President Biden’s budget proposes a number of new tax increases that would impact construction firms, including raising the corporate tax rate to 28%, increasing the 3.8% net investment income tax to 5% for income over $400,000, and taxing capital gains at the ordinary income rates for incomes above $1 million (for a top capital gains rate of 44.6%), among other things.

On March 9, President Biden released his FY2024 budget request, along with the corresponding tax proposals (known as the “green book”). Included in the budget request were a number of new tax increases that would impact construction firms. Among the many proposed changes were to:

• Raise the corporate tax rate to 28 percent.
• Prevent pass-through construction firms from fully deducting losses and/or carrying those losses forward.
• Apply the 3.8 percent net investment income tax to the owners of pass-through businesses who actively participate in their business.
• Increase the 3.8 percent net investment income tax to 5 percent for income over $400,000.
• Tax capital gains at the ordinary income rates for incomes above $1 million (for a top capital gains rate of 44.6 percent).
• Tax accumulated capital gains at death and repeal stepped-up basis (the so-called “double death tax”).

In response, AGC helped author and send a letter to Congressional tax writers outlining serious concerns with these proposed tax increases, and the effect it would have on employers. While it is unlikely that any of these proposals will become law this year due to Republican control of the House of Representatives, many of these proposals could be debated as part of the upcoming Presidential campaign in advance of the 2025 tax cliff.

If you have any questions or concerns, please contact Matthew Turkstra at (202) 547-4733 or [email protected]