Inflation Reduction Act Tax Credit Explained

tax credit

What’s In The Inflation Reduction Act Of 2022

This year congress passed House Resolution 5376, the Inflation Reduction Act of 2022, and while the CBO estimates it will have a “negligible effect on inflation” it does enact some programs aimed at reducing consumer prices, lowering prescription drug costs, and incentivizing investment in energy-saving measures.

Here are the major provisions of the bill:

  • 15% minimum corporate tax rate: Corporations with an annual income of $1 billion will be taxed at a minimum rate of 15%.
  • Funding for the IRS: The IRS will receive $80 billion in additional funding for enforcement (“force” being the operative word). Studies show that no one besides the IRS is happy about this.
  • Tax Credits for energy-efficient improvements: The bill contains tax credits for homeowners who make certain home improvements for energy efficiency.
  • Subsidy extension for the Affordable Care Act: The current subsidies to lower medical insurance premiums have been extended through 2025.
  • Medicare prescription drug price reform: This provision allows Medicare to negotiate the price of some prescription drugs and caps recipients’ out-of-pocket prescription drug costs at $2500, starting in 2025.

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