Biden Signs Inflation Reduction Act with 15% Corporate Minimum Tax, Other Tax Measures
The Inflation Reduction Act introduces, among a wide array of other tax measures, a 15% corporate minimum tax for big US corporations, effective for taxable years beginning after 31 December 2022.
On 16 August 2022, President Joe Biden signed the Inflation Reduction Act of 2022, H.R. 5376, the sweeping tax, climate and health legislation, which establishes, among other measures, a 15% corporate minimum tax for big US corporations (i.e. those with over USD 1 billion in reported income), effective for taxable years beginning after 31 December 2022.
In addition to establishing the alternative corporate minimum tax, the Act also:
- imposes a 1% excise tax on corporate stock repurchases made after 31 December 2022;
- establishes an excise tax on drug manufacturers, producers and importers who fail to enter into drug pricing agreements;
- extends the health insurance premium tax credit modifications made in the American Rescue Plan Act of 2021 (P.L. 117-2) through 2025;
- modifies the tax treatment of the energy sector by:
- extending and modifying the credit for electricity produced from certain renewable resources and the energy credit; and
- extending excise tax credits for alternative fuels, biodiesel, and renewable diesel; and
- appropriates to the US Internal Revenue Service (IRS) and related agencies USD 79.6 billion (on top of its normal appropriations) to enforce the US Internal Revenue Code (IRC) and boost taxpayer services.
The White House issued a statement in which President Biden said the American people won and the special interests lost with the Act, which he called one of the most significant laws in US history. President Biden noted that the Act will cut the federal deficit "by having the wealthy and big corporations finally begin to pay part of their fair share" of taxes while "no one earning less than USD 400,000 a year will pay a penny more in federal taxes."
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