Inflation Reduction Act of 2022 passes Senate

By: Jeremiah (Jerry) Murphy

On Sunday, August 7, 2022, the U.S. Senate passed the Inflation Reduction Act of 2022. The legislation contains significant tax savings such as:

  • Providing significant incentives for individuals and businesses to become more energy efficient by extending, increasing, and expanding credits generally applicable for post-2022 purchases for:

    • Purchasing clean fuel vehicles (both new and used);

    • Making their homes more energy efficient (rebates are also available for qualified expenses incurred by qualified individuals and entities);

    • Making commercial buildings and residences more energy efficient;

    • Building/manufacturing more energy efficient homes; and 

    • Producing clean energy and fuels;

  • Increasing the Research Credit against payroll taxes for qualified small businesses for post-2022 tax years; 

  • Extending the current Premium Tax Credit amounts available to taxpayers who purchase health insurance on state health care exchanges for an additional three years; and

  • Limiting and capping various costs Medicare recipients will have to pay for prescription drugs and certain premiums and co-pays, as well as providing free vaccines.

These expanded programs would be paid for by:

  • Increasing IRS funding for audits and compliance initiatives;

  • Imposing a 1% excise tax on certain stock repurchases, applicable to post-2022 stock repurchases; and

  • Imposing a new 15% corporate minimum tax on corporations with average financial statement income over $1 billion per year, beginning with the 2023 tax year.

The House now gets the bill and it is anticipated that they will vote on the bill later this week; President Biden has indicated that he will sign the bill as soon as it gets to his desk.

We recommend holding up any clean-energy purchases you may be considering today until the House signs-off on the bill and we have a moment or two to understand what it means for you.