Detailed section by section of the Inflation Reduction Act | Akin Gump Strauss Hauer & Feld LLP

[co-authors: Madison Hughes, Leila Fleming, Josué Silva, Joshua A. Gohlke and Katie Malloy]

The senses. Joe Manchin (D-WV) and Chuck Schumer (D-NY) shocked Washington, DC when they announced an agreement around a fiscal reconciliation package that includes provisions on clean energy and health care and tax reform. The Inflation Reduction Act of 2022 (IRA) is a dramatically scaled-down version of the Democrats’ Build Back Better (BBB) ​​plan, with a much lower price tag and fewer programs, with many programs than the Democrats progressives had pushed for last year eliminated from this iteration. According to negotiators, the bill will generate $739 billion in revenue and invest $369 billion in energy security and climate change and another $64 billion to expand the Affordable Care Act (ACA).

Health care provisions include allowing Medicare to negotiate prescription drug prices directly with pharmaceutical manufacturers, set an annual cap of $2,000, and subsidize ACA health insurance premiums. . For energy security and climate change, the bill includes billions in clean energy tax credits, some of which are new since the House passed the BBB in 2021. It also includes substantial funding for incentives for agricultural practices, forestry programs, residential and commercial building efficiency programs, a methane levy for the oil and gas industry, parity between offshore/onshore renewables and oil and gas leasing, and a number of other provisions aimed at promoting the country’s energy independence and the response to climate change.

To pay for these programs, the reconciliation bill includes a 15% minimum corporate tax ($313 billion), prescription drug pricing reforms ($288 billion), eliminating the deferred interest ($14 billion) and increased IRS tax enforcement funding (expected to raise another $124 billion). The Congressional Budget Office estimates the legislation would reduce the deficit by $102 billion between 2022 and 2031.

Before the Senate can review the IRA, the Senate parliamentarian will consider whether each provision complies with the Byrd Rule of Budget Reconciliation, which requires reconciling provisions to have a clear link to revenue and expenditure. If the congressman confirms that each provision complies with the Byrd Rule, Majority Leader Schumer will move quickly to put the bill through a lengthy amendment process and then final passage. As of this writing, all eyes are on Sen. Kyrsten Sinema (D-AZ) to see if she will provide Senate Democrats with the 50th vote to pass the reconciliation package and send it back to the House. Senator Sinema has previously declared her opposition to the end of the deferred interest deduction and reportedly called for changes to the draft legislation relating to drought resilience funding and other tax items.

If the Senate passes the IRA bill, which could happen as soon as the end of this week, Speaker Nancy Pelosi (D-CA) would then have to call the House back in session to pass the Senate’s version of the IRA. and send it to President Biden for his signature. A complicating factor in the House is the group of Democrats, representing mostly Northeast and Mid-Atlantic districts, who demanded that Democrats use reconciliation to repeal a cap on state and local tax deductions ( SALT) which were part of the Tax Cuts and Jobs Act 2017.

This document includes a complete section by section for the IRA prior to the ‘Byrd bath’ and floor modification process.

Section by detailed section of the Inflation Reduction Act