The Inflation Reduction Act: What does it mean to you?
- Senate Democrats on Sunday passed their climate, health and tax package, including nearly $80 billion in funding for the IRS. The bill passed the House on 8/12/22.
- The Inflation Reduction Act allocates $79.6 billion to the IRS over the next 10 years, with more than half of the money going to enforcement.
- More than half of the money is meant for enforcement, with the IRS aiming to collect more from corporate and high-net-worth tax dodgers. The remainder of the funding is earmarked for operations, taxpayer services, technology, development of a direct free e-file system and more. Collectively, those improvements are projected to bring in $203.7 billion in revenue from 2022 to 2031, according to recent estimates from the Congressional Budget Office.
- IRS Commissioner Charles Rettig said the $80 billion in funding would not increase audits of households making less than $400,000 per year.
- More than two-thirds of registered voters support boosting the IRS budget to strengthen tax enforcement on high-income taxpayers, according to a 2021 poll from the University of Maryland.
- The bill also addresses health care and raises revenue, the latter most prominently by a new 15% corporate minimum tax on financial statement, or “book,” income, which was slightly modified before the bill came to the Senate floor. It would also increase IRS funding, particularly for enforcement.
- The bill’s Title I, Subtitle C (§12001), would amend Sec. 36B to extend through 2025 widened eligibility for health care premium tax credits for taxpayers whose household income exceeds 400% of the poverty line and the calculation of the applicable percentage of premium assistance amount, both of which were temporarily provided under the American Rescue Plan Act, P.L. 117-2.
- Following is an at-a-glance list of the bill’s energy and climate Title I, Subtitle D, tax credit and other items:
- Clean electricity and reducing carbon emissions (Part 1)
- Clean fuels (Part 2)
- Clean energy and efficiency incentives for individuals (Part 3)
- Clean vehicles (Part 4)
- Investment in clean energy manufacturing and energy security (Part 5)
- Superfund (Part 6)
- Incentives for clean electricity and clean transportation (Part 7)
- Credit monetization (Part 8)