The Inflation Reduction Act of 2022 was recently signed into law. Besides the headlines, what does that mean to you?
The Act takes a broad swipe at a number of areas, including fighting inflation, investing in domestic energy production, climate initiatives, and healthcare. Some of these objectives translate to changes that can impact you personally, including:
- Healthcare: The Act extends premium tax subsidies for health insurance purchased through the Health Insurance Marketplace. It also assists Medicare recipients by initiating a phased cap for out-of-pocket drug costs. The Act establishes a $35 cap on the monthly cost of insulin. Of importance is the new ability of Medicare to negotiate prices for high-cost drugs. Also, free vaccines through Medicare will be initiated in 2023, among other benefits. The emphasis on affordable healthcare and reduced prescription drug prices could provide significant relief on out-of-pocket drug costs for Medicare recipients.
- The tax code: The Act is intended to motivate the Internal Revenue Service (IRS) to pursue large corporations and high-wealth taxpayers who do not pair their “fair share” in taxes, or engage in tax fraud or tax evasion. The administration states, “No family making less than $400,000 per year will see their taxes go up by a single cent.” Among the provisions of the Act are the pursuit of “tax dodgers” - corporations that pay little or no federal income tax - and instituting a minimum corporate tax of 15 percent. The Act seeks to add a one-percent surcharge on corporate stock buybacks. The White House notes the aim of the surcharge is to “encourage businesses to invest instead of enriching CEOs or funneling profits tax-free to shareholders.” Overall, these and other features of the Act are intended to level the rules by which the working class and the wealthy pay taxes.
- Energy and jobs: The Act offers tax credits in some cases for consumers who purchase new or used electric vehicles (EV). The tax credits have qualifications—so make sure you take a look at the fine print before ordering a new EV. The Act supports development of fair wage union jobs in the clean energy sector. Tax credits will also apply to new build energy efficient homes and U.S.-based industry manufacturing of clean energy components.
There is a lot in the new Inflation Reduction Act. For taxpayers, relief is intended for those who pay their share. For high-asset individuals and large corporations, a careful look at compliance to avoid an IRS civil or criminal audit is probably a good idea.
Challenged by a tax controversy or criminal tax charge from the IRS?
Serving local and international clients from offices in Chicago and Cleveland, the tax group at Robert J. Fedor, Esq., LLC helps you respond strategically to questions concerning offshore tax assets, failure to file returns or your FBAR report, and other compliance questions. Call 800-579-0997 or contact us today.