Article
Inflation Reduction Act of 2022: An overview of tax implications
Aug. 22, 2022 · Authored by Matt Billings, Clay Hodges, Kyle Sund, Travis Riley
The Inflation Reduction Act of 2022, which includes both tax and non-tax measures, was signed into law by President Joe Biden on Aug. 16, 2022.
The act contains multiple opportunities with updated incentives, including the expanded Internal Revenue Code (IRC) Section 179D deduction, increased ability to leverage the R&D credit to offset payroll taxes for eligible start-up businesses, and several new and expanded clean energy credits and incentives.
Notably, the final legislation doesn’t change the carried interest rules, make any updates to the $10,000 state and local tax cap, or include a change to Section 174 to restore full expensing of research and experimental (R&E) costs.
Below are some of the key tax provisions included in the act:
- Changes to section 179D deduction amount and qualifications
- Increased R&D credit for eligible start-up businesses
- 15% corporate minimum tax on large corporations
- 1% excise tax on public company stock buybacks
- New clean vehicle credit and previously owned clean vehicle credit
- Other clean energy tax credits and incentives for businesses and individuals
- Additional IRS funding
Changes to section 179D deduction amount and qualifications
The Inflation Reduction Act will dramatically increase the scope and value of the energy-efficiency tax incentive under Section 179D for the architecture, engineering, and construction industries, along with commercial building owners.
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