Special Edition of the Pennsylvania Perspective: Inflation Reduction Act

August 17, 2022

This week, President Biden signed the Inflation Reduction Act into law — the sweeping reconciliation bill focused on climate, healthcare and tax provisions.

A quick summary of key effects on business include:

  • A 15% minimum tax on corporations with over $1 billion in revenue, with exceptions made for accelerated depreciation and for subsidiaries of private equity staring in 2023. Raises $222 billion.
  • A 1% excise tax on stock buybacks, effective Jan. 1, to raise $74 billion.
  • An $80 billion boost to the Internal Revenue Service budget to hire more agents, upgrade technology in order to boost revenue collection
  • An extension of loan loss limitation tax breaks from the Trump tax package
  • New Superfund taxes on oil companies
  • Drug prices negotiated by Medicare for the first time, with tax penalty imposed on drug companies failing to abide by new price. Price negotiations begin in 2026 with 10 high priced drugs. Penalties imposed for price increases in sales to Medicare.
  • A $2,000 per year cap on out-of-pocket costs for seniors enrolled in a Medicare drug plan
  • Approximately $374 billion in energy and climate-related provisions including tax incentives for green energy projects, a $7,500 tax credit for purchasing new electric vehicles and $4,000 credit for used EVs. Limits imposed on supply chain sourcing for EVs that qualify
  • A three-year extension of subsidies for Obamacare premiums, preventing expiration of subsidies in 2023.

For a more detailed, updated summary of the key provisions, or if you have questions or want additional information, please feel free to reach out to our team.


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