INFLATION REDUCTION ACT
What is the Inflation Reduction Act?
The Inflation Reduction Act was passed in 2022 to combat rising costs by investing in clean energy and providing tax breaks to working Americans. While it was hailed at the time as the most substantial piece of climate legislation in American history, its impact on Americans has gone far beyond climate protections.
How have IRA tax credits benefitted Americans?
To address the increasing burden of energy costs on American households, the IRA provides tax credits to promote energy affordability. It aims to provide financial assistance to low-income families, seniors, and vulnerable communities struggling with rising energy bills by subsidizing home energy upgrades. To date, 3.4 million American households have claimed these tax credits, saving an estimated $8 billion on home repairs and energy upgrades.​
Healthcare Savings for Millions of Americans
The IRA created a $2,000 yearly cap on out-of-pocket pharmaceutical expenses for Medicare beneficiaries, benefitting over 1 million senior citizens. The bill additionally capped monthly insulin costs for Medicare beneficiaries at $35, increasing affordability for the life-saving medication. But Medicare beneficiaries are not the only Americans to see lower healthcare costs, as the bill also extended marketplace subsidies for the Affordable Care Act through 2025, lowering premiums by an average of 44 percent for 13 million ACA enrollees. This has lead to record enrollment, as 10 million Americans have gained healthcare coverage through the ACA since 2020.
New Clean Energy Manufacturing Jobs
Tax incentives for clean energy companies have led to a boom in clean energy manufacturing jobs. Since the bill's passing, over 334,000 clean energy manufacturing jobs have been created. This, along with other bills passed following the pandemic, has led to the highest rate of manufacturing growth in America since the 1970’s. With the investments and tax credits for renewable energy manufacturers provided by the IRA, the bill could create as many as 9 million clean energy jobs over the next decade.
What Happens if the IRA is Repealed?
Despite the financial benefits Americans have reaped from tax credits, new jobs, and lowered healthcare costs, the Trump administration may attempt to repeal parts of the act in his second term. The Heritage Foundation's Project 2025, which outlines plans for a second Trump term, proposes a repeal of the drug price negotiation program created by the IRA, meaning insulin and other drug prices would increase, leading to higher costs for over 9 million Americans. Project 2025 also plans to repeal every tax credit created by the Inflation Reduction Act, meaning billions in savings would no longer be available for American families. A coalition of 18 House Republicans have challenged these plans, urging for the extension of these tax credits as a recognition of the benefits they've had for Americans.
Is the IRA only about climate protection?
No. The Inflation Reduction Act aims to address rising drug costs and reduce federal spending on prescription drugs. The act establishes a cap on out-of-pocket costs for Medicare Part D beneficiaries and requires price negotiation that had been prohibited between federal government and drug companies. Additionally, the act requires pharmaceutical manufacturers to provide rebates to Medicare if the price of their prescription drugs exceeds the rates of inflation as a further control against rising prices.
According to the Centers for Medicare and Medicaid Services, “more than 5 million people with Medicare struggle to afford their prescription drugs” and often people with “lower incomes and those over 65 are more likely to skip medicine they need because of high costs.”
Is the IRA political or partisan?
No. Although the law was passed without any Republican votes in 2022, “almost two-thirds of the projects announced since it became law are going to Republican-held congressional districts” according to one analysis. In fact, according to the US Department of Agriculture, the IRA provides $3.1 billion in relief for borrowers whose agricultural operations are at financial risk and clean energy projects in rural communities recently received $11 billion in funding from the administration and USDA. Additionally, the climate protection regulations offered by the IRA help strengthen the EPA, which is overwhelmingly supported by both Republican and Democrat voters.