| There has obviously been a great deal of news coverage on the Inflation Reduction Act, a $430 billion bill focused on lowering health-care costs, promoting clean energy and increasing corporate taxes.
Senate Democrats narrowly passed the legislation on Sunday. After a marathon overnight Senate session, the 51-50 vote was strictly along party lines, with all Republicans voting no and all Democrats voting yes. Vice President Kamala Harris cast the tie-breaking vote. The legislation now heads to the House, which plans to return from its summer recess on Friday, pass the legislation and send it to Biden's desk for his signature.
With all that said, what exactly does the bill — which Biden called a "godsend" for American families — actually mean for everyday people?
There are several facets of the law that could reduce specific expenses for some American consumers, experts point out. First, there are no new taxes directly on individuals earning $400,000 or less annually.
Here's a quick look at some key policies in the bill in which everyday people could save money if the bill passes:
Health insurance expenses: For low-income Americans who purchase health insurance through the Affordable Care Act exchanges, the bill extends and expands premium subsidies, which would have expired in 2023. The bill extends those subsidies until 2024, and Democrats say they will save each individual $800.
Drug prices for seniors: Starting in 2025, the bill caps seniors' out-of-pocket prescription costs at $2,000 per year, and gives Medicare the ability to negotiate drug prices, which could lower the cost of medications.
Lower drug prices: These won't be felt by American consumers until 2026. The U.S. government will start negotiating the price charged for the top 10 most-used drugs with pharmaceutical companies in 2025.
Energy-efficient purchases: The bill includes a variety of rebates and tax credits to consumers for the purchase of energy-efficient items. These include a $4,000 tax credit for lower- and middle-income individuals to buy used clean vehicles and a tax credit of up to $7,500 to buy new clean electric vehicles (depending on income), alongside tax credits on consumer purchases of heat pumps, electric heating, ventilation and air conditioning and water systems, and rooftop solar equipment. The bill would also create a rebate program for low-income households to use for items like energy-efficient retrofitting. The program runs through Sept. 30, 2031.
Solar panels and solar battery systems: Homeowners who install residential solar panels or solar battery systems will qualify for a 30% tax credit for installations until Dec. 31, 2034. The credits will be made available after respective states design the rules of the program.
For more cool stuff like this, be sure to visit CNBC's Financial Advisor Hub and Personal Finance section. |
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