By Alex Fabian, PICPA Manager of Government Relations
Congress passed a sweeping tax, health care, and climate bill, which was signed by President Joe Biden on Aug. 16, 2022. Known as the Inflation Reduction Act of 2022, the $430 billion package was approved along party lines, with all Democrats backing it and all Republicans opposed.
The bill passed the senate chamber through the reconciliation process. Reconciliation is a rule particular to the Senate that eases passage of legislation on taxes, spending, and the debt limit via a majority vote, bypassing the filibuster. By using reconciliation, Democrats were able to pass the legislation without any Republican support. The Senate is currently split evenly by party, so Vice President Kamala Harris cast the tiebreaking vote. The bill then went to the Democrat-majority House where it easily passed.
There are three major tax provisions in the legislation of particular interest to CPAs:
According to CNBC, the provisions in the Inflation Reduction Act are expected to raise $737 billion over 10 years. Democrats say the bill will reduce the deficit by more than $300 billion, citing analyses from nonpartisan congressional tax and budget offices.
Additionally, CNBC reports that the plan includes a record $369 billion in spending on climate and energy policies that are projected to slash the country’s carbon emissions by roughly 40% by 2030 and several tax incentives for businesses to lower their carbon footprint. This money includes tax credits and incentives for investment in clean energy manufacturing, such as wind, batteries, and solar. It also includes credits for the purchase of electric vehicles. On health care, the new law allocates $64 billion to extend an Affordable Care Act program to reduce insurance costs and includes key prescription drug pricing reforms. The bill empowers Medicare to negotiate prices on 100 drugs over the next decade, among other reforms that the Senate estimates will save $265 billion.
The PICPA government relations team partners closely with the AICPA on federal policy issues, and looks forward to providing additional resources as the key provisions of this historic legislation are unraveled and take effect.
Also, stay tuned for further analysis in the coming weeks from Bob Duquette, CPA, a member of PICPA’s Federal Tax Thought Leadership Committee. He will provide a detailed analysis of the bill in a blog to be posted in a couple weeks.
The PICPA now offers Inflation Reduction Act CPE programming. View the list of available courses.
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