On July 27, 2022, Senator Joe Manchin (D-WV) and Senate Majority Leader Charles E. Schumer (D-NY) announced a last-minute deal—the Inflation Reduction Act of 2022—containing significant changes to federal tax policy and IRS administration, including:
- a new 15% corporate minimum tax imposed on large corporations with adjusted financial statement income in excess of $1 billion, effective for tax years beginning after December 31, 2022;
- modification to the rules on carried interest to apply short-term capital gains rates; and
- increased appropriations for IRS enforcement efforts, taxpayer services, and business modernization systems.
Senate leadership intends to raise the bill for consideration under the rules of budget reconciliation before the Senate breaks for its August recess.
The bill, which is the result of negotiations from the Build Back Better Act, contains a number of other notable non-tax provisions related to climate change, health care and energy. Collectively, the bill's tax provisions coupled with other revenue raisers are expected to raise $739 billion.
We are currently reviewing the legislative text and summaries and will provide a more detailed discussion of the bill's provisions in a subsequent communication.
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