How Will the Inflation Reduction Act’s Tax Reform Impact You?

Business reports, blank paper sheet, data tables and charts - directly above view of office table workspace with TAX REFORMS text.
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To help pay for the new provisions in the Inflation Reduction Act, the U.S. government will institute new tax structures.

See: Inflation Reduction Act’s Climate Change Initiatives Subsidize Solar Panels, Electric Vehicles
Find:7 Surprisingly Easy Ways To Reach Your Retirement Goals

The changes will only apply to individuals and corporations making more than $400,000 annually and will not affect lower and middle class workers or small businesses. The new bill would also impose an excise tax equal to 1% of fair market value for stock buybacks by companies and executives.

It includes instituting a minimum corporate tax of 15% for any organization that nets $1 billion-plus in income, or revenue of $300 billion. As well, $80 billion over the course of 10 years will be provided for the IRS to better enforce tax payments for those who have found loopholes in the system. 

Part of the Act is also offering additional tax credits for measures that align with the overarching themes of the legislation such as, mentioned above, breaks for families and individuals that invest in electric cars and solar energy. 

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Learn: Inflation Reduction Act Offers Home Tax Credits, Rebates to Upgrade Electric and Solar Infrastructure
EV Tax Credit: How Electric Car Owners Could Reap Benefits of Inflation Reduction Act

One thing, for now, that isn’t in the legislation is the extension of the Child Tax Credit as some like Sen. Joe Manchin (D-W.Va.) who introduced the bill claim the cost is too great though others like Sen. Bernie Sanders (D-Vt.) have been pushing for it.

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About the Author

Selena Fragassi joined GOBankingRates.com in 2022, adding to her 15 years in journalism with bylines in Spin, Paste, Nylon, Popmatters, The A.V. Club, Loudwire, Chicago Sun-Times, Chicago Tribune, Chicago Magazine and others. She currently resides in Chicago with her rescue pets and is working on a debut historical fiction novel about WWII. She holds a degree in fiction writing from Columbia College Chicago.
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