These 3 big pieces of Biden’s agenda start January 1 – Yahoo Finance

US President Joe Biden speaks about protecting Social Security, Medicare and reducing prescription drug costs, during a visit to OB Johnson Park and Community Center, in Hallandale Beach, Florida, US, November 1, 2022. REUTERS /Kevin Lamarque

Large pieces of the groundbreaking inflation reduction law that President Biden signed four and a half months ago will come online in 2023.

On January 1, a series of legislative provisions will touch many corners of American life, from the cost of prescription drugs and a new minimum corporate tax to a host of new tax credits as part of Washington’s largest effort to turn the tide on the of the climate. change.

“We are just getting started,” said President Biden said in a speech recentlywho previewed some of the changes, adding that the effects will be felt “from healthcare to clean energy.”

Here are some of the key provisions in the law that are coming into effect.

Health care changes that represent “the most aggressive action in a generation.”

Two much-lauded parts of the health care bill go into effect January 1.

The soon-to-be-implemented changes include a new inflation cap that limits how much drug manufacturers can change the price of prescription drugs and new rules that prevent people who enroll in a Medicare drug plan from paying more than $35 for a month. delivery of insulin.

The law too will allow many Medicare Part D beneficiaries to receive vaccines for $0 in the new year.

These changes are often discussed by President Biden, who said earlier this month, “it’s a real savings for people, and it’s about to start.”

President Joe Biden talks about cutting prescription drug costs during a November visit to Hallandale Beach, Florida. (REUTERS/Kevin Lamarque)

Another important provision of the bill allows Medicare to negotiate prescription drug prices starting in 2023. The previous law prohibited Medicare from interfering in the conversations between drug makers and health plan sponsors. While these changes are expected to save Medicare nearly $100 billion over the next decade, the effects of the renegotiated prices are not expected to be felt by seniors until 2026.

The law also sets a cap on out-of-pocket expenses for many Medicare recipients, but those don’t begin until 2024. In 2025, it will go into full effect with a hard out-of-pocket limit of $2,000 per year that will be indexed to inflation thereafter .

During a recent Yahoo Finance Live appearanceChris Meekins, a Raymond James healthcare policy analyst, noted that the actions in total “represent the most aggressive action in a generation against the pharmaceutical industry related to regulating drug pricing.” But he added that some effects will be felt most strongly within the Medicare system and may have a more limited impact on the industry as a whole.

For example, the new law doesn’t change the price of a new drug at launch, so “when a drug first hits the market, they can do whatever they want,” Meekins noted of the companies.

Two major changes in corporate tax law

The law also includes two major changes to the tax code that will affect businesses in 2023.

First, a new minimum tax of 15% for companies with book income over $1 billion is going into effect and will set a new floor for many of America’s largest companies when it comes to tax time.

The Joint Taxation Committee of Congress reported that in early August about 150 companies could see their tax situation change as a result of the new rules. But the final count may be less after last-minute changes to the bill to include some manufacturer exceptions.

A another analysis University of North Carolina business professor Jeffrey Hoopes found that the revised law is likely to affect companies like Amazon (AMZN), Berkshire Hathaway (BRK-A), ford (F), AT&T (T) and eBay (eBay) the hardest based on what they paid in 2021.

“It’s going to target companies that have a lot of financial accounting revenue but pay relatively little tax,” he said. Amazon infamously paid $0 in taxes in both 2017 and 2018 while making billions in profits thanks to a host of tax credits, loopholes and exemptions.

A video protest sign on a truck paid for by the Patriotic Millionaires drives past a mansion owned by Amazon founder Jeff Bezos as part of a federal tax return day protest to demand he pay his fair share of taxes, in Washington, D.C. USA, May 17, 2021 REUTERS/Jonathan Ernst

A video protest sign on a truck drives past the Washington DC mansion of Amazon founder Jeff Bezos to protest the low taxes his company often pays. (REUTERS/Jonathan Ernst)

A new excise tax of 1% on share buybacks will also come into effect for 2023. The non-deductible tax covers shares repurchased by a company or certain affiliates and covers transactions beginning January 1.

The IRS released new guidelines this week around both the alternative minimum tax and the excise duty with more details on how it works and – in the case of the minimum tax – how companies can know if they are included. The two new taxes are expected to raise about $296 billion over the next decade to pay for other parts of the massive new law.

Former US Senator Byron Dorgan (D-ND) predicted in a Yahoo Finance Live interview this week of the tax change that “companies will say there’s a big problem with them, but I honestly don’t think there’s a big problem.” He added that taxes such as the minimum corporate tax are necessary to prevent companies from completely skipping their tax bill.

A series of new tax credits for clean energy

A third key provision of the law that takes effect this weekend will affect the clean energy economy. A range of tax credits will be available in the new year, especially for Americans who are looking to reduce the climate impact of their home.

A new credit for 2023 offers households up to 30% to cover the cost of certain energy efficiency improvements, such as upgrading a home’s weatherproofing or purchasing new appliances such as a heat pump.

Boynton Beach resident Fred Closter shows off his $40,000 rooftop solar system, which includes $24,000 worth of solar panels and two $8,000 Tesla storage batteries that allow Closter and his wife to live almost completely off the FPL grid.  Congress and the Biden administration last week made it easier for other Floridians to achieve the same goal by increasing the 30% federal tax credit for solar systems through 2032.  (Susan Stocker/Sun Sentinel/Tribune News Service via Getty Images)

Fred Closter of Boynton Beach, FL shows off the $40,000 rooftop solar system he recently installed in his home. (Susan Stocker/Sun Sentinel/Tribune News Service via Getty Images)

There are also changes in the tax credits available for clean vehicles. Many households will be able to receive a tax credit of $7,500 in 2023 when they buy a new electric car and $4,000 when they buy a used electric car.

But some confusion remains about how the credit will be applied in 2023 because of rules around if the vehicle was assembled in North America and where the battery materials are sourced. The Tax and Customs Administration released new guidelines this week, including a list of vehicles who are expected to be eligible for the credit on January 1.

The bill also includes tax credits for the production of electricity from renewable sources, the construction of new renewable energy projects, the domestic production of clean energy components and the development of alternative fuels – all of which will come online on January 1.

All told, the law includes “some two dozen tax provisions that will save families money on their energy bills and accelerate the deployment of clean energy, clean vehicles, clean buildings and clean manufacturing,” wrote John Podesta, Biden’s senior adviser on innovation. in the field of clean energy. and implementation, in a recently published guide to the different investments of the plan.

Ben Werschkul is a Washington correspondent for Yahoo Finance.

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