The $700 billion plus Inflation Reduction Act of 2022 (IRA) was passed by the U.S. Senate on Sunday, August 7 and is scheduled to be taken up by the U.S. House of Representatives on Friday, August 12. The legislation includes a host of revenue raising measures, health care policy changes, and $369 billion in climate related funding and tax incentives that will reduce carbon dioxide (CO2) levels 40% by 2030 compared to 2005 levels.
The legislation raises revenue through changes to federal healthcare policy, by imposing a 15% minimum tax on adjusted financial statement income for corporations with profits in excess of $1 billion, assessing a 1% excise tax on stock buybacks, and through allocating billions in new funding to the Internal Revenue Service (IRS) to assist with collections.
The healthcare policy changes include authorizing Medicare to directly negotiate the price of prescription drugs, capping Medicare out-of-pocket costs at $2,000 annually, capping out-of-pocket costs at $35 per month for insulin co-pays under Medicare programs, and a three-year extension of the enhanced and expanded Affordable Care Act (ACA) premium tax credit.
Association for Commuter Transportation (ACT) members should be heartened by many of the climate related provisions included in the IRA. IRA programs where local governments are eligible include – ($1.5 billion) State and Private Forestry Conservation Program, ($2.6 billion) Investing in Coastal Communities and Climate Resilience, ($297 million) Alternative Fuel and Low-Emission Aviation Technology Program, ($1 billion) Assistance for Latest and Zero Building Energy Code Adoption, ($760 million) Grants to Facilitate the Siting of Interstate Electricity Transmission Lines, ($1 billion) Clean Heavy-Duty Vehicles, ($2.25 billion) Grants to Eliminate Air Pollution at Ports, ($27 billion) Greenhouse Gas Reduction Fund, ($5 billion) Greenhouse Gas Air Pollution Planning and Implementation Grants, ($17 million) Low Emissions Electricity Program, ($3 billion) Environmental and Climate Justice Block Grants, ($3.05 billion) Neighborhood Access and Equity Grant Program, and ($2 billion) Low-Carbon Transportation Materials Grants.
In staying with the principles of emissions reductions and investments and incentives for disadvantaged communities, both the $3.95 Billion Neighborhood Access and Equity Grant Program (reconnecting communities) and the $2 billion Low-Carbon Transportation Materials Grant Program include language that exclude funding from either program going toward projects for additional through travel lanes for single-occupant passenger vehicles.
On the tax incentive side, the IRA includes –
An extension of the biodiesel, renewable diesel, alternative fuels, alternative fuels mixture through 2024, which transitions into the Clean Fuel Production Credit beginning in 2025
Clean refundable vehicle tax credit for new qualified plug-in electric propulsion vehicles that can be up to $7,500 if all tests are met for components included in the car; there are also limitations on the tax credit related to price of the vehicle and income of the purchaser
Previously owned clean vehicle tax credit of the lesser of $4,000 or 30 percent of the sale price for eligible vehicles that are at least 2 years old and purchased before December 31, 2032; there are also limitations on the tax credit based on a purchaser’s income
Tax credit for commercial clean vehicles that can as valuable as $40,000
An Alternative Fuel Refueling Property Credit that increases the maximum credit available from $30,000 to $100,000 for electric vehicle charging, but to qualify for the most generous incentives the investment must hit wage, location, and apprenticeship requirements.