When Will the Inflation Reduction Act Impact Americans?
TL/DR –
The $430 billion U.S. Inflation Reduction Act, anticipated to pass the House of Representatives, aims to lower healthcare costs, promote clean energy, and increase corporate taxes. In the healthcare sector, the bill extends subsidies for Affordable Care Act premiums until 2024, caps annual drug costs for senior citizens who receive Medicare at $2,000 from 2025, and from 2026, the government will negotiate the prices of the top 10 most-used drugs with pharmaceutical companies. On energy, the bill provides rebates for electric vehicle purchasing, sets up homeowner credits for upgrading electrical panels and improving insulation, and offers 30% tax credit for installing residential solar panels or battery systems until December 31, 2034.
U.S. Inflation Reduction Act: Healthcare and Energy Impact
The pending $430 billion U.S. Inflation Reduction Act aims to reduce healthcare costs, encourage clean energy adoption, and raise corporate taxes amidst soaring inflation rates. This legislation is expected to be passed by the House of Representatives on Friday.
Healthcare Provisions
The bill encompasses several healthcare measures, including extensions to Affordable Care Act (ACA) premium subsidies that were due to expire at the end of this year. This move will prevent a premium increase for 13 million Americans and, according to President Joe Biden’s Democrats, save each individual $800.
The legislation also introduces a cap on annual drug costs for Medicare beneficiaries. Starting in 2025, senior citizens will pay no more than $2,000 per year on medication. Moreover, government negotiation with pharmaceutical companies on drug prices for the top 10 most-used medicines will start in 2025 with price reductions to be felt by Americans by 2026.
Energy Provisions
The proposed bill includes several incentives for cleaner energy. Auto buyers will be eligible for electric vehicle rebates this year, with $7,500 for new and $4,000 for used electric vehicles, depending on income. Detailed regulations on income verification and vehicle qualification criteria are being developed by the U.S. Treasury and administration.
The legislation also earmarks $4.28 billion for homeowner rebates to encourage energy efficiency improvements. The state-administered program, running until September 2031, offers rebates for the installation of heat pump water heaters, HVAC systems, electrical panel upgrades, and insulation improvements.
Further, homeowners installing solar panels or solar battery systems will qualify for a 30% tax credit until December 31, 2034. The availability of these credits will be determined once individual states develop program rules.
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