Inflation Reduction Act includes key tax, climate and health care provisions

The Inflation Reduction Act (IRA) of 2022 (H.R. 5376) contains provisions focused on climate, energy and health, including new, extended and expanded tax credits. It provides for over $430 billion in climate and energy provisions and extends enhanced Affordable Care Act (ACA) subsidies.

Revenue provisions include a 15% corporate alternative minimum tax (CAMT) on adjusted financial statement income for corporations with profits over $1 billion, a stock buyback tax, increased IRS enforcement funding, and a two-year extension of the limitation on excess business losses.

A Joint Committee on Taxation (JCT) revenue estimate of the bill estimates the following revenue impacts, over 10 years:

• CAMT provision: +$222 billion
• Stock buyback excise tax: +$74 billion
• Two-year extension of limitation on excess business losses of noncorporate taxpayers: +$53 billion
• Reinstatement of Superfund excise tax: +$11.7 billion

The Congressional Budget Office (CBO) estimated that revenues would increase by $204 billion over the 2022—2031 period as a result of increases in outlays for IRS tax enforcement activities.

The bill also includes prescription drug provisions including establishment of a Drug Price Negotiation program within Medicare, prescription drug inflation rebates, a redesign of the Part D benefit, and a $35 monthly caps on out-of-pocket costs for insulin for Medicare beneficiaries. The bill also extends the enhanced ACA subsidies established in the American Rescue Plan Act (ARPA) for three years — through 2025. 

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