverage may be eligible for the premium tax credit (PTC). In order to be eligible to receive the premium tax credit in 2021, individuals must have annual household income at or above 100% of the federal poverty level; not be eligible for certain types of health insurance coverage, with exceptions; file federal income tax returns; and enroll in a plan through an individual exchange. This provision would temporarily extend expanded eligibility for and the amount of the PTC originally enacted under ARPA by modifying the income eligibility criteria and credit formula for 2021 through 2025. Regarding income eligibility, the provision would temporarily eliminate the phaseout for households with annual incomes above 400% of the federal poverty level (FPL). Regarding the formula, the provision would temporarily establish the percentage of annual income that eligible households may be required to contribute toward the premium. The percentages would range from 0.0% to 8.5% of household income, with higher-income groups subject to larger percentages, as specified. The provision would temporarily strike the existing indexing provision that would apply to the formula beginning in 2023 through 2026. This provision is a modification of Section 137501 in H.R. 5376, as reported on September 27, 2021. For background, see Under current law, individuals who are eligible for minimum eligible coverage from their employer are generally ineligible for the PTC. An exception is provided to an individual whose employer-provided health benefits are unaffordable or inadequate. In 2021, coverage is considered unaffordable if an employee’s share of the premium for self-only coverage under the plan exceeds 9.83% of the employee’s household income. This affordability test is annually adjusted. For 2022 through 2025, this provision would reduce the percentage of household income used to determine affordability of eligible employer-sponsored plans and qualified small employer health reimbursement arrangements from 9.83% to 8.5%. Hence, more households with unaffordable employer health benefits could be eligible for the PTC compared to current law. The provision would temporarily strike the annual adjustment process through 2026. This provision is a modification of Section 137502 in H.R. 5376, as reported on September 27, 2021. For background, see Congressional Research Service   CRS Report R44425, Health Insurance Premium Tax Credit and CostSharing Reductions, by Bernadette Fernandez. CRS Report R44425, Health Insurance Premium Tax Credit and CostSharing Reductions, by Bernadette Fernandez. 34 Tax Provisions in the Build Back Better Act: Rules Committee Print 117-18 Section Title and Number Treatment of Lump-Sum Social Security Benefits in Determining Household Income Section 137303 Temporary Expansion of Health Insurance Premium Tax Credits for Certain LowIncome Populations Section 137304 Special Rule for Individuals Receiving Unemployment Compensation Section 137305 Description CRS Resources Beginning in 2022, this provision would exclude from household income—for purposes of determining PTC eligibility and amount for a given year—any lump-sum Social Security benefit payment attributable to a prior year. This provision would allow taxpayers to elect to include as part of their income the excludable amount, as specified, beginning in 2026. This provision is identical or nearly identical to Section 137503 in H.R. 5376, as reported on September 27, 2021. For background, see For 2022 through 2025, this provision would expand PTC eligibility for lower-income households and make other temporary changes. The provision would temporarily disallow income criteria to be used to determine PTC eligibility. For households with incomes not exceeding 138% of FPL, the provision would temporarily disregard the affordability test applicable to eligible employer-sponsored plans and qualified small employer health reimbursement arrangements for PTC eligibility purposes. For households with incomes les [Text truncated at 120,000 characters. The full text is on the page linked above.] --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/crs%3AR46960. Public record. Not legal advice.