On August 16, 2022, President Joe Biden signed the Inflation Reduction Act of 2022 (the “Act”) into law. The bill passed Congress with a vote of 220-207 in the House, and 51-50 in the Senate, with Vice President Kamala Harris casting the tiebreaking vote. The Act is massive, with over 300 pages of tax-related changes. It includes, among other provisions:
▪ A 15% corporate alternative minimum tax on large corporations (the corporate AMT had previously been eliminated by the Tax Cuts & Jobs Act of 2017)
▪ A 1% excise tax on stock repurchases by domestic corporations whose stock trades on an established securities market
▪ Significant funding ($80 billion) for the IRS, with $45.6 billion aimed chiefly at enforcement. The IRS has said that its goal is to reduce the tax gap by strengthening its ability to capture revenue from taxes that might not otherwise be collected. Treasury Secretary Janet Yellen has directed the IRS to implement programs in a way that will not increase examinations of taxpayers making less than $400,000.
▪ Green Energy – The majority of the provisions of the Act are devoted to incentives for green energy, including extensions and expansions of current credits, as well as some new credits:
The Inflation Reduction Act does not include a restoration of the full state and local taxes deduction for individuals. Therefore, the $10,000 limit on deducting state and local taxes remains in place for individuals through 2025.
If you have questions about how any of the provisions of the Inflation Reduction Act of 2022 may affect you, please contact us.