The Inflation Reduction Act Increased Taxes For All Taxpayers

According to the Joint Committee on Taxation, will raise billions of dollars in taxes on Americans making less than $400,000 annually.” The United States Senate voted 51-50 to pass the bill on August 7, 2022, and the United States House of Representatives voted 220-207 to pass the bill on August 12, 2022. The roughly $700 billion legislation cleared Congress without a single Republican vote.

In 2023, taxes will increase by $16.7 billion on American taxpayers earning less than $200,000—a nearly $17 billion tax targeted solidly at low-and middle-income earners next year, amidst stagflation.

The $17 billion hit alone is confirmation that the Biden pledge to not raise taxes on anyone earning less than $400,000 is shattered by the latest tax-and-spend bill.
The proposal would raise another $14.1 billion from taxpayers earning between $200,000 and $500,000.
According to JCT data, 98 percent of all tax returns filed by those in the $200,000 to $500,000 category are filed by those earning between $200,000 and $400,000, with at least three-fourths of the income in the $200,000 to $500,000 category also coming from those below $400,000, meaning it is likely that at least half of all new tax revenue raised next year would come from those earning under $400,000.

Throughout the ten-year window, the average tax rate for nearly every single income category would increase.
By 2031, when the new green energy credits and subsidies provide an even greater benefit to those at higher incomes, those earning below $400,000 are projected to bear as much as two-thirds of the burden of the additional tax revenue collected that year.
“The more this bill is analyzed by impartial experts, the more we can see Democrats are trying to sell the American people a bill of goods,” Crapo continued. “Non-partisan analysts are confirming this bill raises taxes on the middle class and produces no meaningful deficit reduction when gimmicks are removed and the full cost is accounted for. It’s no wonder this bill, which was drafted behind closed doors, is being rushed through the Senate at record pace.”

In 2023, taxes will increase by $16.7 billion on American taxpayers earning less than $200,000—a nearly $17 billion tax targeted solidly at low- and middle-income earners next year, amidst stagflation.
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IRS Releases Guidance On Elective Payments And Transfers Of Certain Credits Under The Inflation Reduction Act

The Internal Revenue Service issued proposed regulations and frequently asked questions describing rules for applicable entities that earn certain clean energy credits and choose to make an elective payment election and rules for eligible taxpayers that elect to transfer certain credits to unrelated parties.

For tax years beginning after Dec. 31, 2022, applicable entities can choose to make an elective payment election, which will treat certain credits as a payment against their federal income tax liabilities rather than as a nonrefundable credit. This payment will first offset any tax liability of the entity and any excess will be refundable.

Applicable entities generally include tax-exempt organizations, state and local governments, Indian tribal governments, Alaska Native Corporations, the Tennessee Valley Authority and rural electric cooperatives. All other taxpayers may elect to be treated as an applicable entity for a limited number of credits.

Also, for tax years beginning after Dec. 31, 2022, certain eligible taxpayers (generally taxpayers that are not applicable entities) can make an election to transfer all or a portion of an eligible credit to unrelated taxpayers for cash payments.
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What The Inflation Reduction Act Means For You

The Inflation Reduction Act, which includes expanded or extended tax credits and additional funding for the IRS, was signed into law on August 16, 2022.

How could the Inflation Reduction Act impact you when filing your next tax return?

Below is a simplified summary of how the Inflation Reduction Act may affect you.

Health Care

The Inflation Reduction Act includes:

  • Extension of Affordable Care Act (ACA) funding through 2025. This funding, which was due to expire at the end of 2022, will allow consumers to continue to buy insurance with lower premiums through the Health Insurance Marketplace (also referred to as the Marketplace or the Exchange).
  • Extension of the American Rescue Plan Act (ARPA) temporary exception that allows taxpayers with incomes above 400 percent of the Federal Poverty Level to qualify for the Premium Tax Credit.

Energy Efficient Home Improvement Credit

The Nonbusiness Energy Property Credit was extended through 2032 and renamed the Energy Efficient Home Improvement Credit.

Starting in 2023, the credit will be equal to 30 percent of the costs of all eligible home improvements made during the year. Additionally:

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More Taxes, More Spending, Higher Prices, And An Army of IRS Agents

Washington, D.C.–U.S. Senator Mike Crapo (R-Idaho), Ranking Member of the Senate Finance Committee, delivered remarks on the Democrats’ reckless tax-and-spending bill, outlining what Americans can expect from the mislabeled Inflation Reduction Act of 2022: more taxes, more spending, higher prices, and an army of IRS auditors.

“It’s too many taxes, too much spending, too big of a burden on American people across all income categories.” 

To watch Crapo’s full remarks, click HERE or the image above. 

On the state of the economy:  

The nonpartisan Penn Wharton Budget Model says the “Inflation Reduction Act” will, if anything, raise inflation in the first few years, with a small and insignificant negative effect later in this decade. That same model concludes that there is “low confidence that the legislation will have any impact on inflation.” 

But it does have an impact on all of us and our economy.  

The bill does nothing to bring the economy out of stagnation and recession.  Rather, the “Inflation Reduction Act of 2022” gives us higher taxes, more spending, higher prices, and an army of IRS agents.  

On tax hikes:  

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