The Inflation Reduction Act (IRA) is a groundbreaking piece of legislation that creates millions of new clean energy jobs, makes prescription drugs more affordable, and asks the ultra-wealthy and big corporations to pay their fair share in taxes.
Passed by Congressional Democrats and signed into law by President Biden on August 16, 2022, the bill is a $500 billion investment that delivers what our communities need to thrive. The bill includes benefits in three main areas: clean energy and climate, affordable health care, and tax fairness.
Clean Energy & Climate
The IRA fights the climate crisis through historic investments in (a) clean energy, (b) energy efficient buildings, and (c) resilient communities. The almost $400 billion in funding is meant to benefit our communities, families, and workers while lowering carbon emissions 40% by 2030.
Clean Energy Investments
The majority of the IRA’s funding is intended to transform our economy and communities by bolstering the clean energy industry and creating over six million new jobs.This funding includes $216 billion in funding for the federal government to contribute to the cost of clean energy projects, through tax breaks intended to encourage investment in clean energy, including wind and solar power, battery storage, electric vehicles and charging states.
In order to take full advantage of the federal funding that’s available, businesses and nonprofits must meet explicit standards to ensure that they treat workers and communities fairly and equitably. Most of the labor and materials used are required to be from the U.S. in order to create and sustain jobs in our local communities. There are additional benefits available for investments made in communities that have been disproportionately impacted by pollution, like coal mining towns. While it’s typical for the government to use funds to incentivize corporations to take certain actions, this funding is groundbreaking because states, local governments, and nonprofits can take advantage of these clean energy programs as well!
Additionally, there is funding available to make it cheaper for people to buy electric vehicles, with tax breaks up to $7500 for new vehicles and up to $4000 for used vehicles. This money is available when you purchase the car, so you pay less upfront and don’t have to wait until tax season to get a refund, which means buying electric vehicles is in reach for more families.
Energy Efficient Buildings
The IRA offers funding to lower the cost of constructing new buildings and retrofitting existing ones to be energy efficient and climate resilient, while lowering energy costs for families. There are various initiatives to address the energy efficiency of homes and apartments, commercial, and public buildings, which would create 900,000 new jobs.
These initiatives include:
- Tax breaks that allow for residential homeowners and tenants to be reimbursed up to 30% of the cost of eligible home improvement investments like energy efficient appliances, rooftop solar panels, geothermal heating, and home batteries.
- Tax breaks that offset the costs that commercial building owners incur to install energy systems in their buildings that reduce energy usage by 25%.
- $1 billion for local governments, nonprofits, and housing developers to upgrade affordable housing to be energy efficient and lower utility bills.
- $250 million to update federal buildings so that they meet the environmental and energy standards set by the Office of Federal High-Performance Green Buildings.
The IRA also makes a $120 billion investment to ensure our communities’ health and climate resilience, while creating another half a million new jobs. These investments include:
- Conservation programs like restoring coastal habitats and supporting forests.
- Resilience programs that reduce pollution in schools and support local governments in climate change planning and response.
- Environmental justice programs that ensure that as we invest in all communities, those that have been historically marginalized and disproportionately impacted by climate change are not left behind.
Affordable Health Care
The IRA addresses the sky-rocking cost of health care, ensuring that our families and seniors pay less for their care. In addition to the savings for households, it’s estimated that these provisions will save the federal government $173 billion through 2031.
Medicare Takes on Big Pharma
The majority of the IRA’s health care provisions are drug price reforms that reduce costs for millions of Medicare beneficiaries, including:
- Requiring Medicare to negotiate with pharma companies on the prices of certain high-cost drugs to use its purchasing power to bring down the cost of prescription drugs.
- Preventing drug companies from price gouging by penalizing them for raising drug prices faster than the rate of inflation. This will result in Medicare recipients saving on the cost of 43 different prescription drugs, just in the the period between July 1 and September 30, 2023.
- Establishing a $35/month copay cap on insulin.
- Capping out-of-pocket expenses for Medicare Part D prescription drugs at $2,000 annually, starting in 2025.
- Offering free vaccines, as of January 2023.
Expanding the Affordable Care Act
The bill will also make health insurance more affordable, so that millions more Americans will be able to get coverage. By extending Affordable Care Act subsidies through the end of 2025, not only will millions of families save money when buying insurance through the marketplace, but families who buy their insurance on their own will have their insurance premiums reduced by up to $800.
The IRA enacts new taxes to ensure that the ultra-wealthy and large corporations are paying their fair share. It increases the minimum tax on large corporations to 15% and limits the deductions that wealthy business owners were able to use to avoid paying taxes on their full income. The bill also enacts a 1% tax on stock buybacks to encourage corporations to invest in their workers rather than lining the pockets of shareholders. The IRA also increased funding for the IRS by $60 billion over the next 10 years to improve customer service and step up enforcement to go after ultra-wealthy tax cheats.