The Inflation Reduction Act

On Friday The U.S. House of Representatives passed a major bill focusing on climate, health care, and tax known as the Inflation Reduction Act. President Joe Biden will sign the bill today putting it into law.

The Inflation Reduction Act highlights:

Climate: The goal of the bill is to reduce greenhouse gasses by 40% below 2005 levels by 2030. The transportation, electric power and industry sectors each make up around 25% of national emissions.

According to the Washington Post, “The bill uses two main levers: major new incentives for private industry to produce far more renewable energy, and other incentives for households to transform their energy use and consumption.”

Health Care: The bill allows Medicare to negotiate drug prices on various prescription drugs over the next decade and prevents future administrations from refusing to do so.

Tax: The bill imposes a minimum tax rate of 15% aimed toward corporations that earn more than $1 billion per year in profits. The tax will help pay for investments across climate and health care. It will boost the IRS’ tax enforcement and compliance capabilities, attempting to close the “tax gap”.