Fact Sheet: How the Inflation Reduction Act will help small businesses

Fact Sheet: How the Inflation Reduction Act will help small businesses


By signing the Inflation Reduction Act, President Biden is making good on his promise to build an economy that works for working families and small businesses. The Inflation Control Act is making urgent investments to reduce prescription drug costs, healthcare costs, and energy costs to create opportunities for 33 million small, innovative businesses in America. It is the boldest action we have taken to tackle the climate crisis. The Fed will help tackle inflation by reducing the deficit. Large corporations and the wealthy are required to pay their fair share, and no small business or family earning less than $400,000 a year will pay an extra penny in taxes.

President Biden and Democrats in Congress defeated special interests to pass this landmark legislation to offer American families and small businesses and grow the economy from the bottom up and in the middle.

Reduce costs for small businesses

The Inflation Control Act will reduce costs for small businesses by keeping healthcare costs low, supporting energy-efficient investments, and enhancing supply chain resilience.

Maintain critical support for small business healthcare costs. The Inflation Control Act will maintain the US bailout’s excellent tax credit support for Affordable Care Act (ACA) plans by extending it through 2025. According to a recent analysis of 2021 tax data Issued by the Department of Health and Human ServicesThe ACA Marketplace is an important source of coverage for 2.6 million adult and self-employed small business owners. Furthermore, small business owners and the self-employed make up 25 percent of market enrollment among working-age adults. Since the introduction of the Health Insurance Act (ACA), the uninsured rate for the self-employed has dropped dramatically from 30% in 2013 to 20.5% in 2019, resulting in a decline of 1.3 million uninsured self-employed adults. InclusiveAnd the Around 13 million Americans It will save on average about 800 dollars annually on their health insurance premiums compared to what they would pay without the inflation-reduction law. This investment will continue to stimulate new business start-up and job creation, as entrepreneurs may take the leap to start a business without the risk of not getting insurance.

Reducing energy costs for small businesses. The Inflation Reduction Act includes a number of provisions that will save small business owners money on energy costs:

  • Small businesses can get a tax credit that covers 30% of the cost of switching to low-cost solar energy – reducing operating costs and protecting against the volatile energy prices that are currently putting pressure on small businesses.
  • Small commercial building owners can get a tax credit of up to $5 per square foot to support energy efficiency improvements that save on lower utility bills.
  • Small businesses that use large vehicles such as trucks and vans will benefit from tax credits that cover 30% of purchase costs for clean commercial vehicles, such as electric models and fuel cells.

As small businesses save on energy costs, they will also help combat the climate crisis. The frequency and scale of natural disasters has put more small businesses and communities at risk of destruction and disruption. The Climate Change Inflation Act’s landmark action will provide economic stability and growth for major streets across the country.

Reducing the deficit to fight inflation. More than the inflation-reduction law is paid in full and will cut the deficit over the next decade. This will build on the significant debt reduction that has taken place under the Biden-Harris administration. The administration is expected to achieve more than $1.5 trillion in deficit reduction this year, after cutting the deficit by more than $350 billion last year. This would be the largest one-year decline ever in our country’s history, and would make the deficit smaller than what the Congressional Budget Office predicted before the US bailout was passed. Many prominent economists and commentators have argued that by building on the deficit reduction we have achieved thus far under President Biden with additional deficit reductions in the hundreds of billions of dollars, the Inflation Reduction Act will help relieve inflationary pressure. When small businesses operate with more price stability, on costs from gas to wages, it will be easier for entrepreneurs to plan and grow their business.

Lower costs of prescription drugs for the elderly. Many small businesses are owned by seniors. Americans pay 2-3 times more for their prescription drugs than people in other wealthy countries pay. Higher prices contribute to racial and ethnic health disparities. The Anti-Inflation Act will help close the gap in drug access by improving coverage for prescription drugs and lowering Medicare drug prices. Law:

  • The maximum amount that seniors will have to pay for prescription drugs they buy at the pharmacy is $2,000 per year.
  • The maximum amount that seniors will have to pay for insulin is $35 for a one-month supply.
  • It provides access to a number of free additional vaccines, including the shingles vaccine, for Medicare beneficiaries.
  • It will lower prescription drug costs for seniors by allowing Medicare to negotiate high-cost drug prices and requiring drug manufacturers to pay a discount to Medicare when they raise prices faster than inflation.

Expanding economic opportunities for small businesses
The Inflation Control Act will help small businesses grow and create well-paying jobs in communities across America.

Double the tax credit for research and development (R&D) for small businesses. Profitable startups create jobs and support economic growth through research, discovery, and innovation. However, they were not able to take advantage of the research and development tax credit to the same extent as large corporations. This bill level the playing field and will help stimulate high-impact research and development, by increasing the reimbursable R&D tax credit for small businesses from $250,000 to $500,000. Small businesses, starting in 2023, may use the credit to reduce more payroll taxes and many other business expenses by as much as $500,000 a year so they can do the best they can: innovate and market to solve global problems and create jobs to move our economy forward.

Strengthening American industrialization and competitiveness. The law opens opportunities for small businesses and invests in American workers and industry by stimulating American supply chains with technologies such as solar, wind, carbon capture and clean hydrogen, at a time when countries around the world race to lead the clean energy economy. . The legislation includes targeted tax incentives aimed at manufacturing US-sourced materials such as batteries and solar and wind energy parts, and technologies such as carbon capture systems and electrolyzers to produce hydrogen. The legislation also includes key requirements around local sources – for example, for the use of domestic steel in wind projects – and on prevailing wages and vocational training to ensure well-paying jobs are created.


Supporting local clean energy economics:
The act creates a new Clean Energy and Sustainability Accelerator, which will seed state and local clean energy financing institutions, and support the deployment of distributed zero-emission technologies such as heat pumps, community solar, and electric vehicle charging. This accelerator will expand clean energy entrepreneurship opportunities while prioritizing more than 50% of its investments in underserved communities.

Expanding rural opportunities. The act significantly expands America’s Rural Energy Program, which supports small rural businesses and agricultural producers with clean energy and energy efficiency upgrades. The USDA estimates that this expansion will reach more than 41,500 businesses and small farms. The act also provides more than $9 billion to help rural electric cooperatives, which serve more than 21 million businesses, homes and farms, promote flexibility, reliability, and affordability, including through clean energy projects.

Leveling the playing field through tax law reform
The 2017 tax bill passed by President Trump and Republicans in Congress has exacerbated the unfair tax system. The Inflation Reduction Act of 2022 is an important step forward in making our tax code fairer. You will increase revenue by:

  • Making sure the big and super-rich companies pay the taxes they actually owe.
  • Suppress large, profitable corporations with more than $1 billion in annual profits that currently avoid paying little or no federal income taxes.
  • Charging an additional 1% fee on corporate stock buybacks that will encourage companies to invest.

Small businesses and working families will have better access to the benefits they are entitled to under the tax code and will be able to answer their questions quickly and efficiently, thanks to the law’s transformative investments in the Internal Revenue Service. Treasury Secretary Janet Yellen directed The Internal Revenue Service will not use any of the additional funding the bill provides to increase the share of small businesses or households below $400,000 that is being checked against historical levels. This will help ensure that no family or small business earning less than $400,000 a year in taxes does not go up by one cent.

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