Inflation Reduction Act

Earlier this week, President Biden signed the Inflation Reduction Act, HR 5376, into law. The bill has several significant provisions to raise revenue, but most taxpayers won't see much impact on their annual tax returns.
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The provisions that will be likely to impact individual tax payers relate to residential energy credits. Many credits were set to expire at the end of 2021 and have been extended through 2032 or 2034.

Other significant provisions of the Inflation Reduction Act include the following:

• Corporate Alternative Minimum Tax (AMT) - This applies to most corporations with average income in excess of $1 Billion.
• A new tax on stock buybacks
• Expansion of eligibility for the health care premium tax credits

The bill also provides for additional funding to the IRS. The most significant use of those earmarked funds would increase enforcement by 69%. Although there is concern about the increased likelihood for an IRS Audit, the bill says this is not intended to increase audit rates for individuals or small businesses with taxable income below $400,000.

For additional information on these provisions, take a look at the summary written by The Tax Advisor, Congress enacts tax and climate bill.

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