By a narrow margin in August 2022, Congress passed, and the President signed into law, the Inflation Reduction Act of 2022. The bill has been the subject of much debate and many experts claim that in the long run, the bill may actually worsen inflation by constraining the productive capacity of the economy. Major tax provisions of the bill that are effective beginning after December 31, 2022, include:
- Extends the expanded health insurance Premium Tax Credits provided in the American Rescue Plan Act, including allowing higher-income households to qualify for the credits and boosting the subsidy for lower-income households, through the end of 2025.
- Imposes a 15 percent minimum tax on financial statement or “book income” for corporations with profits over $1 billion.
- Modifies, extends and creates a variety of tax credits for green energy and other efforts primarily through 2031 or 2033.
- Raises the Superfund tax on crude oil and imported petroleum to 16.4 cents per barrel (indexed to inflation) and decreases other taxes and fees on the fossil fuel sector.
- Expands IRS enforcement funding by about $80 billion over 10 years.
- Imposes a 95 percent excise tax penalty on drug manufacturers to lower drug prices.
- Increases the research & development tax credit amount that can be claimed against payroll taxes for small businesses.
For more information, please contact Melissa Howell, CPA, Principal, at 716.633.1373 or mhowell@tsacpa.com.
