AUGUST 18, 2022
The Inflation Reduction Act of 2022 will make a historic down payment on deficit reduction to fight inflation, invest in domestic energy production and manufacturing, and reduce carbon emissions by roughly 40 percent by 2030. The bill will also finally allow Medicare to negotiate for prescription drug prices and extend the expanded Affordable Care Act program for three years, through 2025.[Senate summary]
By signing the Inflation Reduction Act, President Biden is delivering on his promise to meet the climate crisis and build an economy that works for working families, including Tribal nations and American Indian, Alaska Native, and Native Hawaiian families. The Inflation Reduction Act lowers prescription drug costs, health care costs, and energy costs. It’s the most aggressive action we have taken to confront the climate crisis. It’ll lower the deficit and ask the super wealthy and corporations to pay their fair share. And no one making under $400,000 per year will pay a penny more in taxes.
President Biden and Congressional Democrats beat back the special interests to pass this historic legislation that includes significant Tribal-specific provisions, and otherwise helps American Indian, Alaska Native, and Native Hawaiian communities who have been at the frontline of climate change, by lowering costs, advancing environmental justice while building a cleaner future, and growing the economy from the bottom up and the middle out.
The Inflation Reduction Act:
- Expands Medicare benefits: free vaccines (2023), $35/month insulin (2023) and caps out-of-pocket drug costs to an estimated $4,000 or less in 2024 and settling at $2,000 in 2025
- Lowers energy bills: cuts energy bills by $500 to $1,000 per year
- Makes historic climate investment: reduces carbon emissions by roughly 40% by 2030
- Lowers health care costs: saves the average enrollee $800/year in the ACA marketplace, allows Medicare to negotiate 100 drugs over the next decade, and requires drug companies to rebate back price increases higher than inflation
- Creates manufacturing jobs: more than $60 billion invested will create millions of new domestic clean manufacturing jobs
- Invests in disadvantaged communities: cleaning up pollution and taking steps to reducing environmental injustice with $60 billion for environmental justice
- Closes tax loopholes used by wealthy: a 15% corporate minimum tax, a 1% fee on stock buybacks and enhanced IRS enforcement
- Protects families and small business making $400,000 or less
The Inflation Reduction Act takes the most aggressive action on climate and clean energy in American history. And it does so by providing funding specifically for Tribes to plan for and adapt to climate change, mitigate drought, support fisheries, and shift to clean energy production and use.
Support climate resilience and adaptation in Tribal nations and Native communities. The Inflation Reduction Act includes Tribal-specific funding to address climate-related impacts in Native communities, including investments that support:
- Tribal climate resilience and adaptation programs at the Bureau of Indian Affairs (BIA);
- Climate resilience and adaptation activities for the Native Hawaiian community;
- Mitigating drought impacts in Tribal communities; and
- Tribal fish hatchery operations and maintenance programs.
Fund a Tribal electrification program. The Inflation Reduction Act includes investments for a Tribal Electrification Program for Tribes and Tribal organizations to provide electricity to unelectrified Tribal homes through zero-emission energy systems, and to transition electrified homes to zero-emission energy systems.
Support Tribal energy development. The Inflation Reduction Act provides additional investments for the Tribal Energy Loan Guarantee Program, and increases loan guarantees for Tribal energy development from $2 billion to $20 billion.
COMBAT CLIMATE CHANGE AND LOWER ENERGY COSTS
In addition to its Tribal-specific funding, the Inflation Reduction Act will bring down energy costs for families and create thousands of good jobs, all while reducing climate pollution and ensuring that we have a clean, secure future energy supply. It will:
Reduce Pollution: The law will eliminate about a billion tons of greenhouse gas emissions in 2030 and position America to meet President Biden’s climate goals of cutting emissions in half or more by 2030 and reaching net-zero by no later than 2050.
Advance Environmental Justice: Climate change disproportionately impacts low-income communities and communities of color. The Act will work to alleviate legacy pollution and to ensure that clean energy opportunities reach all Americans, including through new Environmental Justice Block Grants—which will support community-led projects across the country.
Make Home Efficiency Upgrades More Affordable: The Inflation Reduction Act will make it more affordable for families to purchase energy-efficient and electric appliances when they need to replace everyday home appliances and equipment. And, these appliances will save families money on their utility bills in the long run.
- When families need to replace air conditioners, water heaters, or furnaces, they can save up to 30% with tax credits for efficient heating and cooling equipment that will save them hundreds of dollars on utility bills.
- Households can save up to 30% with tax credits for home construction projects on windows, doors, insulation, or other weatherization measures that prevent energy from escaping homes.
- If families need to replace or upgrade stoves, ovens, or other home appliances, they can receive direct rebates when buying more energy-efficient and electric appliances that can lower future utility bill by at least $350 per year.
- Families in affordable housing units will benefit from resources to support projects that boost efficiency, improve indoor air quality, make clean energy or electrification upgrades, or strengthen their climate resilience.
- Overall, families that take advantage of clean energy tax credits can save more than $1,000 per year.
Support Farmers, Ranchers, and Forest Landowners: The Inflation Reduction Act recognizes the critical role that America’s farmers, ranchers, and forest landowners play in addressing the climate crisis. The law will:
- Help farmers, ranchers, and forest landowners deploy climate-smart practices that will reduce greenhouse gas emissions, increase storage of carbon in soils and trees, and make their operations more productive.
- Support innovative, cost-effective ways to measure and verify climate benefits, including through USDA’s Environmental Quality Incentives Program, Conservation Stewardship Program, Agricultural Conservation Easement Program, Regional Conservation Partnership Program, and Conservation Technical Assistance.
- Help up to 280,000 farmers and ranchers apply conservation to approximately 125 million acres of land.
Strengthen the Resilience of Rural Lands to Climate Impacts: The Inflation Reduction Act protects communities from the risks of wildfires and makes public and private lands more resilient in the face of climate change. These investments will help:
- Protect 1.8 million acres of National Forest System Lands from wildfire and restore an additional 550,000 acres of federal lands.
- Increase climate resilience of forests on 280,000 acres of non-federal land, support conservation easements on 475,000 private acres, and prepare management plans for an additional 1,500,000 private acres.
- Strengthen habitats and infrastructure to withstand climate-induced extreme weather events in our National Parks, National Wildlife Refuges and across our public lands.
LOWER HEALTH CARE COSTS
The Inflation Reduction Act will lower health care costs, including prescription drug costs, and expand health insurance coverage for American Indian, Alaska Native, and Native Hawaiian families.
Lower Prescription Drug Costs for Seniors: Americans pay 2-3 times more for their prescription drugs than people in other wealthy countries. The Inflation Reduction Act increases access to medication in Tribal communities, especially for Tribal elders, by improving prescription drug coverage and lowering drug prices in Medicare. The law:
- Caps the amount that seniors will have to pay for prescription drugs they buy at the pharmacy at $2,000 a year, giving peace of mind to seniors who no longer have to worry about spending thousands and thousands more on prescription drugs.
- Caps the amount that seniors will have to pay for insulin at $35 for a month’s supply.
- Means that seniors on Medicare will now have access to a number of additional free vaccines, including the shingles vaccine.
- Will further lower prescription drug costs for seniors by allowing Medicare to negotiate the price of high-cost drugs and requiring drug manufacturers to pay Medicare a rebate when they raise prices faster than inflation.
Lowering Health Insurance Premiums and Expanding Coverage: Almost half a million AI/ANs were uninsured in 2019 before President Biden took office and over 130,000 AI/ANs fell into the Medicaid “coverage gap” and were locked out of coverage because their state refused to expand Medicaid. Since President Biden took office, the uninsured rate has reached a new historic low: 8% and over 5 million Americans have gained health insurance coverage. The Inflation Reduction Act continues the American Rescue Plan’s more generous Affordable Care Act premium tax credits.
- The Inflation Reduction Act locks in lower monthly premiums – about 26,000 uninsured AI/ANs had access to a $0-premium plan in 2021.
- By continuing the improvements made through ARP, the Inflation Reduction Act will help keep free or low-cost health insurance available. About 60,000 more AI/ANs will have health insurance coverage next year, compared to without the IRA.
MAKE THE TAX CODE FAIRER
President Trump and Congressional Republicans’ 2017 tax law only made an unfair tax system worse. The Inflation Reduction Act is a critical step forward in making our tax code fairer. It will raise revenue by:
- Ensuring that high-income people and large corporations pay the taxes they already owe.
- Cracking down on large, profitable corporations that currently get away with paying no federal income tax.
- Imposing a 1% surcharge on corporate stock buybacks that will encourage businesses to invest.
The legislation’s tax reforms won’t just raise revenue to finance critically needed investments to lower costs and combat climate change, they are also an important component of building an economy that rewards work rather than wealth and doesn’t let the rich and powerful get away with playing by a separate set of rules.
Millions of working families will have better access to the benefits they are entitled to under the tax code and be able to get their questions answered quickly and efficiently, thanks to the Act’s transformational investments in the Internal Revenue Service. And, no family making less than $400,000 per year will see their taxes go up by a single cent.