On July 27, 2022, Senate Democratic leaders released a modified version of the reconciliation tax and spending bill that the House of Representatives passed last year, which is commonly referred to as “Build Back Better.”Watch this webinar recording to listen to our National Tax Office Legislative Affairs team provide an in-depth overview of the Inflation Reduction Act of 2022.
The Senate has renamed the legislation to the “Inflation Reduction Act of 2022” and includes the following provisions expected to raise or save revenue for the federal government:
The amount of revenue raised or saved by these provisions is expected to cover the cost of enacting several energy-related provisions, extend to 2025 the Affordable Care Act’s enhanced premium tax credit (currently scheduled to expire at the end of this year), and reduce the federal government’s deficit by at least $300 billion.
The Senate bill means that the Build Back Better legislation that passed the House last year will probably not pass the Senate and will probably not become law.
The Senate bill is protected by a budget process called “reconciliation.” This protection allows the legislation to pass the Senate with a simple majority of 51 votes instead of the normal 60 votes. This means the bill can pass the Senate with the support of all 50 Senate Democrats and Vice President, Kamala Harris.
Before Senators can vote on the bill, the chamber’s parliamentarian must review its provisions to ensure that they comply with the rules of reconciliation. If a provision falls outside these rules, it can be modified or deleted from the legislation. In other words, all provisions are subject to change.
The parliamentarian’s review is expected to be completed the first week of August. After approval, the legislation can be debated in the Senate’s chamber. Once the bill is on the Senate’s floor, it will be subjected to debate where lawmakers can offer legislative amendments (a process that can take several days to complete). Upon conclusion of the debate, Senators will vote on passing the bill from the chamber. Again, passage is dependent on support from all Senate Democrats and Vice President, Kamala Harris.
To become law, the House must approve the same legislation that the Senate has passed. The Democrats currently hold a slim majority in the House, and although some congresspeople may vocalize certain objections, commentators expect House approval.
President Biden states he will sign the bill once it passes the Senate and House. However, due to the evenly divided Senate, passage is not guaranteed. We will provide further updates as the legislative process moves forward.
This article is provided for general informational purposes only. It is not legal, accounting or other professional advice, as it does not address any individual facts, circumstances or concerns. Before making personal or business related decisions, please consult with appropriate legal, accounting or other qualified professionals.
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