House Committees Outline Energy Provisions in Climate Bill

Lawmakers on the House Ways and Means Committee and the House Energy and Commerce Committee have released a high-level explanation of the energy provisions in the “Inflation Reduction Act of 2022.”

The document is attached and can serve as a go-to resource for understanding certain benefits that are in the legislation.

Background:

President Joe Biden on August 16, 2022, signed into law the Inflation Reduction Act of 2022, formerly known as the “Build Back Better” bill.

The Build Back Better bill that the House approved on November 19, 2021, is not going to pass the Senate and it will not become law.

Aside from the provisions listed in the attached document, the Inflation Reduction Act of 2022 also included the following tax measures:

• Corporate Minimum Tax: Corporations with a three-year average adjusted financial statement income in excess of $1 billion would be subject to a 15% minimum tax, effective for taxable years beginning after 2022. Adjusted financial statement income would be determined using tax instead of book depreciation. Broad discretion would be given to Treasury in implementing the corporate minimum tax.
• Excise Tax on Stock Buybacks: One percent excise tax on corporate stock buybacks by publicly traded companies. The levy applies to net buybacks; therefore, it only applies if there is an excess of redemptions over new issues for the year.
• Limitation on the Excess Business Losses of Noncorporate Taxpayers: Extended for two years, to apply to tax years ending before January 1, 2029.
• Increased IRS Funding: The agency will receive $80 billion over the next ten years. Of that amount $45.6 billion will go to tax enforcement. Administration officials have said that the extra funding is not supposed to increase audit rates on taxpayers and small businesses earning less than $400,000 a year.
• Black Lung fund: Permanent extension of tax rate to fund Black Lung Disability Trust Fund.
• Superfund: Reinstate the Superfund tax for oil and petroleum products (16.4-cents-per-barrel).

Important to note: Certain lawmakers next year might try to repeal tax provisions in this piece of legislation. Those attempts will be in vain because they won't pass both chambers of Congress and will not be signed into law by President Joe Biden.