A Deeper Dive Into The Inflation Reduction Act’s Tax Provisions
Legislation promises increased IRS funding, climate protections. What does it mean for tax professionals and their clients? Editor’s note: The following article originally appeared in the Aug. 29, 2022 online edition of The Journal of Accountancy. It is reprinted here with permission.
BY ALISTAIR M. NEVIUS, J.D. The budget reconciliation bill, P.L. 117169, known as the Inflation Reduction Act, was signed into law on Aug. 16. It includes numerous tax provisions, including new corporate taxes. It also contains numerous clean-energy-related tax incentives, and money for IRS enforcement and other initiatives. Earlier budget reconciliation bill proposals were known as the Build Back Better Act
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and had included much more far-ranging tax provisions, most of which did not make it into the bill as enacted. The enacted bill, for example, makes no change to the $10,000 SALT deduction cap; earlier versions had proposed to increase the cap. Earlier proposals to increase the child tax credit, extend changes to the earned income tax credit, and tax high-income individuals were also abandoned.
Late in the Senate negotiation process, proposed changes to the taxation of carried interests were also dropped. The enacted bill features a wide array of nontax provisions, many aimed at promoting clean energy initiatives. The act also includes prescription drug pricing reform. Here is an in-depth look at the tax items in the act.
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