By: Janice Li
On August 7, the Inflation Reduction Act of 2022 was approved through the budget reconciliation procedure, with Vice President Kamala Harris acting as the deciding tie-breaking vote. The act is a significant investment in combating climate change, increasing taxes on major corporations, and lowering the cost of prescription pharmaceuticals and health care. By the end of this week, the House of Representatives is anticipated to vote on the measure, and President Joe Biden is projected to sign it into law the following day.
The provisions of the plan include many expenditures on climate protection, including tax credits for consumers to cover energy costs; investments in sustainable energy production; and tax credits intended to reduce carbon emissions. The bill will also enable Medicare to bargain for a lower price on some prescription pharmaceuticals, lowering the cost of medication for recipients.
Starting in 2025, the annual out-of-pocket limit for Medicare users will be $2,000 for prescription drugs. Additionally, the bill includes that a new 15% tax rate will be applied to corporations with annual revenue of at least $1 billion, and over the next ten years, the law will invest $80 billion in the country’s tax agency.
The remaining funds will be used for operations, taxpayer services, technology, the creation of a direct free e-file system, etc. According to recent projections from the Congressional Budget Office, those changes will collectively generate $203.7 billion in revenue from 2022 through 2031.
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