Biden signed the Inflation Reduction Act. Here’s MarketWatch’s summary of how it will affect your energy bills, investments, and drug costs.
President Joe Biden on Tuesday signed into law the Inflation Reduction Act, the Democratic Party’s major economic package to tackle climate change, curb drug costs and raise hundreds of billions of dollars through taxes. corporations.
At a White House ceremony, Biden called the law – without any Republicans voting for – a measure “not only about today. It’s about tomorrow. ”
Here’s a guide to the key components of the broad act, as reported by MarketWatch journalists.
Energy and climate: The law has a number of consumer-focused rebates and tax credits that can affect Americans’ wallets directly.
Here is an example of how an IRA Solar and heat pump discounts and credits can reduce your energy bills.
And if you are thinking of buying an electric car
IRAs include the first credit is for used electric vehicles, as well as a $7,500 credit for new electric vehicles.
Read more: IRA’s climate section will keep US ‘in impressive distance’ of halving emissions by 2030
This measure is seen as a major effort to increase access to electric vehicles at all income levels and use them for a variety of purposes. This is how to navigate the tight market for used electric vehicles like Nissan
Leaves and Chevy
Health care: Medicare will be allowed to negotiate the cost of some prescription drugs
with pharmaceutical companies, can significantly reduce the amount seniors have to spend on drugs.
Meanwhile, executives of pharmaceutical companies have told investors that the changes will “Refrigeration” or “adverse” to the development of new therapies.
The IRA limits out-of-pocket drug costs for Medicare beneficiaries at $2,000 a year, starting in 2025. It also imposes a $35-a-month limit on insulin purchased through Medicare — but the limit that term does not extend to patients purchasing private insurance.
Idea: No, Senate Inflation Bill Doesn’t Strip $300 Billion From Medicare
The law Biden signed will also go into effect 13 million people get federal benefits under the Affordable Care Act from a higher health insurance premium next year. Those benefits will be renewed for three years.
Tax: There are two major corporate tax elements of the package: a 15% corporate minimum tax aimed at companies like Amazon
pay little or no income tax and 1% excise tax on inventory
The 1% tax on share buybacks is considered unlikely to reduce the attractiveness of share buybacks by many large companies, while other results may be more subtle, such as potential profit from the new 15% minimum corporate tax rate.
The minimum tax and buybacks would reduce S&P earnings per share by 1.5%, analysts say, but the decline could be deeper in areas like healthcare.
and information technology.
The Internal Revenue Service will receive $80 billion in new funding over a decade. But Some tax experts wondered how far the money would go to make a difference at the backlog and under siege..
In a late turn when the bill was being voted on in the Senate, private equity firms got away with facing tens of billions of dollars in potential tax increases and instead leaving with a slight reduction from the new 15% corporate minimum tax rate.
There is no change to the $10,000 limit on state and local tax deductions.
Inflation and deficit: Whether the law exists as its name suggests is a subject of Heated debate. In an analysis released Friday, the Penn Wharton Budget Model found the measure would reduce the deficit by $264 billion over a decade. The same study also concludes that the effect on inflation is “statistically indistinguishable”.
Others, including former Treasury Secretary Larry Summers, see the IRA doing its job.
“The trend of this measure would be to reduce inflation, because over time it reduces demand by reducing the budget deficit,” said Summers, important throughout the year on the Democrats’ approach to contain inflationary pressures. told the Harvard Gazette.