On August 7, 2022, the US Senate passed the Inflation Reduction Act (the Act). The bill is expected to be voted on by the House on Friday, August 12, followed by signature by the President. The Act was introduced to reduce the deficit and make major investments in health care, domestic energy, and climate change.
This Act is increasing revenue without significantly changing the tax code. Unlike the Build Back Better Act President Biden proposed last November, the Act does not include many provisions impacting individual income tax or estate planning.
One consequence outside the tax code is that $80 billion will be directed toward IRS enforcement. If the Act is passed, we expect the number of audits to increase and that funds will be used to monitor and enforce taxes on digital assets.
Below is a brief summary of the provisions that would be effective after December 31, 2022:
- 15% corporate minimum tax on large corporations with more than $1 billion in income.???
- 1% excise tax on stock buybacks for publicly traded US corporations.
- Extension of the Affordable Care Act health insurance program through 2025.
- Medicare recipients’ out-of-pocket prescription drug costs will be capped at $2,000 a year and $35 cap on insulin.
- Tax credit for new and used US based electric vehicles ranging from $4,000 (used) to $7,500 (new). Credits will be limited based on AGI and the sale price of the vehicle.
Provisions may change before the President signs the bill. We will provide an update if there are any changes to the final Act.
As always, please do not hesitate to contact your GMAG team if you have questions about the Inflation Reduction Act and how it might affect you or your business.
The information included in this report has been obtained from sources that GMAG believes to be reliable; however, these sources cannot be guaranteed as to their accuracy or completeness
The information included in this report is based upon information reasonably available to GMAG as of the date noted herein.
GM Advisory Group, does not provide tax, legal, or accounting advice. This material is not intended to replace the advice of a qualified tax advisor attorney, or accountant.
We can work with your independent tax/legal advisor to help create a plan tailored to your specific needs. You should consult your own tax, legal and accounting advisors before engaging in any plan or transaction.
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