On Sunday, August 7, 2022, the Senate cleared the amended bill referred to as, The Inflation Reduction Act, for passage with a 51-50 vote, with all Democrats voting in favor, and Vice President Kamala Harris breaking the tie in favor. The bill now awaits passage by the House, which is set to convene on August 12, 2022 for final passage.
The bill would raise revenue from:
- Imposing a 15% corporate minimum tax rate for companies with higher than $1 billion of annual financial statement income
- Prescription drug price reform to lower prices, including Medicare Negotiation of drug process
- Increased tax enforcement. There are no changes to the Internal Revenue Code to implement the improvement in IRS enforcement. Bill only increases the IRS budget by $80 billion of the next decade which is expected to be used in part, to hire 87,000 new IRS agents
- Imposing a 1% excise tax on stock buybacks
It would spend this revenue on:
- Continuing for three more years the expansion of Affordable Care Act subsidies originally expanded under the American Rescue Plan Act of 2021
- Addressing domestic energy security and climate change including incentives for green energy. Incentives come in the form of tax credits such as those for electric vehicles or residential energy property. The energy investment credit is extended to 2024. The credit for the purchase of clean vehicles (which includes both plug-in electric vehicles and fuel cell vehicles) is extended through 2032. A new credit of up to $4,000 is also available for the purchase of a previously-owned clean vehicle subject to income limitation, through 2032
- Funding for drought relief
- Extending for two years, the excess business loss limitation rules that apply to noncorporate taxpayers. The limitation would apply to tax year beginning before January 1, 2029.
- Deficit reduction
What’s not in the Bill:
- Closing of the carried interest loophole
- No changes to the tax rules affecting qualified small stock
- No change to the SALT deduction limitation
- No change to the international tax rules (including GILTI and BEAT)
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