The Inflation Reduction Act (IRA) is a law that includes $500 billion for clean energy, better healthcare, and more tax money. It was signed on August 16, 2022, and its main goals are to help the environment, make healthcare cheaper, and improve how taxes are collected. The IRA is one of three big laws that together will spend $2 trillion over the next ten years to help the US economy grow and create new jobs.
One of the biggest parts of the IRA is $400 billion for clean energy projects. This money will help reduce pollution and make the country greener by the end of the decade. The government will use different ways to give out this money, like tax breaks, grants, and loans. Some of the main areas they will focus on are clean electricity, electric cars, and green transportation.
The US Department of Energy will get about $12 billion to help with loans for energy projects. Most of the clean energy money ($394 billion) will be in the form of tax breaks. Companies will get the biggest share of these tax breaks, which will help them invest in clean energy and create new jobs. Regular people and local governments can also get some of this money to help make their homes and communities greener.
For example, there will be $43 billion in tax breaks to help people buy electric cars, energy-saving appliances, solar panels, and other green technologies. Starting in 2023, if you buy an electric car, you might get a tax break of up to $7,500 for a new car or $4,000 for a used car. If you make your home more energy-efficient, you could get a tax break of up to 30% of the cost, with some limits.
The IRA also has rules to make sure that companies and workers benefit fairly from these tax breaks. To get the full tax break, companies have to pay good wages and offer training programs. There are also rules to make sure that the materials used in electric cars and batteries come from the US or friendly countries.
The IRA will work together with another law, the Bipartisan Infrastructure Law, to spend about $370 billion on clean energy projects over the next five to ten years.
The money from the IRA will be given out by different parts of the US government. The Treasury Department will handle most of the tax breaks, while other departments like Health and Human Services, Agriculture, Energy, and the Environmental Protection Agency will work on other parts of the plan.
The IRA will also raise some taxes on big companies to help pay for all these new programs. It will increase the minimum tax on large corporations to 15%, add a 1% tax on stock buybacks, and give more money to the IRS to collect taxes better. The government will save about $237 billion over the next ten years because of these changes. Overall, the Inflation Reduction Act does a lot of good things for the environment, people, and the government. It helps make clean energy more popular, makes healthcare more affordable, and brings in more money for the government to use on important things like education and infrastructure.