US' Inflation Reduction Act aims to cut deficit by $1.5 trn in 2022

The IRA has made urgent investments to lower prescription drug costs, health care costs, and energy costs to create opportunities for America’s 33 million small businesses and innovative start-ups, according to a press release by the White House.

Small businesses can receive a tax credit that covers 30 per cent of the cost of switching over to low-cost solar power – lowering operating costs and protecting against the volatile energy prices that are currently squeezing small businesses.

Small business building owners can receive a tax credit up to $5 per square foot to support energy efficiency improvements that deliver lower utility bills. Small businesses that use large vehicles like trucks and vans will benefit from tax credits covering 30 per cent of purchase costs for clean commercial vehicles, like electric and fuel cell models.

The IRA bill levels the playing field for pre-revenue start-ups and helps spur their high-impact research and development (R&D), by increasing the refundable research and development tax credit for small businesses from $250,000 to $500,000. Small businesses, starting in 2023, may use the credit to further reduce payroll taxes and several other business expenses by up to $500,000 annually so they can innovate and commercialise to solve global problems and create jobs to propel the American economy forward.

The IRA would preserve the American Rescue Plan’s premium tax credit supports for Affordable Care Act (ACA) plans by extending them through 2025. According to a recent analysis of 2021 tax data issued by the Department of Health and Human Services, the ACA Marketplace serves as an important source of coverage for 2.6 million small business owners and self-employed adults. Moreover, small business owners and self-employed people make up 25 per cent of marketplace enrolment among working-age adults, added the release.

Since the implementation of the ACA, the uninsured rate for the self-employed has fallen dramatically from 30 per cent in 2013 to 20.5 per cent in 2019, resulting in 1.3 million less uninsured self-employed adults. Overall, about 13 million Americans will save an average of about $800 annually on their health insurance premiums compared to what they would pay without the IRA. This investment will continue to spur new business starts and job creation, as entrepreneurs may take the leap of starting a business without the risk of going uninsured.

ALCHEMPro News Desk (NB)