Build Back Better Calculator
Print| SALT Cap Deduction Increase | $0.00 |
The Build Back Better Act (and its enacted successor provisions within the Inflation Reduction Act) introduced landmark federal tax policy proposals, expanded family tax credits, clean energy incentives, and corporate tax reform. Key elements included expanding the Child Tax Credit (CTC), raising the State and Local Tax (SALT) deduction cap, establishing clean energy tax credits, and introducing high-income surtaxes.
Our free Build Back Better Calculator estimates the comparative tax liability and credit benefit changes under federal economic tax legislation.
How to Calculate Legislative Tax & Credit Provisions
Evaluating Build Back Better legislative tax provisions involves comparing base tax liability against enacted and proposed credit rules.
Key Legislative Tax Provision Formulas:
1. Expanded Child Tax Credit (CTC) Provisions:
Enhanced CTC = $3,600 per child under age 6 + $3,000 per child ages 6 to 17
2. State and Local Tax (SALT) Deduction Cap Relief:
SALT Tax Savings = ( Proposed SALT Cap - $10,000 Current Cap ) × Marginal Tax Rate
3. High-Income Surtax (Net Investment & High AGI):
High-Income Surtax = 5% on Modified AGI > $10,000,000 + 3% additional on MAGI > $25,000,000
4. Residential Clean Energy Tax Credit (Section 25D):
Clean Energy Tax Credit = Total Solar / Heat Pump / EV Charger Cost × 30%
Summary of Build Back Better & Inflation Reduction Act Provisions
The table below summarizes key tax provisions, credit limits, and income thresholds:
| Tax Provision / Credit | Baseline Tax Law | Legislative Proposal / Enacted Rule | Targeted Beneficiaries |
|---|---|---|---|
| Child Tax Credit (Under 6) | $2,000 per child | $3,600 fully refundable | Low-to-middle income families |
| SALT Deduction Cap | Capped at $10,000 | Proposed $80,000 Cap | High-tax state homeowners (NY, CA, NJ) |
| Residential Clean Energy Credit | 26% expiration track | 30% Tax Credit through 2032 | Homeowners installing solar, batteries, heat pumps |
| Corporate Alternative Minimum Tax | None (21% flat tax) | 15% Minimum Tax on Book Income | Corporations with >$1B book income |
Step-by-Step Calculation Example
A family with 2 young children (ages 3 and 5) installs $20,000 in residential solar panels during the tax year:
- Baseline Child Tax Credit: $4,000 ($2,000 × 2 children)
- Enhanced Child Tax Credit: $7,200 ($3,600 × 2 children)
- Residential Solar Installation Cost: $20,000
Step 1: Calculate Clean Energy Tax Credit (30%)
Solar Credit = $20,000 × 0.30 = $6,000.00
Step 2: Calculate Combined Tax Credit Benefit under Enhanced Legislation
Enhanced CTC Benefit = $7,200.00
Total Family Tax Credits = $7,200 (CTC) + $6,000 (Solar) = $13,200.00
Step 3: Compare Net Tax Savings vs Baseline
Net Tax Savings = $13,200 - $4,000 = +$9,200.00 in tax savings
Frequently Asked Questions (FAQ)
What is the relationship between Build Back Better and the Inflation Reduction Act?
The Inflation Reduction Act (IRA) of 2022 was the enacted legislative compromise of the broader Build Back Better proposal, codifying key provisions such as 30% clean energy tax credits, Medicare prescription price negotiation, and the 15% corporate minimum tax.
How does the 30% Residential Clean Energy Credit work?
The 30% credit applies directly against federal income tax liability for eligible clean energy equipment—including rooftop solar panels, geothermal heat pumps, solar water heaters, and battery storage systems—installed between 2022 and 2032.
Are monthly Child Tax Credit payments still available?
Advance monthly CTC payments ($250 to $300/month) were authorized under the 2021 American Rescue Plan. Unless reauthorized by Congress, current CTC benefits are claimed annually upon filing Form 1040.