The Biden Tax Plan: How the Build Back Better Act Could Affect Your Tax Bill

Depending on your income, the Build Back Better Act recently passed by the House could boost or cut your future tax bills.

picture of a person in a Build Back Better Bill costume in front of the U.S. Capitol
(Image credit: Getty Images)

President Biden's "Build Back Better" social spending and tax bill is slowly working its way through Congress. It was recently passed by the House of Representatives and has been sent to the Senate. While there's still plenty of political wrangling to come, and additional changes are expected in the Senate, we now have a pretty good sense of where the Democrats are headed with this budget reconciliation bill. The proposed legislation calls for sharp spending increases for a wide variety of social programs that would impact childcare, health care, higher education, climate change, and more. The package also contains a number of tax law changes that would boost taxes for some people and cut them for others.

How might these changes affect your future income tax bills if the Build Back Better Act ultimately becomes law? First, the bill calls for higher taxes and fewer tax breaks for the wealthy. That's no surprise, because Biden and Congressional Democrats have said for months that they want to make the rich pay their "fair share" of taxes (opens in new tab) and use the additional revenue to strengthen the social safety net. The proposed legislation would also extend enhancements to certain tax credits for lower- and middle-income families. These enhancements were designed to help ordinary Americans pay for some of the day-to-day expenses they incur. There are also new or improved tax breaks for higher education costs, clean energy initiatives, and expenses paid by certain workers.

At this point, it's impossible to say which (if any) of the proposed tax law changes will survive and be enacted into law. Additional tax provisions could be added later, too. Nothing is set in stone yet. However, smart taxpayers will get up-to-speed on the Build Back Better bill's tax proposals now, so they're prepared if/when they make it through the legislative process. To get you started, we've identified some of the most common ways the Build Back Better plan could either raise or lower your taxes. After all, what you know now could save you big bucks down the road.

Rocky Mengle
Senior Tax Editor, Kiplinger.com

Rocky is a Senior Tax Editor for Kiplinger with more than 20 years of experience covering federal and state tax developments. Before coming to Kiplinger, he worked for Wolters Kluwer Tax & Accounting and Kleinrock Publishing, where he provided breaking news and guidance for CPAs, tax attorneys, and other tax professionals. He has also been quoted as an expert by USA Today, Forbes, U.S. News & World Report, Reuters, Accounting Today, and other media outlets. Rocky has a law degree from the University of Connecticut and a B.A. in History from Salisbury University.