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Jan 1st inflation redcution act information

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Two much-touted portions of the bill concerning health care start on Jan. 1.

The soon-to-be implemented changes include a new inflation cap that limits how much drug manufacturers can change the price of prescription drugs and new rules that insure that people enrolled in a Medicare prescription drug plan don’t pay more than $35 for a month’s supply of insulin.

The law also will allow many Medicare Part D beneficiaries to receive vaccines for $0 in the new year.


Another key provision of the bill allows Medicare to negotiate for prescription drug prices beginning in 2023. The previous law prohibited Medicare from intervening in the talks between drug makers and health plan sponsors. While these changes are projected to save Medicare nearly $100 billion over the coming decade, the effects of the renegotiated prices aren’t expected to be felt by seniors until 2026.

The law also institutes a cap on out-of-pocket expenses for many Medicare recipients, but those won’t begin until 2024. In 2025, it will fully kick in with a hard cap on out-of-pocket expenses of $2,000 per year that will be indexed to inflation afterward.


The law also has two big changes to the tax code that will affect businesses in 2023.

First, a new 15% corporate minimum tax on corporations with book income above $1 billion takes effect and will set a new floor for many of America’s biggest businesses when it comes to tax time.

Congress’s Joint Committee on Taxation reported in early August that about 150 companies could see their tax situation change as a result of the new rules. But the final tally may be less after last-minute changes were made to the bill to include some exceptions for manufacturers.

A another analysis by University of North Carolina Business Professor Jeffrey Hoopes found that the revised law is likely to hit companies like am*zon (AMZN), Berkshire Hathaway (BRK-A), Ford (F), AT&T (T), and eBay (EBAY) the hardest based on what they paid in 2021.

“It's going to target companies who have a lot of financial accounting income, but pay relatively little in tax,” he said. am*zon infamously paid $0 in taxes in both 2017 and 2018 even while making billions in profits thanks to a host of tax credits, loopholes, and exemptions.


Also going into effect for 2023 is a new 1% excise tax on stock buybacks. The non-deductible tax will cover stock that is repurchased by a corporation or by certain corporate affiliates and will cover transactions from Jan. 1 onwards.

The IRS released new guidance this week around both the alternative minimum tax and the excise tax outlining more details about how it works and — in the case of the minimum tax — how companies can know if they are included. The two new taxes are projected to raise about $296 billion over the coming decade to pay for other parts of the massive new law.


A new credit for 2023 offers households up to 30% to cover the costs of certain energy-efficient improvements like upgrading a home’s weatherization or buying new appliances like a heat pump.

There are also changes coming around the tax credits available for clean vehicles. Many households will be able to receive a $7,500 tax credit in 2023 when they purchase a new electric vehicle and $4,000 when purchasing a used EV.

But there remains some confusion over how the credit will be applied in 2023 because of rules around if the vehicle was assembled in North America and where the materials for the battery came from. The IRS released new guidance this week, including a list of vehicles that are expected to qualify for the credit on Jan. 1.





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