Find out how one key aspect of the new Infrastructure Investment and Jobs Act law will affect small businesses
On Nov. 6 the U.S. House passed the procedural vote to set up consideration of the Build Back Better Act as soon as Thursday, Nov. 18. They also recently passed the bipartisan infrastructure bill (Infrastructure Investment and Jobs Act) and President Biden signed it into law on Nov. 15. NFIB Vice President of Federal Government Relations Kevin Kuhlman hosted a webinar on Nov. 10 to highlight what these developments mean for small businesses and the expected timeline of upcoming changes.
“Over this week and next week, we do expect some estimates or further analysis of the Build Back Better Act from the Congressional Budget Office (CBO),” Kuhlman explains. “These are estimates for how much these spending programs will cost and how much the tax proposals are expected to raise.”
Updated Timeline
- Nov. 15: Infrastructure Investment and Jobs Act was signed by President Biden.
- Nov. 18-19: U.S. House vote expected on Build Back Better Act.
- Dec. 15: Federal government funding expires.
Infrastructure Investment and Jobs Act, known as the bipartisan infrastructure bill
Over the next 10 years, this law includes approximately $550 billion in new infrastructure spending. Traditional and green infrastructure are both included, such as highway construction and maintenance, waterway improvements, broadband expansion, and lead pipes replacements throughout the country. The bill was signed into law by President Biden on Monday, Nov. 15.
For many small businesses, the details of this law’s offsets are important because it will shorten the duration of Employee Retention Tax Credit (ERTC, also known as the ERC). The ERTC was originally scheduled to expire as of Dec. 31, 2021 but the Infrastructure Investment and Jobs Act retroactively shortens this pandemic-recovery tax credit program by one calendar quarter. ERTC eligibility has been disallowed for the fourth quarter of 2021 and now expires as of Sept. 30, 2021. The IRS is expected to issue further guidance for businesses on the details of this change.
Build Back Better Act
Substantial changes have occurred on the Build Back Better Act in recent weeks. Small businesses have fewer tax increases to worry about, but some problematic issues remain. Mainly, it will impose a 3.8% surtax on active business income above $400,000 ($500,000 for joint filers), known as the Small Business Surtax.
Mandates remaining in the Build Back Better Act include:
- A scaled down Paid Family and Medical Leave Program beginning Jan. 1, 2024.
- Applies to all businesses and employees.
- Requires up to 4 weeks of leave per year instead of 12 weeks.
- Administered and paid by the Social Security Administration.
- Partial employer reimbursement.
- Employees self-attest they provided employers 7-days’ notice.
- Increased penalties and penalty exposure for businesses.
- FLSA, OSHA, NLRA penalties increased up to $20,740.
- Affordable Care Act is expanded for businesses with more than 50 full-time employees.
- Affordability definition lowers from 9.5%-8.5% of employee income.
In Congressional negotiations, Kevin explains there continues to be disagreement over the top-line price tag of the Build Back Better Act, with spending totals ranging from $1.5 trillion to $2 trillion. NFIB will continue to monitor the small business policies and advocate against any new taxes or mandates for small businesses. Kevin and NFIB Senior Manager of Government Relations Courtney Titus Brooks finish the webinar answering questions about the ERTC, the IRS, the Small Business Deduction, state and local taxes, and capital gains. You can watch the free Federal Update webinar here for more information.
The Small Business Survival campaign is an ongoing fight led by small business owners speaking out in the fight to protect small businesses from Washington’s proposed tax hikes and mandates. The campaign includes small business owners speaking and meeting with their representatives in Congress, testimony in key Congressional hearings, letters, briefings, surveys, studies about the potential problems with these tax increases and mandates, and targeted advertising.
As a small business owner, you can Take Action by reaching out with your personal story to your member of Congress to express your concerns with the Small Business Surtax, increased penalties, or inflexible Paid Family and Medical Leave Program.
