Tax Provisions in the Inflation Reduction Act of 2022 (H.R. 5376)

Tax Provisions in the Inflation Reduction Act of 2022 (H.R. 5376)

Tax Provisions in the Inflation Reduction Act
of 2022 (H.R. 5376)
Updated August 10, 2022
Congressional Research Service
https://crsreports.congress.gov
R47202

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Contents
Tables
Table 1. Subtitle A—Deficit Reduction ........................................................................................... 2
Table 2. Subtitle B—Prescription Drug Reform ............................................................................. 4
Table 3. Subtitle C—Affordable Care Act Subsidies ...................................................................... 5
Table 4. Subtitle D—Energy Security ............................................................................................. 5
Table 5. Estimated Budgetary Effect of the Revenue Provisions of the “Inflation
Reduction Act of 2022” .............................................................................................................. 24

Table A-1. Subtitle A—Deficit Reduction ..................................................................................... 28
Table A-2. Subtitle B—Prescription Drug Reform ....................................................................... 29
Table A-3. Estimated Budgetary Effect of the Revenue Provisions of the “Inflation
Reduction Act of 2022” .............................................................................................................. 31

Appendixes
Appendix. Inflation Reduction Act as Initially Proposed in the Senate ........................................ 28

Contacts
Author Information ........................................................................................................................ 35

Congressional Research Service

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n July 27, 2022, Senate Majority Leader Chuck Schumer and Senator Joe Manchin
released legislative text for budget reconciliation legislation, also known as the “Inflation
O Reduction Act of 2022.”1 On August 7, 2022, the Senate passed a modified version of the
Inflation Reduction Act of 2022.2 This text will replace the legislative text of the House-passed
Build Back Better Act (BBBA; H.R. 5376) as a substitute amendment.3
This report summarizes the tax provisions in the Inflation Reduction Act of 2022, which include
 establishing a corporate minimum tax;
 imposing an excise tax on corporate stock repurchases;
 establishing an excise tax on drug manufacturers, producers, and importers who
fail to enter into drug pricing agreements;
 extending the health insurance premium tax credit modifications made in the
American Rescue Plan Act of 2021 (ARPA; P.L. 117-2) through 2025; and
 modifications to the tax treatment of the energy sector that would generally
reduce revenues; including
 extension and modification of the credit for electricity produced from certain
renewable resources;
 extension and modification of the energy credit; and
 extension of excise tax credits for alternative fuels, biodiesel, and renewable
diesel.
All tax provisions in the Inflation Reduction Act of 2022 text are summarized in a series of tables
below. References to relevant CRS reports are included where applicable.
 Table 1 includes the provisions in Subtitle A, Deficit Reduction;
 Table 2 includes the provisions in Subtitle B, Prescription Drug Pricing Reform;
 Table 3 includes the provisions in Subtitle C, Affordable Care Act Subsidies; and
 Table 4 includes the provisions in Subtitle D, Energy Security.
Provisions in Subtitle A, as passed on August 7, 2022, were modified from what was introduced
on July 27. Specifically, the July 27 version included changes to the tax treatment of carried
interest. This provision was not included in the Senate-passed version. The Senate-passed version
instead included an excise tax on corporate stock repurchases and an extension of loss limits for
pass-through businesses. Additionally, the Senate-passed version made some modifications to the
corporate minimum tax. Table 1 includes information on the provisions in the Senate-passed
version of the IRA, while Table A-1 includes the provisions that were in Subtitle A in the July 27

1 Legislative text for the Inflation Reduction Act of 2022 is available at https://www.democrats.senate.gov/inflation-
reduction-act-of-2022.
2 The text as passed by the Senate on August 7, 2022, can be found on the House Rules Committee website at
https://rules.house.gov/bill/117/hr-5376-sa. The updated text for the Inflation Reduction Act of 2022 was originally
introduced in the Senate as an amendment in the nature of a substitute (S.Amdt. 5194). Two other amendments were
agreed to during Senate consideration (S.Amdt. 5472 and S.Amdt. 5488). The text of these amendments can be found
at https://ats.senate.gov/Index.aspx?view=11010001&type=2&bill=H.R.5376.
3 For information on the provisions in the Build Back Better Act, see CRS Report R46998, Senate Finance Committee
Tax Provisions in the Build Back Better Act, coordinated by Molly F. Sherlock; CRS Report R46960, Tax Provisions in
the Build Back Better Act: Rules Committee Print 117-18, coordinated by Molly F. Sherlock; and CRS Report R46923,
Tax Provisions in the “Build Back Better Act:” The House Ways and Means Committee’s Legislative
Recommendations, coordinated by Molly F. Sherlock.
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version of the IRA. Table A-2 also includes the provisions that were in subtitle B in the July 27
version of the IRA that were modified in the Senate-passed version. Table 4 also includes the
provisions that were newly added as the IRA was being considered in the Senate.
The Joint Committee on Taxation (JCT) has estimated that the Senate-passed version of the IRA
would increase federal tax revenue by $90.7 billion over the 10-year FY2022 through FY2031
budget window.4 The revenue provisions in Subtitle A would generate additional federal tax
revenue of an estimated $395.9 billion over this period. The mostly energy-related provisions in
Subtitle D would reduce federal tax revenue by an estimated $205.2 billion over the 10-year
period (additional non-energy-related revenues of $53.8 billion would come from extending the
limits on excess business losses for noncorporate taxpayers by two years, after 2026). The JCT
revenue estimate is presented in Table 5. JCT’s preliminary revenue estimate of the IRA before
Senate consideration can be found in Table A-3.
Table 1. Subtitle A—Deficit Reduction
Section Title
Description
CRS Resources
Part 1—Corporate Tax Reform
Corporate
This provision would impose a new alternative minimum
For background, see
Alternative Minimum
tax of 15% on corporations based on financial income. It

CRS In Focus IF12179,
Tax
would apply to corporations with $1 bil ion or more in
The Corporate

average annual earnings in the previous three years. In the
Minimum Tax Proposal,
case of U.S. corporations that have foreign parents, it
Section 10101
by Jane G. Gravelle.
would apply only to income earned in the United States of
$100 mil ion or more of average annual earnings in the

CRS Report R46887,
previous three years (and apply when the international
Minimum Taxes on
financial reporting group has income of $1 bil ion or more).
Business Income:
It would apply to a new corporation in existence for less
Background and Policy
than three years based on the earnings in the years of
Options, by Mol y F.
existence.
Sherlock and Jane G.
Gravelle.
The provision would exclude Subchapter S corporations,
regulated investment companies (RICs), and real estate

CRS Insight IN11646,
investment trusts (REITs). The tax would apply would to
A Look at Book-Tax
large private equity firms organized as partnerships, but
Differences for Large
excludes portfolio companies owned by these firms (due to
Corporations Using
a modification made by Section 13904 of the bil ).
Aggregate Internal
Revenue Service (IRS)
Firms that file consolidated returns would include income
Data, by Mol y F.
allocable to the firm from related firms including control ed
Sherlock and Jane G.
foreign corporations (and any disregarded entities); for
Gravelle.
other related firms, dividends would be included. The
provision would allow special deductions for cooperatives
and Alaska Native Corporations. It would make
adjustments to conform financial accounting to tax
accounting for certain defined benefit pension plans. It
would apply with respect to items under the unrelated
business income tax for tax-exempt entities.
Financial income would be adjusted to allow depreciation
deductions based on tax rules. It would also be adjusted to

4 Joint Committee on Taxation, Estimated Budgetary Effect of the Revenue Provisions of Title I -Committee on
Finance, of an Amendment in the Nature of a Substitute to H.R. 5376, “An Act to Provide for Reconciliation Pursuant
to Title II of S. Con. Res. 14,” as Passed by the Senate on August 7, 2022, and Scheduled for Consideration by the
House of Representatives on August 12, 2022,” JCX-18-22, August 9, 2022,
https://www.jct.gov/publications/2022/jcx-18-22/.
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Tax Provisions in the Inflation Reduction Act of 2022 (H.R. 5376)

Section Title
Description
CRS Resources
allow recovery of wireless spectrum rights as allowed
under tax rules (recovered over 15 years).
The additional tax would equal the amount of the minimum
tax in excess of the regular income tax plus the additional
tax from the Base Erosion and Anti-Abuse tax. Income
would be increased by federal and foreign income taxes to
place income on a pretax basis.
Losses would be allowed in the same manner as with the
regular tax, with loss carryovers limited to 80% of taxable
income.
Domestic credits under the general business tax (such as
the R&D credit) would be allowed to offset up to 75% of
the combined regular and minimum tax. Foreign tax credits
would be allowed based on the allowance for foreign taxes
paid in a corporation’s financial statement.
A credit for additional minimum tax could be carried over
to future years to offset regular tax when that tax is higher.
This tax would apply to taxable years beginning after
December 31, 2022.
Part 2—Excise Tax on Repurchase of Corporate Stock

Excise Tax on
This provision would impose a 1% excise tax on the
For background, see
Repurchase of
repurchase of stock by a publicly traded corporation. The

CRS In Focus IF11960,
Corporate Stock
amount subject to tax would be reduced by any new issues
An Excise Tax on Stock

to the public or stock issued to employees. The tax would
Repurchases and Tax
not apply if repurchases are less than $1 mil ion or are
Section 10201
Advantages of Buybacks
contributed to an employee pension or similar plan.
over Dividends, by Jane
The tax would not apply if the repurchases are treated as a
G. Gravelle.
dividend. It also would not apply to repurchases by

CRS Legal Sidebar
regulated investment companies (RICs) or real estate
LSB10266, Stock
investment trusts (REITs). Further, it would not apply to
Buybacks: Background
repurchases that are treated as dividends or to purchases
and Reform Proposals,
by a dealer in securities in the ordinary course of business.
by Jay B. Sykes.
The excise tax would apply to purchases of corporation

stock by a subsidiary of the corporation (a corporation or

CRS In Focus IF11393,
Stock Buybacks:
partnership that is more than 50% owned). The tax would
Concerns over Debt-
also apply to purchases by a U.S. subsidiary of a foreign-
Financing and Long-
parented firm. It would apply to newly inverted (after
Term Investing, by
September 20, 2021) or surrogate firms (firms that merged
Gary Shorter.
to create a foreign parent with the former U.S.
shareholders owning more than 60% of shares).

CRS In Focus IF11506,
The tax would not be deductible.
Stock Buybacks and
Company Executives’
The tax would apply to repurchases after December 31,
Profits, by Gary
2022.
Shorter.
Source: CRS analysis of the legislative text of the Senate amendment to H.R. 5376, “Inflation Reduction Act of
2022,” as posted on the House Rule Committee Website at https://rules.house.gov/bil /117/hr-5376-sa.
Notes: The changes that would be made by these provisions are permanent. Part 3 of Subtitle A would provide
additional appropriations of $79.6 bil ion over the next 10 years to enhance IRS service and enforcement
activities. For background on IRS appropriations, see CRS Insight IN11977, IRS-Related Funding in the Inflation
Reduction Act, by Brendan McDermott; and CRS In Focus IF12098, Internal Revenue Service Appropriations, FY2023,
by Gary Guenther.
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Tax Provisions in the Inflation Reduction Act of 2022 (H.R. 5376)

Table 2. Subtitle B—Prescription Drug Reform
Section Title
Description
CRS Resources
Part 1—Lowering Prices Through Drug Price Negotiations
Selected Drug
This provision would impose a new excise tax on drug
For background, see
Manufacturer Excise
manufacturers, producers, and importers who fail to

CRS Report R47056,
Tax Imposed During
enter into drug pricing agreements under Section 1193 of
Build Back Better Act
Noncompliance
the Social Security Act, as added by the bil on selected
(BBBA) Health Coverage
Period
drugs (i.e., are noncompliant with Section 1193). This
Provisions: House-Passed

excise tax would be found under the new Internal
and Senate-Released
Revenue Code (IRC) Section 5000D.
Section 11003
Language, coordinated
The excise tax rate would range from 185.71% to 1,900%
by Vanessa C. Forsberg
of the selected drug’s price depending on the duration of
and Ryan J. Rosso.
noncompliance. The provision does not specify these
rates explicitly, but instead defines an applicable
percentage which equals the share of the post-tax sale
price attributable to the excise tax. Specifically, the
applicable percentage as defined in the statute equals
tax/(tax+price) which simplifies to tax rate/(tax rate+1)
with the applicable percentages being 65% for the sales of
selected drugs during the first 90 days of noncompliance,
75% for sales during the 91st to 180th days of
noncompliance, 85% for sales during the 181st to 270th
days of noncompliance, and 95% for sales after the 270th
day of noncompliance. Hence, the corresponding tax
rates would be calculated as (applicable percentage)/(1-
applicable percentage) and equal 185.71%, 300%, 566.67%
and 1,900% respectively, depending on the duration of
noncompliance. For example, if a selected drug was
subject to the top tax rate of 1,900% and cost $10 pre-
tax, it would cost $200 post-tax with $190 of the $200
cost (or 95%, the applicable percentage) being attributable
to the excise tax.
Selected drugs would be those defined in Section 1192(a)
of the Social Security Act, as enacted under this bil , which
are manufactured or produced in the United States or
enter into the United States for consumption, use, or
warehousing. The excise tax would not apply to drugs
sold for export, and the provision addresses the refund or
credit process if tax is paid.
Noncompliance periods as defined in the bil would
generally begin after the deadline to enter into an
agreement to negotiate or renegotiate, or to agree upon
a maximum price, had passed. Such periods would end
when such agreement has been reached. The
noncompliance period would also end if a generic version
of the selected drug becomes available. The earliest
potential noncompliance period would begin on October
2, 2023.
The excise tax would be suspended during any period in
which none of the drugs made by a selected drug’s
manufacturer are covered by a Medicaid Drug Rebate
Program agreement, a Medicare Part D Coverage Gap
Discount agreement, or a Medicare Part D Manufacturer
Discount Program agreement.
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Tax Provisions in the Inflation Reduction Act of 2022 (H.R. 5376)

Section Title
Description
CRS Resources
For sales that were timed to avoid the excise tax, the
Secretary of the Treasury could treat the sale as
occurring during a day in a noncompliance period.
Manufacturers would be prohibited from deducting excise
tax payments from their federal income taxes.
Source: CRS analysis of the legislative text of the Senate amendment to H.R. 5376, “Inflation Reduction Act of
2022,” as posted on the House Rule Committee Website at https://rules.house.gov/bil /117/hr-5376-sa.
Notes: This provision would apply after the date of enactment to the sale of drugs during a noncompliance
period. The first noncompliance period could begin on October 2, 2023. Within the description, “Section”
citations refer to the section within the Internal Revenue Code (IRC), 26 U.S.C., unless otherwise noted.
Table 3. Subtitle C—Affordable Care Act Subsidies
Section Title
Description
CRS Resources
Improve Affordability Under current law, income eligibility for and calculation of
For background, see
and Reduce Costs of
the premium tax credit (PTC) incorporates temporary

CRS Report R44425,
Health Insurance for
changes enacted under the American Rescue Plan Act of
Health Insurance
Consumers
2021 (ARPA; P.L. 117-2). For 2021 and 2022, ARPA
Premium Tax Credit

expanded income eligibility by eliminating the phaseout for
and Cost-Sharing
households with annual incomes above 400% of the federal
Section 12001
Reductions, by
poverty level (FPL). For those same years, ARPA also
Bernadette Fernandez.
increased credit amounts by adjusting the percentage of
annual income that eligible households may be required to
contribute toward the premium. The percentages currently
range from 0.0% to 8.5% of household income, with higher-
income groups subject to larger percentages, as specified.
This provision would extend these ARPA changes to 2023,
2024, and 2025.
Source: CRS analysis of the legislative text of the Senate amendment to H.R. 5376, “Inflation Reduction Act of
2022,” as posted on the House Rule Committee Website at https://rules.house.gov/bil /117/hr-5376-sa.
Notes: The provision in this table is effective for taxable years beginning after December 31, 2022.
Table 4. Subtitle D—Energy Security
Section Title
Description
CRS Resources
Part 1—Clean Electricity and Reducing Carbon Emissions

Extension and
Current law provides a production tax credit (PTC), at a
For background, see
Modification of
rate of 2.5 cents or 1.3 cents per kilowatt hour (kWh)

CRS Report R43453,
Credit for Electricity
depending on the technology used, for the first 10 years
The Renewable Electricity
Produced from
of production at qualifying renewable electricity
Production Tax Credit: In
Certain Renewable
production facilities that began construction before 2022.
Brief, by Mol y F.
Resources
The credit amount is adjusted annually for inflation from a
Sherlock.

statutory rate of 1.5 cents per kWh, with some
technologies qualifying for a half-credit amount. This

CRS Report R46865,
Section 13101
provision would extend the PTC for wind, biomass,
Energy Tax Provisions:
geothermal, solar (which previously expired at the end of
Overview and Budgetary
2005), landfil gas, trash, qualified hydropower, and marine
Cost, by Mol y F.
and hydrokinetic resources through 2024.
Sherlock.
The base credit amount for the PTC would be set in

CRS Report R46451,
statute at 0.3 cents per kWh (0.5 cents per kWh in 2021,
Energy Tax Provisions
or 0.3 cents for half-credit technologies, after being
Expiring in 2020, 2021,
adjusted for inflation). Facilities that pay prevailing wages
2022, and 2023 (“Tax
during the construction phase and first 10 years of
Extenders”), by Mol y F.
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Tax Provisions in the Inflation Reduction Act of 2022 (H.R. 5376)

Section Title
Description
CRS Resources
operation and meet registered apprenticeship
Sherlock, Margot L.
requirements are eligible for a PTC that is five times the
Crandall-Hol ick, and
base amount, or 2.5 cents or 1.3 cents per kWh in 2021
Donald J. Marples.
after being adjusted for inflation. Facilities with a

CRS Report R45171,
maximum net output of less than one megawatt are also
Registered
eligible for the five times base credit amount (e.g., 2021
Apprenticeship: Federal
rates of 2.5 cents or 1.3 cents per kWh), as are facilities
Role and Recent Federal
that begin construction before 60 days after the Secretary
Efforts, by Benjamin
of the Treasury publishes guidance on the wage and
Col ins.
registered apprenticeship requirements. Qualifying
hydropower and marine and hydrokinetic renewable

CRS In Focus IF11927,
energy projects, which are half-credit technologies under
Federally Funded
current law, would be allowed the ful PTC.
Construction and the
Payment of Locally
A “bonus credit” amount would be provided for projects
Prevailing Wages, by
that meet domestic content requirements to certify that
David H. Bradley and
certain steel, iron, and manufactured products used in the
Jon O. Shimabukuro.
facility were domestically produced. The bonus credit
amount would be 10% of the credit amount.

CRS Insight IN11983,
Proposed Tax Preference
In 2024, the amount of the credit that could be received
for Domestic Content in
as direct pay would be limited to 90% for large facilities
Energy Infrastructure, by
not meeting domestic content requirements (see “Elective
Christopher D.
Payment for Energy Property and Electricity Produced
Watson and Mol y F.
from Certain Renewable Resources, Etc.” below). This
Sherlock.
limit would be waived if materials are not available
domestically or if including domestic materials would
increase the facility’s construction cost by more than 25%.
The credit amount could be increased by 10% for facilities
located in an energy community. An energy community is
defined as being a brownfield site, an area which has or
had significant employment related to oil, gas, or coal
activities, or a census tract or any adjoining tract in which
a coal mine closed after December 31, 1999, or in which
a coal-fired electric power plant was retired after
December 31, 2009.
The provision provides that for facilities financed with tax-
exempt bonds, the credit amount would be reduced by
the lesser of (1) 15%; or (2) the fraction of the proceeds
of a tax-exempt obligation used to finance the project
over the aggregate amount of the project’s financing
costs.
The proposal also extends the option to claim the energy
investment tax credit (ITC) in lieu of the PTC.
Extension and
Current law provides a temporary investment tax credit
For background, see
Modification of
(ITC) for investments in certain energy property. This

CRS In Focus IF10479,
Energy Credit
provision would extend and modify the ITC, with the
The Energy Credit or

credit generally extended through the end of 2024.
Energy Investment Tax
Section 13102
The ITC would be extended through 2024 at a base rate
Credit (ITC), by Mol y F.
of 6% for solar, fuel cells, waste energy recovery,
Sherlock.
combined heat and power, and small wind property, and

2% for microturbine property. These amounts would be

CRS Report R46865,
Energy Tax Provisions:
increased to 30% and 10%, respectively, if projects pay
Overview and Budgetary
prevailing wages during the construction phase and during
Cost, by Mol y F.
the first five years of operation and meet registered
Sherlock.
apprenticeship requirements. The higher credit rates
would also be available to any project with a maximum

CRS Report R46451,
net output of less than one megawatt of electrical or
Energy Tax Provisions
Expiring in 2020, 2021,
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Tax Provisions in the Inflation Reduction Act of 2022 (H.R. 5376)

Section Title
Description
CRS Resources
thermal energy and for facilities that begin construction
2022, and 2023 (“Tax
before 60 days after the Secretary of the Treasury
Extenders”), by Mol y F.
publishes guidance on the wage and registered
Sherlock, Margot L.
apprenticeship requirements.
Crandall-Hol ick, and
The ITC for geothermal heat pumps would be extended
Donald J. Marples.
through 2034 with a 6% base credit rate with the 30%

CRS Report R45171,
credit rate allowed for projects meeting wage and
Registered
workforce requirements or for projects below the
Apprenticeship: Federal
maximum net output threshold. The credit would phase
Role and Recent Federal
down after 2032, with the rates being 5.2% and 26% in
Efforts, by Benjamin
2033 and 4.4% and 22% in 2034, with no credit allowed
Col ins.
for property beginning construction after 2035.

CRS In Focus IF11927,
This list of qualifying property would be expanded to
Federally Funded
include energy storage technology (including thermal
Construction and the
energy storage property), qualified biogas property,
Payment of Locally
electrochromic glass, and microgrid control ers at the 6%
Prevailing Wages, by
or 30% rate. Linear generator assemblies would be added
David H. Bradley and
to the definition of qualifying fuel cells. The credit would
Jon O. Shimabukuro.
also be available for interconnection property. Public

utilities, under certain circumstances, would be able to

CRS Insight IN11983,
Proposed Tax Preference
elect out of normalization requirements for investments
for Domestic Content in
in energy storage technologies.
Energy Infrastructure, by
A “bonus credit” amount would be provided for projects
Christopher D.
that meet domestic content requirements to certify that
Watson and Mol y F.
certain steel, iron, and manufactured products used in the
Sherlock.
facility were domestically produced. The bonus credit
amount would be 2 percentage points, or 10 percentage
points for projects that meet wage and workforce
requirements.
In 2024, the amount of the credit that could be received
as direct pay would be limited to 90% for large facilities
not meeting domestic content requirements (discussed
below). This limit would be waived if materials are not
available domestically or if including domestic materials
would increase the facility’s construction cost by more
than 25%.
The provision provides that for facilities financed with tax-
exempt bonds, the credit amount would be reduced by
the lesser of (1) 15%; or (2) the fraction of the proceeds
of a tax-exempt obligation used to finance the project
over the aggregate amount of the project’s financing
costs.
An increased credit amount would be available to projects
in an energy community, with the credit increase being 10
percentage points for projects meeting wage and
workforce requirements or 2 percentage points
otherwise. An energy community is defined as being a
brownfield site, an area which has or had significant
employment related to oil, gas, or coal activities, or a
census tract or any adjoining tract in which a coal mine
closed after December 31, 1999, or in which a coal-fired
electric power plant was retired after December 31,
2009.
Increase in Energy
This provision would allow for the allocation of 1.8
For background on the ITC,
Credit for Solar and
gigawatts for “environmental justice solar and wind
see
Wind Facilities
capacity” credits in each of calendar year 2023 and 2024.
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Tax Provisions in the Inflation Reduction Act of 2022 (H.R. 5376)

Section Title
Description
CRS Resources
Placed in Service in
Taxpayers receiving a capacity allocation may be entitled

CRS In Focus IF10479,
Connection with
to tax credits in addition to otherwise allowed ITCs.
The Energy Credit or
Low-Income
Specifically, projects receiving an allocation that are
Energy Investment Tax
Communities
located in a low-income community or on Indian land
Credit (ITC), by Mol y F.

would be eligible for a bonus investment tax credit of 10
Sherlock.
percentage points, while projects that are part of a low-
Section 13103
For background on housing
income residential building project or qualified low-
assistance programs, see
income economic benefit project would be eligible for a
20 percentage point bonus investment credit.

CRS Report RL34591,
Overview of Federal
Qualifying solar and wind facilities would include those
Housing Assistance
with a nameplate capacity of 5 megawatts or less, and
Programs and Policy, by
qualifying property would include energy storage property
Maggie McCarty, Libby
installed in connection with the solar property and
Perl, and Katie Jones.
interconnection property.
Facilities receiving an allocation would be required to
have the facility placed in service within four years.
Extension and
Under current law, industrial carbon capture or direct air
For background, see
Modification of
capture (DAC) facilities that begin construction by

CRS In Focus IF11455,
Credit for Carbon
December 31, 2025, can qualify for the Section 45Q tax
The Tax Credit for
Oxide Sequestration
credit for carbon oxide sequestration. This tax credit can
Carbon Sequestration

be claimed for carbon oxide captured during the 12-year
(Section 45Q), by Angela
period fol owing a qualifying facility’s being placed in
Section 13104
C. Jones and Mol y F.
service. Currently, the per metric ton tax credit for
Sherlock.
geologically sequestered carbon oxide is set to increase
to $50 per ton by 2026 ($35 per ton for carbon oxide

CRS Insight IN11710,
that is reused, such as for enhanced oil recovery) and
Carbon Capture and
adjusted for inflation thereafter. This provision would
Sequestration Tax Credit
extend the start of construction deadline to December
(“Section 45Q”)
31, 2032.
Legislation in the 117th
Congress, by Mol y F.
The amount of carbon oxide that must be captured at a
Sherlock and Angela C.
qualifying facility would be reduced to 1,000 metric tons
Jones.
annually for a DAC facility, 18,750 metric tons annually
for an electricity generating facility (and be designed to

CRS Report R46451,
capture not less than 75% of the baseline carbon oxide
Energy Tax Provisions
production; 60% in the case of electricity generating
Expiring in 2020, 2021,
facilities not yet or recently placed in service), and 12,500
2022, and 2023 (“Tax
metric tons for any other facility.
Extenders”), by Mol y F.
Sherlock, Margot L.
Base credit amounts would be $17 per metric ton for
Crandall-Hol ick, and
carbon oxide that is captured and geologically
Donald J. Marples.
sequestered and $12 per metric ton for carbon oxide that
is reused. Increased credit amounts of $85 per ton and

CRS Report R45171,
$60 per ton, respectively, would be available for facilities
Registered
that pay prevailing wages during the construction phase
Apprenticeship: Federal
and during the first 12 years of operation and meet
Role and Recent Federal
registered apprenticeship requirements.
Efforts, by Benjamin
The credit amount for carbon oxide captured using DAC
Col ins.
and geologically sequestered would be increased to a base 
CRS In Focus IF11927,
rate of $36 per metric ton, with a credit of $180 per
Federally Funded
metric ton for projects that meet wage and workforce
Construction and the
requirements. These amounts would be $26 and $130 per
Payment of Locally
metric ton for carbon oxide captured using DAC that is
Prevailing Wages, by
utilized in a qualified manner.
David H. Bradley and
Projects financed with tax-exempt bonds would have the
Jon O. Shimabukuro.
credit amount reduced by the lesser of (1) 15%; or (2) the
fraction of the proceeds of a tax-exempt obligation used
to finance the project over the aggregate amount of the
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Section Title
Description
CRS Resources
project’s financing costs. The provision would also
provide flexibility with respect to the period in which
credits can be claimed for projects affected by federally
declared disasters.
Zero-Emission
This provision would create a new tax credit for qualifying For background, see
Nuclear Power
zero-emission nuclear power produced and sold after

CRS Report R42853,
Production Credit
December 31, 2023. Qualified nuclear power facilities are
Nuclear Energy: Overview

taxpayer-owned facilities that use nuclear power to
of Congressional Issues,
generate electricity that did not receive an advanced
Section 13105
by Mark Holt.
nuclear production tax credit allocation under Section

45J, and are placed in service before the date of

CRS Insight IN10725,
enactment (i.e., are existing nuclear power plants).
The Advanced Nuclear
Production Tax Credit, by
The PTC amount would be 0.3 cents per kWh. The credit
Mol y F. Sherlock and
would be reduced when the price of electricity increases.
Mark Holt.
Credits would be reduced by a “reduction amount,”
which is 80% of the excess of gross receipts from

CRS Report R45171,
electricity produced by the facility and sold over the
Registered
product of 2.5 cents times the amount of electricity sold
Apprenticeship: Federal
during the taxable year. Thus, the credit would phase
Role and Recent Federal
down as annual average prices exceed 2.5 cents per kWh.
Efforts, by Benjamin
Col ins.
Taxpayers that satisfy prevailing wage and registered
apprenticeship requirements would be eligible for a tax

CRS In Focus IF11927,
credit of five times the base amount per kWh (i.e., up to
Federally Funded
1.5 cents per kWh).
Construction and the
Credit amounts and amounts in the reduction amount
Payment of Locally
formula would be adjusted for inflation.
Prevailing Wages, by
David H. Bradley and
The credit would terminate on December 31, 2032.
Jon O. Shimabukuro.
Part 2—Clean Fuels

Extension of
Current law provides a 50-cents-per-gallon tax credit for
For background, see
Incentives for
alternative fuels and alternative fuel mixtures through

CRS Report R46865,
Biodiesel, Renewable
2021 and a $1.00-per-gallon tax credit for biodiesel and
Energy Tax Provisions:
Diesel, and
renewable diesel (with an additional $0.10-per-gallon tax
Overview and Budgetary
Alternative Fuels
credit for agri-biodiesel) through 2022. The biodiesel and
Cost, by Mol y F.

renewable diesel mixtures tax credit may be claimed as an
Sherlock.
immediate excise tax credit against the blender’s motor
Section 13201
and aviation fuels excise taxes. Credits in excess of excise

CRS Report R46451,
tax liability may be refunded. The biodiesel and small agri-
Energy Tax Provisions
biodiesel credits may be claimed as income tax credits.
Expiring in 2020, 2021,
The alternative fuels credit can be claimed as an excise
2022, and 2023 (“Tax
tax credit or received as an outlay. The alternative fuels
Extenders”), by Mol y F.
mixture credit is an excise tax credit.
Sherlock, Margot L.
Crandall-Hol ick, and
This provision would extend the existing tax credits for
Donald J. Marples.
alternative fuels and alternative fuel mixtures and
biodiesel and renewable diesel through December 31,
2024.
This provision would establish a special rule for paying
claims for tax credits during the period of retroactive
eligibility. The biodiesel and renewable diesel credit,
alternative fuel credit, alternative fuel mixture credit, and
payments for alternative fuels expired at the end of 2021.
This provision would allow those credits for all of 2022.
The IRS would need to create a process within 30 days of
enactment for one-time claims for these tax credits.
Taxpayers would have 180 days to submit a claim, which
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Tax Provisions in the Inflation Reduction Act of 2022 (H.R. 5376)

Section Title
Description
CRS Resources
would need to be paid within 60 days of receipt (interest
would be paid on any payment made after that date).
Extension of Second
Current law provides a $1.01-per-gallon income tax
For background, see
Generation Biofuel
credit for second-generation biofuel production through

CRS Report R46865,
Incentives
2021. This provision would extend the second-generation
Energy Tax Provisions:

biofuel producer tax credit through December 31, 2024.
Overview and Budgetary
Section 13202
Cost, by Mol y F.
Sherlock.

CRS Report R46451,
Energy Tax Provisions
Expiring in 2020, 2021,
2022, and 2023 (“Tax
Extenders”), by Mol y F.
Sherlock, Margot L.
Crandall-Hol ick, and
Donald J. Marples.
Sustainable Aviation
This provision would create a new tax credit for the sale
For background, see:
Fuel Credit
or mixture of sustainable aviation fuel starting in 2023.

CRS Report R47171,

The tax credit would have a base amount of $1.25 per
Sustainable Aviation Fuel
gallon, with a supplemental credit amount of $0.01 per
Section 13203
(SAF): In Brief, by Kelsi
gallon for each percentage point by which the lifecycle
Bracmort and Mol y F.
greenhouse gas emissions reduction percentage for the
Sherlock.
fuel exceeds 50% (with a maximum supplemental credit of
$0.50 per gallon, making the maximum potential per
gallon credit $1.75). Sustainable aviation fuel is defined as
liquid fuel that (1) meets the requirements of either
ASTM International Standard D7566 or the Fischer
Tropsch provisions of ASTM International Standard
D1655, Annex AI; (2) is not derived from coprocessing an
applicable material with a feedstock which is not biomass;
(3) is not derived from palm fatty acid distil ates or
petroleum; and (4) has been certified to achieve at least a
50% lifecycle greenhouse gas reduction percentage as
defined according to the most recent Carbon Offsetting
and Reduction Scheme for International Aviation adopted
by the International Civil Aviation Organization and
agreed to by the United States (or a similar methodology
which satisfies criteria in the Clean Air Act Section
211(o)(1)(H)), as compared with petroleum-based jet fuel.
The sustainable aviation fuel credit would require
claimants to be registered with the Secretary of the
Treasury, and could be used to offset fuel excise tax
liability or, in the case of insufficient fuel excise tax
liability, be received as a payment. Like the tax credit for
biodiesel and renewable diesel, there would be a
coordinated income tax credit. Credit amounts would be
included in a taxpayer’s gross income for income tax
purposes.
The $1.00 per gallon tax credit for aviation fuel produced
from biodiesel (under Section 40A) would terminate after
December 31, 2022.
The credit would expire after December 31, 2024.
Clean Hydrogen
This provision would create a new credit for the qualified
For background, see

production of clean hydrogen. The credit would be

CRS Report R45171,
available for qualified clean hydrogen produced at a
Section 13204
Registered
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Section Title
Description
CRS Resources
qualifying facility during the facility’s first 10 years of
Apprenticeship: Federal
operation. The base credit amount would be $0.60 per
Role and Recent Federal
kilogram (kg) times the applicable percentage. Credit
Efforts, by Benjamin
amounts would be indexed for inflation.
Col ins.
The applicable percentage would be determined by the

CRS In Focus IF11927,
lifecycle greenhouse gas emissions rate achieved in
Federally Funded
producing clean hydrogen. The applicable percentage
Construction and the
would be 100% for hydrogen achieving a lifecycle
Payment of Locally
greenhouse gas emissions rate of less than 0.45 kilograms
Prevailing Wages, by
of carbon dioxide equivalent (CO2e) per kg. The
David H. Bradley and
applicable percentage would be 33.4% for hydrogen
Jon O. Shimabukuro.
achieving a lifecycle greenhouse gas emission rate of less
than 1.5 kilograms of CO2e per kg (but not less than 0.45
kilograms). For hydrogen with a lifecycle greenhouse gas
emission rate of less than 2.5 kgs of CO2e per kg (but not
less than 1.5), the applicable percentage would be 25%,
and for hydrogen with a lifecycle greenhouse gas
emissions rate of less than 4 kgs of CO2e per kg (but not
less than 2.5), the applicable percentage would be 20%.
The credit would be five times the base credit amount
(i.e., up to $3.00 per kg) if the clean hydrogen is produced
at a facility that meets prevailing wage and registered
apprenticeship requirements.
The provision provides that for facilities financed with tax-
exempt bonds, the credit amount would be reduced by
the lesser of (1) 15%; or (2) the fraction of the proceeds
of a tax-exempt obligation used to finance the project
over the aggregate amount of the project’s financing
costs.
To qualify for the credit, new facilities must begin
construction before January 1, 2033. Facilities existing
before January 1, 2023, would be able to qualify based on
the date that modifications to their facility required to
produce clean hydrogen are placed into service.
Taxpayers may claim the PTC for electricity produced
from renewable resources by the taxpayer if the
electricity is used at a qualified clean hydrogen facility to
produce qualified clean hydrogen. Taxpayers could elect
to claim the energy investment tax credit (ITC) in lieu of
the clean hydrogen production credit. Taxpayers could
not claim credits for clean hydrogen produced at facilities
that claimed credits for carbon capture under Section
45Q.
The provision would terminate the alternative fuel excise
tax credit for hydrogen.
Part 3—Clean Energy and Efficiency Incentives for Individuals

Extension, Increase,
Current law provides a 10% tax credit for qualified
For background, see
and Modifications of
energy-efficiency improvements and expenditures for

CRS Report R42089,
Nonbusiness Energy
residential energy property on a taxpayer’s primary
Residential Energy Tax
Property Credit
residence through 2021. The credit is subject to a $500
Credits: Overview and

per taxpayer lifetime limit. This provision would extend
Analysis, by Margot L.
the tax credit through December 31, 2032, and make
Section 13301
Crandall-Hol ick and
additional modifications.
Mol y F. Sherlock.
The proposed modifications would increase the credit

CRS Report R46451,
rate to 30% with an annual per-taxpayer limit of $1,200
Energy Tax Provisions
and a $600 per-item limit. For geothermal and air source
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Section Title
Description
CRS Resources
heat pumps and biomass stoves, there would be an annual
Expiring in 2020, 2021,
credit limit of $2,000. Limits for expenditures on windows
2022, and 2023 (“Tax
and doors would also be increased. Biomass stoves would
Extenders”), by Mol y F.
be made eligible for tax credits.
Sherlock, Margot L.
Required energy-efficiency standards would be modified,
Crandall-Hol ick, and
and changed to update over time without additional
Donald J. Marples.
legislative action. Qualifying building envelope components
would no longer include roofs, but would include air
sealing insulation. Improvements to or replacements of
panelboards, sub-panelboards, branch circuits, or feeders
used with qualifying property would also be credit-eligible
costs. The credit would be allowed for expenditures
made on any dwelling unit used by the taxpayer (not
limited to primary residences).
A 30% credit, up to $150, would be allowed for home
energy audits. Treasury would be given the authority to
treat errors related to this section as mathematical or
clerical errors. Starting in 2025, taxpayers would be
required to submit a product identification number to
claim the tax credit.
The credit would be renamed the energy efficient home
improvement credit.
Residential Clean
Current law provides a tax credit for the purchase of
For background, see
Energy Credit
solar electric property, solar water heating property, fuel

CRS Report R42089,

cells, geothermal heat pump property, small wind energy
Residential Energy Tax
property, and qualified biomass fuel property. The credit
Section 13302
Credits: Overview and
rate is 26% through 2022 (it was 30% through 2019), and
Analysis, by Margot L.
is scheduled to be reduced to 22% in 2023 before
Crandall-Hol ick and
expiring at the end of that year. This provision would
Mol y F. Sherlock.
extend the credit through December 31, 2034, restoring
the 30% credit rate through 2032, and then reducing the

CRS Report R46451,
credit rate to 26% in 2033 and 22% in 2034. Qualified
Energy Tax Provisions
battery storage technology would be added to the list of
Expiring in 2020, 2021,
eligible property.
2022, and 2023 (“Tax
Extenders”), by Mol y F.
The credit would be renamed the residential clean energy
Sherlock, Margot L.
credit.
Crandall-Hol ick, and
Donald J. Marples.
Energy Efficient
Under current law, a permanent deduction of up to $1.80
For background, see
Commercial
per square foot is allowed for certain energy-saving

CRS Committee Print
Buildings Deduction
commercial building property installed as part of (1) the
CP10004, Tax

interior lighting system; (2) the heating, cooling,
Expenditures:
ventilation, or hot water system; or (3) the building
Section 13303
Compendium of
envelope.
Background Material on
This provision would update efficiency requirements,
Individual Provisions — A
providing that a qualifying building must increase its
Committee Print
efficiency relative to a reference building by 25%. The
Prepared for the Senate
deduction would be set at $0.50 per square foot, and
Committee on the
increased by $0.02 for each percentage point by which
Budget, 2020, by Jane
the certified efficiency improvements reduce energy and
G. Gravelle et al. (pp.
power costs, with a maximum amount of $1.00 per
99-104).
square foot. For projects that meet prevailing wage and

CRS Report R45171,
registered apprenticeship requirements, the base amount
Registered
is $2.50, which would be increased by $0.10 for each
Apprenticeship: Federal
percentage point increase in energy efficiency, with a
Role and Recent Federal
maximum amount of $5.00 per square foot. The
maximum deduction amount would be the total deduction
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Section Title
Description
CRS Resources
a building can claim less deductions claimed with respect
Efforts, by Benjamin
to the building in the preceding three years.
Col ins.
Taxpayers making energy-efficiency retrofits that are part

CRS In Focus IF11927,
of a qualified retrofit plan on a building that is at least five
Federally Funded
years old would be able to deduct their adjusted basis in
Construction and the
the retrofit property (so long as that amount does not
Payment of Locally
exceed a per-square foot value determined on the basis of
Prevailing Wages, by
energy usage intensity). To qualify, retrofit plans must be
David H. Bradley and
expected to reduce a building’s energy use intensity by at
Jon O. Shimabukuro.
least 25%.

Any tax-exempt entity would be allowed to allocate the
deduction to the designer of the building or retrofit plan.
Extension, Increase,
Under current law, through 2021, a tax credit is available
For background, see
and Modifications of
for eligible contractors for building and selling qualifying

CRS Report R46451,
New Energy Efficient
energy-efficient new homes. The credit is equal to $2,000,
Energy Tax Provisions
Home Credit
with certain manufactured homes qualifying for a $1,000
Expiring in 2020, 2021,

credit.
2022, and 2023 (“Tax
Section 13304
This provision would extend the energy-efficient new
Extenders”), by Mol y F.
home credit through December 31, 2032, and increase
Sherlock, Margot L.
and modify the credit amount. For homes acquired after
Crandall-Hol ick, and
2021, a $2,500 credit would be available for new homes
Donald J. Marples.
that meet certain Energy Star efficiency standards, and a

CRS In Focus IF11927,
$5,000 credit would be available for new homes that are
Federally Funded
certified as zero-energy ready homes. Multifamily
Construction and the
dwellings that meet certain Energy Star efficiency
Payment of Locally
standards would be eligible for a $500 credit per unit,
Prevailing Wages, by
with a $1,000 per unit credit available for eligible zero-
David H. Bradley and
energy ready multifamily dwellings. The credits for
Jon O. Shimabukuro.
multifamily dwelling units would be increased to $2,500
and $5,000, respectively, if the taxpayer ensures that the
laborers and mechanics employed by contractors and
subcontractors in the construction of the residence are
paid prevailing wages.
Taxpayers claiming the low-income housing tax credit
would not have to reduce their basis for credits claimed
under this section.
Part 4—Clean Vehicles

Clean Vehicle Credit
Buyers of qualifying plug-in electric vehicles (EVs) may be
For background, see

able to claim a nonrefundable tax credit of up to $7,500

CRS In Focus IF11017,
under current law. The tax credit phases out once a
Section 13401
The Plug-In Electric
vehicle manufacturer has sold 200,000 qualifying vehicles.
Vehicle Tax Credit, by
Current law also allows, through 2021, a tax credit of up
Mol y F. Sherlock.
to $8,000 for fuel cell vehicles (the base credit amount is
$4,000, with up to an additional $4,000 available based on

CRS Report R46864,
fuel economy). Heavier fuel cell vehicles qualify for up to a
Alternative Fuels and
$40,000 credit. This provision would modify the tax
Vehicles: Legislative
credit for plug-in electric vehicles, allowing certain clean
Proposals, by Melissa N.
vehicles to qualify and eliminating the current per
Diaz.
manufacturer limit. The credit would be renamed the

CRS Report R46231,
clean vehicle credit.
Electric Vehicles: A Primer
The modified credit for clean vehicles would be $3,750
on Technology and
for any vehicle meeting the critical minerals requirement,
Selected Policy Issues, by
and $3,750 for any vehicle meeting the battery
Melissa N. Diaz.
components requirement. The maximum credit per

vehicle would be $7,500. Clean vehicles would include
plug-in electric vehicles with a battery capacity of at least
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Section Title
Description
CRS Resources
7 kilowatt hours and fuel cell vehicles. Qualifying vehicles
would include those that had final assembly occur in
North America. Sellers would be required to provide
taxpayer and vehicle information to the Treasury for tax
credit eligible vehicles. Only vehicles made by qualified
manufacturers, who have written agreements with and
provide periodic reports to the Treasury, could qualify.
For vehicles placed in service after 2023, qualifying
vehicles would not include any vehicle with battery
components that were manufactured or assembled by a
foreign entity of concern (as defined in 42 U.S.C.
§18741). For vehicles placed in service after 2024,
qualifying vehicles would not include any vehicle in which
applicable critical minerals in the vehicle’s battery were
from a foreign entity of concern. Taxpayers would be
required to include the vehicle identification number
(VIN) on their tax return to claim a tax credit.
To receive the $3,750 critical minerals portion of the
credit, the vehicle’s battery must contain a threshold
percentage (in value) of critical minerals that were
extracted or processed in a country with which the
United States has a free trade agreement, or recycled in
North America. The threshold percentage would be 40%
through 2023, increasing to 50% in 2024, 60% in 2025,
70% in 2026, and 80% after 2026.
To receive the $3,750 battery components portion of the
credit, the percentage of the battery’s components
manufactured or assembled in North America would have
to meet threshold amounts. For vehicles placed in service
through 2023, the percentage would be 50%. The
percentage increases to 60% for 2024 and 2025, 70% for
2026, 80% for 2027, 90% for 2028, and 100% after 2028.
The credit would be disallowed for certain higher-income
taxpayers. Specifically, no credit would be allowed if the
current year or preceding year’s modified AGI exceeds
$300,000 for married taxpayers ($225,000 in the case of
head of household filers; $150,000 in the case of other
filers).
Credits would only be allowed for vehicles that have a
manufacturer’s suggested retail price of no more than
$80,000 for vans, SUVs, or pickup trucks, and $55,000 for
other vehicles. Taxpayers would be allowed to claim the
credit for one vehicle per year.
Starting in 2024, taxpayers purchasing eligible vehicles
could elect to transfer the tax credit to the dealer, so
long as the dealer meets registration, disclosure, and
other requirements. The Secretary of the Treasury is
directed to establish a program to make advance
payments to dealers for transferred credits. Amounts
provided as direct spending would be grossed-up
(increased) by 6.0445%.
The credit would not apply to vehicles acquired after
December 31, 2032.
Credit for
This provision would create a new tax credit for buyers
For background, see
Previously-Owned
of previously owned qualified clean (plug-in electric and

CRS In Focus IF11017,
Clean Vehicles
The Plug-In Electric
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Tax Provisions in the Inflation Reduction Act of 2022 (H.R. 5376)

Section Title
Description
CRS Resources

fuel cell) vehicles. The credit would be up to $4,000
Vehicle Tax Credit, by
Section 13402
limited to 30% of the vehicle purchase price.
Mol y F. Sherlock.
The credit would be disallowed for taxpayers above

CRS Report R46864,
modified AGI thresholds. Married taxpayers filing a joint
Alternative Fuels and
return could not claim the credit if their modified AGI
Vehicles: Legislative
was above $150,000 ($112,500 in the case of head of
Proposals, by Melissa N.
household filers; $75,000 in the case of other filers). The
Diaz.
taxpayer’s modified AGI would be the lesser of modified

AGI in the taxable year or prior year.

CRS Report R46231,
Electric Vehicles: A Primer
Credits would only be allowed for vehicles with a sale
on Technology and
price of $25,000 or less with a model year that is at least
Selected Policy Issues, by
two years earlier than the calendar year in which the
Melissa N. Diaz.
vehicle is sold. This credit could only be claimed for
vehicles sold by a dealer and on the first transfer of a
qualifying vehicle. Taxpayers could only claim this credit
once every three years and would be required to include
the VIN on their tax return to claim a tax credit.
Starting in 2024, taxpayers purchasing eligible vehicles
could elect to transfer the tax credit to the dealer, so
long as the dealer meets registration, disclosure, and
other requirements. Amounts provided as direct spending
would be grossed-up (increased) by 6.0445%.
The credit would not apply to vehicles acquired after
December 31, 2032.
Qualified
This provision would create a new tax credit for qualified

Commercial Clean
commercial clean vehicles placed in service by the
Vehicles
taxpayer during the year. The credit would be the lesser

of (1) 15% of the vehicle’s cost (30% for vehicles not
powered by a gasoline or diesel internal combustion
Section 13403
engine); or (2) the incremental cost of the vehicle relative
to a comparable vehicle. Credit amounts cannot exceed
$7,500 for vehicles weighing less than 14,000 pounds, or
$40,000 otherwise. Eligible vehicles would have a battery
capacity of not less than 15 kilowatt hours (7 kilowatt
hours in the case of vehicles weighing less than 14,000
pounds) and be charged by an external source of
electricity. Mobile machinery and qualified commercial fuel
cell vehicles would also be eligible for this credit.
Qualifying vehicles must be depreciable property.
Only vehicles made by qualified manufacturers, who have
written agreements with and provide periodic reports to
the Treasury, could qualify. Taxpayers would be required
to include the VIN on their tax return to claim a tax
credit.
Tax-exempt entities would have the option of electing to
receive direct payments.
The credit would not apply to vehicles acquired after
December 31, 2032.
Alternative Fuel
Current law allows, through 2021, a tax credit for the
For background, see
Refueling Property
cost of any qualified alternative fuel vehicle refueling

CRS Report R46451,
Credit
property installed by a business or at a taxpayer’s
Energy Tax Provisions

principal residence. The credit is equal to 30% of these
Expiring in 2020, 2021,
costs, limited to $30,000 for businesses at each separate
Section 13404
2022, and 2023 (“Tax
location with qualifying property, and $1,000 for
Extenders”), by Mol y F.
residences. This provision would extend the credit
Sherlock, Margot L.
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Section Title
Description
CRS Resources
through December 31, 2032, and make additional
Crandall-Hol ick, and
modifications.
Donald J. Marples.
For business property (property subject to depreciation),

CRS Report R46864,
the credit would be extended at a rate of 6% (30% if
Alternative Fuels and
prevailing wage and registered apprenticeship
Vehicles: Legislative
requirements were met), with the credit limit increased
Proposals, by Melissa N.
to $100,000.
Diaz.
The definition of qualifying property would be modified to

CRS Report R46231,
include bidirectional charging equipment. The credit could
Electric Vehicles: A Primer
also be claimed for electric charging stations for two- and
on Technology and
three-wheeled vehicles that are intended for use on public
Selected Policy Issues, by
roads.
Melissa N. Diaz.
Starting in 2023, charging or refueling property would

CRS Report R45171,
only be eligible if it is placed in service within a low-
Registered
income or rural census tract.
Apprenticeship: Federal
Role and Recent Federal
Efforts, by Benjamin
Col ins.

CRS In Focus IF11927,
Federally Funded
Construction and the
Payment of Locally
Prevailing Wages, by
David H. Bradley and
Jon O. Shimabukuro.
Part 5—Investment in Clean Energy Manufacturing and Energy Security

Extension of the
This provision would provide additional allocations of the
For background, see
Advanced Energy
qualified advanced energy manufacturing tax credit, which

CRS Committee Print
Project Credit
is a 30% tax credit for investments in projects that
CP10004, Tax

reequip, expand, or establish certain energy manufacturing
Expenditures:
facilities. The American Recovery and Reinvestment Act
Section 13501
Compendium of
(P.L. 111-5) provided $2.3 bil ion in allocations, which
Background Material on
have been ful y allocated.
Individual Provisions — A
An additional $10 bil ion in allocations would be provided
Committee Print
with at least $4 bil ion to be allocated to energy
Prepared for the Senate
communities (as defined in the extended PTC, Section
Committee on the
13101). Credits cannot be allocated to projects located in
Budget, 2020, by Jane
census tracts in which projects having received prior
G. Gravelle et al. (pp.
allocations under Section 48C are located.
221-224).
The definition of qualifying advanced energy projects

CRS Report R45171,
would be amended such that it would include projects
Registered
that reequip, expand, or establish a manufacturing or
Apprenticeship: Federal
industrial facility for the production or recycling of
Role and Recent Federal
renewable energy property; energy storage systems and
Efforts, by Benjamin
components; grid modernization equipment and
Col ins.
components; property designed to remove, use, or

sequester carbon oxide emissions; equipment designed to

CRS In Focus IF11927,
Federally Funded
refine, electrolyze, or blend any fuel, chemical, or product
Construction and the
which is renewable or low-carbon and low-emission;
Payment of Locally
property designed to produce energy conservation
Prevailing Wages, by
technologies; electric or fuel-cell vehicles, including
David H. Bradley and
technologies, components, or materials for such vehicles
Jon O. Shimabukuro.
and the associated charging infrastructure; hybrid vehicles
weighing less than 14,000 pounds, including technologies,
components, or materials for such vehicles; which
reequips an industrial manufacturing facility with
Congressional Research Service

16

Tax Provisions in the Inflation Reduction Act of 2022 (H.R. 5376)

Section Title
Description
CRS Resources
equipment designed to reduce greenhouse gas emissions
by at least 20%; or which reequips, expands, or
establishes an industrial facility for the processing, refining
or recycling of critical materials.
The base rate for the credit would be 6%, with the 30%
credit rate allowed for projects meeting prevailing wage
and registered apprenticeship requirements.
The Secretary of the Treasury would be directed to
establish a program to award credits to qualifying
advanced energy project sponsors. Applicants accepting
certifications for credits would have two years to provide
evidence that the requirements of the certification have
been met and to place property in service.
Advanced
This provision would create a new production tax credit
For background, see
Manufacturing
that could be claimed for the domestic production and

CRS Insight IN11980,
Production Credit
sale of qualifying solar and wind components.
Offshore Wind Provisions

Credits for solar components would include (1) for a thin
in the Inflation Reduction
Section 13502
film photovoltaic cell or crystalline photovoltaic cell, 4
Act, by Laura B. Comay,
cents per direct current watt of capacity; (2) for
Corrie E. Clark, and
photovoltaic wafers, $12 per square meter; (3) for solar
Mol y F. Sherlock.
grade polysilicon, $3 per kilogram; (4) for polymeric
backsheet, 40 cents per square meter; and (5) for solar
modules, 7 cents per direct current watt of capacity.
For wind energy components, if the component is an
offshore wind vessel, the credit amount would be 10% of
the sales price. Otherwise, credits for wind components
would be computed as an applicable amount times the
total rated capacity of the completed wind turbine for
which the component was designed. The applicable
amount would be 2 cents for blades, 5 cents for nacelles,
3 cents for towers, 2 cents for fixed platform offshore
wind foundations, and 4 cents for floating platform
offshore wind foundations. The credit for torque tubes
and longitudinal purlin would be $0.87 per kg, and the
credit for structural fasteners would be $2.28 per kg. The
credit for inverters would be based on the inverter’s
capacity, with different types of inverters eligible for
specified credit amounts ranging from 1.5 cents to 11
cents per watt. For electrode active materials, the credit
would be 10% of the production cost. Battery cells could
qualify for a credit of $35 per kilowatt hour of capacity,
and battery modules could qualify for a credit of $10 per
kilowatt hour of capacity (or $45 in the case of a battery
module which does not use battery cells). A credit of 10%
would also be available for the production of critical
minerals.
The credit would phase out for components sold after
December 31, 2029. Components sold in 2030 would be
eligible for 75% of the ful credit amount. Components
sold in 2031 and 2032 would be eligible for 50% and 25%
of the ful credit amount, respectively. No credit would be
available for components sold after December 31, 2032.
The phaseout would not apply to the production of
critical minerals.
Congressional Research Service

17

Tax Provisions in the Inflation Reduction Act of 2022 (H.R. 5376)

Section Title
Description
CRS Resources
The credit could not be claimed for components
produced at a facility for which a credit was claimed
under Section 48C.
Part 6—Superfund

Reinstatement of
This provision would permanently reinstate the
For background, see
Superfund
Hazardous Substance Superfund financing rate for certain

CRS In Focus IF11982,

excise taxes, but would not reauthorize the Superfund
Superfund Tax Legislation
special environmental tax on corporate income that also
Section 13601
in the 117th Congress,
once financed this trust fund.
by Anthony A. Cil uffo
This provision would permanently reinstate Superfund
and David M. Bearden.
excise taxes on domestic crude oil and imported

petroleum products at the rate of 16.4 cents per barrel in

CRS Report R41039,
Comprehensive
2023, with adjustments for inflation annually thereafter.
Environmental Response,
The previous tax rate was 9.7 cents per barrel when this
Compensation, and
tax last expired at the end of 1995.
Liability Act: A Summary
Generally, the tax is paid by refineries that receive crude
of Superfund Cleanup
oil or by the person using or importing a petroleum
Authorities and Related
product.
Provisions of the Act, by
The Infrastructure Investment and Jobs Act (P.L. 117-58)
David M. Bearden.
separately renewed other excise taxes that contribute to
the Superfund. P.L. 117-58 increased the tax rate on
domestically produced chemical feedstocks and imported
chemical derivatives and renewed those taxes from July 1,
2022, through December 31, 2031. P.L. 117-58 also
removed the statutory link between the dates of
applicability of the crude oil and chemical products taxes.
Revenues from the excise tax finance the Hazardous
Substance Superfund Trust Fund. Borrowing would be
authorized through repayable advances from the General
Fund of the U.S. Treasury until the end of 2032.
Part 7—Incentives for Clean Electricity and Clean Transportation

Clean Electricity
This provision would create a new clean electricity
For background, see
Production Credit
production tax credit (PTC). This new PTC would be for

CRS Report R45171,

the sale of domestically produced electricity with a
Registered
greenhouse gas emissions rate not greater than zero. To
Section 13701
Apprenticeship: Federal
qualify for a tax credit, electricity would need to be
Role and Recent Federal
produced at a qualifying facility placed in service after
Efforts, by Benjamin
December 31, 2024.
Col ins.
The base PTC amount would be 0.3 cents per kWh, with

the tax credit amount increased to 1.5 cents per kWh for

CRS In Focus IF11927,
Federally Funded
facilities that pay prevailing wages and meet registered
Construction and the
apprenticeship requirements (0.5 cents and 2.5 cents,
Payment of Locally
respectively, in 2021, applying the inflation adjustment
Prevailing Wages, by
factor; the amounts would be adjusted for inflation
David H. Bradley and
annually). Facilities with a maximum net output of less
Jon O. Shimabukuro.
than 1 megawatt and that begin before 60 days after the
Secretary of the Treasury publishes guidance on the wage

CRS Insight IN11983,
and registered apprenticeship requirements would also
Proposed Tax Preference
qualify for the ful 1.5 cents per kWh amount. The PTC
for Domestic Content in
would be available for electricity produced during the
Energy Infrastructure, by
facility’s first 10 years of operation.
Christopher D.
Watson and Mol y F.
The credit amount would be increased by 10% for
Sherlock.
electricity produced in energy communities (as defined for
Congressional Research Service

18

Tax Provisions in the Inflation Reduction Act of 2022 (H.R. 5376)

Section Title
Description
CRS Resources
the purposes of the increased credit amount under the
PTC and ITC).
The provision would provide that for facilities financed
with tax-exempt bonds, the credit amount is reduced by
the lesser of (1) 15%; or (2) the fraction of the proceeds
of a tax-exempt obligation used to finance the project
over the aggregate amount of the project’s financing
costs.
A 10% domestic content bonus would be available for
electricity produced at facilities that certify that certain
steel, iron, and manufactured products used in the facility
were domestically produced. The ability to claim the
credit as direct pay would be subject to meeting domestic
content requirements.
Taxpayers would not be able to claim the clean electricity
production credit if the facility or electricity produced
from the facility claimed certain other energy-related
investment or production tax credits. Taxpayers would
choose between the clean electricity PTC and ITC, and
could not claim both.
The tax credit would phase out when emissions reduction
target levels are achieved or after 2032 (the later of the
two). The emissions target phaseout would begin after
the calendar year in which greenhouse gas emissions from
the electric power sector are equal to or less than 25% of
2022 electric power sector emissions. Once phaseout
begins, the ful credit amount would remain available for
facilities that begin construction the fol owing year. The
credit amount for facilities beginning construction in the
second year would be 75% of the ful credit amount. This
would be reduced to 50% for facilities beginning
construction in the third year, and zero afterward.
Clean Electricity
This provision would create a new clean electricity
For background, see
Investment Credit
investment tax credit (ITC). This new ITC would be for

CRS Report R45171,

investment in qualifying zero-emissions electricity
Registered
generation facilities or energy storage technology. Costs
Section 13702
Apprenticeship: Federal
of interconnection property would be eligible for clean
Role and Recent Federal
electricity projects smaller than 5 megawatts. This credit
Efforts, by Benjamin
would be available for facilities and property placed in
Col ins.
service after December 31, 2024.

The base ITC amount would be 6%, with the tax credit

CRS In Focus IF11927,
Federally Funded
rate increased to 30% for facilities that pay prevailing
Construction and the
wages and meet registered apprenticeship requirements.
Payment of Locally
Facilities with a maximum net output of less than 1
Prevailing Wages, by
megawatt and that begin before 60 days after the
David H. Bradley and
Secretary of the Treasury publishes guidance on the wage
Jon O. Shimabukuro.
and registered apprenticeship requirements would also
qualify for the ful 30% amount.

CRS Insight IN11983,
Proposed Tax Preference
The clean electricity ITC is increased by one-third (2
for Domestic Content in
percentage points or 10 percentage points) for property
Energy Infrastructure, by
placed in service in an energy community (as defined
Christopher D.
above for the purposes of the clean electricity PTC).
Watson and Mol y F.
Similarly, a 10 percentage point domestic content bonus
Sherlock.
also applies for the clean electricity ITC. The ability to
claim the credit as direct pay would be subject to meeting
domestic content requirements.
Congressional Research Service

19

Tax Provisions in the Inflation Reduction Act of 2022 (H.R. 5376)

Section Title
Description
CRS Resources
The provision would provide that for facilities financed
with tax-exempt bonds, the credit amount is reduced by
the lesser of (1) 15%; or (2) the fraction of the proceeds
of a tax-exempt obligation used to finance the project
over the aggregate amount of the project’s financing
costs.
Taxpayers would not be able to claim the clean electricity
production credit if the facility or electricity produced
from the facility claimed certain other energy-related
investment or production tax credits. Taxpayers would
choose between the clean electricity PTC and ITC, and
could not claim both.
This provision would also allow for the annual allocation
of 1.8 gigawatts for “environmental justice solar and wind
capacity” credits. Taxpayers receiving a capacity allocation
may be entitled to tax credits in addition to otherwise
allowed clean electricity ITCs. Specifically, projects
receiving an allocation that are located in a low-income
community or on Indian land would be eligible for a 10
percentage point bonus investment tax credit, while
projects that are part of a low-income residential building
project or qualified low-income economic benefit project
would be eligible for a 20 percentage point bonus
investment credit. Qualifying clean electricity projects
would include those with a nameplate capacity of 5
megawatts or less (other than facilities producing
electricity through combustion or gasification). Facilities
receiving an allocation would be required to have the
facility placed in service within four years.
The clean electricity ITC would phase out according to
the same schedule as would apply to the clean electricity
PTC.
Cost Recovery for
This provision would provide that any facility qualifying for
Qualified Facilities,
the clean electricity PTC or any facility or property
Qualified Property,
qualifying for the clean electricity ITC would be treated as
and Energy Storage
5-year property under the modified accelerated cost
Technology
recovery system (MACRS), making it so that cost

recovery for renewable energy investments would be
generally similar to current law.
Section 13703
This provision would apply to facilities and property
placed in service after December 31, 2024.
Clean Fuel
This provision would create a tax credit for domestic
For background, see
Production Credit
clean fuel production starting in 2025. The tax credit per

CRS Report R47171,

gallon of transportation fuel would be calculated as the
Sustainable Aviation Fuel
applicable amount multiplied by the emissions factor of
Section 13704
(SAF): In Brief, by Kelsi
the fuel. To qualify, the fuel must be produced by the
Bracmort and Mol y F.
taxpayer at a qualified facility (excluding facilities that
Sherlock.
receive credits for producing clean hydrogen or carbon
oxide sequestration, or the investment credit for energy

CRS Report R45171,
produced in clean hydrogen facilities) and sold by the
Registered
taxpayer. Qualified producers must be registered with the
Apprenticeship: Federal
IRS.
Role and Recent Federal
Efforts, by Benjamin
The “applicable amount” would be determined by the
Col ins.
type of fuel and the producer’s labor practices. The base
credit amount for zero-emissions fuels would be $0.20 for 
CRS In Focus IF11927,
nonaviation fuel and $0.35 for aviation fuel. If the
Federally Funded
Congressional Research Service

20

Tax Provisions in the Inflation Reduction Act of 2022 (H.R. 5376)

Section Title
Description
CRS Resources
producer meets prevailing wage and registered
Construction and the
apprenticeship requirements, then the applicable amount
Payment of Locally
would be $1.00 for nonaviation fuel and $1.75 for aviation
Prevailing Wages, by
fuel. These amounts would be adjusted annually for
David H. Bradley and
inflation.
Jon O. Shimabukuro.
The “emissions factor” would be calculated according to
the fol owing formula: [(50 kilograms of CO2-equivalent
(CO2e) global warming potential per metric mil ion
British Thermal Units (mmBTU) – emissions rate of fuel
produced) / 50 kilograms of CO2e per mmBTU]. The
Treasury Secretary would publish tables of emissions
rates for various fuel types that would be used in the
calculation. Qualifying transportation fuel would be fuel
with an emissions rate not greater than 50 kilograms of
CO2e per mmBTU.
The credit would not be available for transportation fuel
sold after December 31, 2027.
Part 8—Credit Monetization and Appropriations

Elective Payment for
This provision would allow certain organizations, generally For background, see
Energy Property and
tax-exempt entities including state and local governments

CRS Report R45693,
Electricity Produced
and Indian tribal governments, to treat certain tax credit
Tax Equity Financing: An
from Certain
amounts as payments of tax. Payments in excess of tax
Introduction and Policy
Renewable
liability can be refunded to these organizations, allowing
Considerations, by Mark
Resources, Etc.
the credits to be received as “direct pay.” This direct
P. Keightley, Donald J.

payment would be allowed for the Section 30C credit for
Marples, and Mol y F.
alternative fuel refueling property, the Section 45
Section 13801
Sherlock.
renewable electricity production credit, the Section 45Q
carbon oxide sequestration credit, the new Section 45U

CRS Insight IN11983,
zero-emission nuclear power production credit; the new
Proposed Tax Preference
Section 45V clean hydrogen production credit; in the case
for Domestic Content in
of certain tax-exempt entities, the new Section 45W
Energy Infrastructure, by
credit for qualified commercial vehicles; the new Section
Christopher D.
45X advanced manufacturing production credit; the new
Watson and Mol y F.
Section 45Y clean electricity production credit; the new
Sherlock.
Section 45Z clean fuel production credit; the Section 48
energy investment tax credit, and the Section 48C
qualifying advanced energy project credit; and the new
Section 48D clean electricity investment credit.
Taxpayers who are not tax-exempt entities would be
allowed to elect direct pay for the clean hydrogen, carbon
oxide sequestration, and advanced manufacturing
production credits for the first five years starting with the
year a facility is placed in service. This election cannot be
made after December 31, 2032.
This provision would not apply to territories with mirror-
code tax systems.
Taxpayers who are not tax-exempt entities would be
allowed a one-time transfer of these tax credits. Any
payments received in exchange for the transfer of credits
would be excluded from income, and any amounts paid to
obtain a transferred credit could not be deducted from
income. Credits that could be transferred would also be
given extended carryback and carryforward periods. The
carryback period for these credits would be extended
from 1 to 3 years, and the carryforward period extended
from 20 to 22 years.
Congressional Research Service

21

Tax Provisions in the Inflation Reduction Act of 2022 (H.R. 5376)

Section Title
Description
CRS Resources
Part 9—Other Provisions

Permanent Extension Under current law, an excise tax is imposed on coal from
For background, see
of Tax Rate to Fund
mines in the United States. The tax rate depends on how

CRS Report R45261,
Black Lung Disability
the coal is mined. The current rates are $0.50 per ton for
The Black Lung Program,
Trust Funds
coal from underground mines and $0.25 per ton for coal
the Black Lung Disability

from surface mines, with both limited to 2% of the sales
Trust Fund, and the
price. The Black Lung excise tax is intended to fund
Section 13901
Excise Tax on Coal:
benefits for U.S. coal miners who develop Black Lung
Background and Policy
disease as a result of working in coal mines.
Options, by Scott D.
Temporary, higher rates of $1.10 per ton of coal from
Szymendera and Mol y
underground mines and $0.55 per ton of coal from
F. Sherlock.
surface mines, limited to 4.4% of the sales price, have
applied for much of the time since 1986. They most
recently applied from the beginning of 2020 through the
end of 2021.
This provision would permanently extend the higher
rates.
Increase in Research
Under current law, businesses are allowed a credit against For background, see
Credit Against
income tax that is based on their qualified research

CRS Report RL31181,
Payrol Tax for Small
expenses. The credit is calculated as the amount of
Federal Research Tax
Business
qualified research expenses above a base amount that is
Credit: Current Law and

meant to represent the amount of research expenditures
Policy Issues, by Gary
in the absence of the credit.
Section 13902
Guenther.
Some small businesses may not have a large enough

CRS Report R47062,
income tax liability to take advantage of their research
Payroll Taxes: An
credit. Current law allows a small business, defined as a
Overview of Taxes
business with less than $5 mil ion in gross receipts and
Imposed and Past Payroll
that is under five years old, to apply up to $250,000 of the
Tax Relief, by Anthony
research credit toward its Social Security payrol tax
A. Cil uffo and Mol y F.
liability.
Sherlock.
This provision would allow an additional credit of up to
$250,000 against Medicare Hospital Insurance tax for
taxable years beginning after December 31, 2022. The
credit could not exceed the tax imposed for any calendar
quarter, with unused amounts of the credit carried
forward.
Reinstatement of
This provision would reinstate the current-law expiration
For background, see
Limitation Rules for
date of the state and local tax (SALT) limitation enacted in  CRS Insight IN11296,
Deduction for State
Section 13904 of the bil . In other words, the expiration
Tax Treatment of Net
and Local, etc.,
date would remain 2025, as under current law.
Operating Losses (NOLs)
Taxes; Extension of
The provision would also extend the limitation on excess
in the Coronavirus Aid,
Limitation on Excess
business losses of noncorporate taxpayers. Businesses are
Relief, and Economic
Business Losses of
generally permitted to carry over a net operating loss
Security (CARES) Act, by
Noncorporate
(NOL) to certain past and future years. Under the passive
Jane G. Gravelle.
Taxpayers
loss rules, individuals and certain other taxpayers are


limited in their ability to claim deductions and credits

CRS Report R46377,
The Tax Treatment and
Section 13903
from passive trade and business activities, although unused
Economics of Net
deductions and credits may generally be carried forward
Operating Losses, by
to the next year. Similarly, certain farm losses may not be
Mark P. Keightley.
deducted in the current year, but can be carried forward
to the next year.

For taxpayers other than C corporations, a deduction in
the current year for excess business losses is temporarily
disallowed (through 2026) and such losses are treated as
a NOL carryover to the fol owing year. An excess
Congressional Research Service

22

Tax Provisions in the Inflation Reduction Act of 2022 (H.R. 5376)

Section Title
Description
CRS Resources
business loss is the amount that a taxpayer’s aggregate
deductions attributable to trades and businesses exceed
the sum of (1) aggregate gross income or gain attributable
to such activities and (2) $250,000 ($500,000 if married
filing jointly), adjusted for inflation. For partnerships and S
corporations, this provision was applied at the partner or
shareholder level. This provision would extend the
temporary limitation through 2028.
Removal of Harmful
In addition to the modification noted in Section 10101
For background, see
Small Business Taxes; above, this provision would have extended the $10,000

CRS Report R46246,
Extension of
state and local tax (SALT) limitation from 2025 through
The SALT Cap: Overview
Limitation of
2026. However, the SALT change would effectively be
and Analysis, by Grant
Deduction for State
reversed by changes made in Section 13903 of the bil .
A. Driessen and Joseph
and Local, etc., Taxes
S. Hughes.

Section 13904
Source: CRS analysis of the legislative text of the Senate amendment to H.R. 5376, “Inflation Reduction Act of
2022,” as posted on the House Rule Committee Website at https://rules.house.gov/bil /117/hr-5376-sa.
Notes: Energy provisions that extend expiring provisions are generally effective in 2022, with new provisions
generally effective in 2023. Exceptions are noted. Sections 13903 and 13904 were added during Senate
consideration of the bil . The changes that would be made by the provisions are permanent, unless otherwise
noted. Within the description, “Section” citations refer to the section within the Internal Revenue Code (IRC),
26 U.S.C., unless otherwise noted. Section 13802 would provide appropriations of $500 mil ion to remain
available until September 30, 2031, for the IRS to carry out this subtitle.

Congressional Research Service

23

Table 5. Estimated Budgetary Effect of the Revenue Provisions of the “Inflation Reduction Act of 2022”
Provision
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2022-2031
SUBTITLE A—DEFICIT REDUCTION
Part 1—Corporate Tax Reform
—
34,679
34,258
22,039
17,702
18,699
20,798
22,756
24,658
26,659
222,248
Part 2—Excise Tax on Repurchase of
—
5,697
7,875
8,070
8,581
8,882
8,838
8,603
8,500
8,641
73,686
Corporate Stock
Part 3—Funding the Internal Revenue
Service and Improving Taxpayer
Estimates to be provided by the Congressional Budget Office (CBO)
Compliance
Total of Subtitle A
—
40,376
42,133
30,109
26,283 27,581
29,636
31,359
33,158
35,300
295,934
SUBTITLE B—PRESCRIPTION DRUG PRICING REFORM | SUBTITLE C—AFFORDABLE CARE ACT SUBSIDIES
Totals of Subtitle B and C
Estimates to be provided by the Congressional Budget Office (CBO)
SUBTITLE D—ENERGY SECURITY
Part 1—Clean Electricity and Reducing Carbon Emissions
Extension and modification of credit for
electricity produced from certain
—
-1,562
-2,183
-3,317
-4,822
-6,428
-7,677
-8,232
-8,329
-8,511
-51,062
renewable resources
Extension and modification of energy
credit
—
-2,140
-1,559
-2,458
-5,367
-2,359
-48
-38
-9
15
-13,962
Increase in energy credit for solar
facilities placed in service in connection
Estimated included in “Extension and modification of credit for electricity produced from certain renewable resources” and
with low-income communities
“Extension and modification of energy credit” above
Extension and modification of credit for
carbon oxide sequestration
—
-42
-303
-469
-495
-463
-429
-388
-343
-296
-3,229
Zero-emission nuclear power
production credit
—
—
-2,188
-3,524
-3,710
-3,838
-3,960
-4,050
-4,279
-4,452
-30,001
Total of Part 1
—
-3,744
-6,233
-9,768 -14,394 -13,088 -12,115 -12,709 -12,961 -13,243
-98,254
CRS-24

Provision
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2022-2031
Part 2—Clean Fuels
Extension of incentives for biodiesel,
—
-2,776
-1,780
-1,015
—
—
—
—
—
—
-5,571
renewable diesel, and alternative fuels
Extension of second-generation biofuel
—
-24
-20
-10
—
—
—
—
—
—
-54
incentives
Sustainable aviation fuel credit
—
-10
-25
-14
—
—
—
—
—
—
-49
Credit for production of clean hydrogen
—
-131
-362
-610
-918
-1,251
-1,627
-2,082
-2,667
-3,518
-13,166
Total of Part 2
—
-2,941
-2,187
-1,649
-918
-1,251
-1,627
-2,082
-2,667
-3,518
-18,840
Part 3—Clean Energy and Efficiency Incentives for Individuals
Extension, increase, and modifications of
nonbusiness energy property credit
—
-1,887
-1,348
-1,324
-1,345
-1,327
-1,277
-1,301
-1,314
-1,327
-12,451
Extension of residential clean energy
credit
—
-459
-1,021
-2,692
-2,770
-2,850
-2,935
-3,019
-3,092
-3,185
-22,022
Energy efficient commercial buildings
—
-62
-50
-46
-42
-38
-35
-32
-30
-28
-362
deduction
Extension, increase, and modifications of
—
-273
-193
-203
-216
-230
-241
-240
-229
-217
-2,043
new energy efficient home credit
Total of Part 3
—
-2,681
-2,612
-4,265
-4,373
-4,445
-4,488
-4,592
-4,665
-4,757
-36,879
Part 4—Clean Vehicles
Clean vehicle credit
—
-85
-451
-557
-681
-854
-1,024
-1,155
-1,303
-1,429
-7,541
Credit for previously-owned qualified
—
-99
-96
-120
-132
-146
-162
-179
-197
-215
-1,347
plug-in electric drive motor vehicles
Credit for qualified commercial clean
vehicles
—
-189
-177
-228
-298
-388
-469
-539
-607
-687
-3,583
Alternative fuel refueling property credit
—
-138
-128
-145
-164
-184
-207
-231
-257
-284
-1,738
CRS-25

Provision
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2022-2031
Total of Part 4
—
-511
-852
-1,050
-1,275
-1,572
-1,862
-2,105
-2,365
-2,615
-14,209
Part 5—Investment in Clean Energy Manufacturing and Energy Security
Extension of the advanced energy
project credit
—
-1,463
-1,377
-915
-926
-614
-442
-280
-196
-42
-6,255
Advanced manufacturing production
credit
—
-1,755
-2,503
-2,691
-3,165
-3,563
-3,938
-4,534
-4,562
-3,921
-30,632
Total of Part 5
—
-3,218
-3,880
-3,606
-4,091
-4,177
-4,380
-4,814
-4,758
-3,963
-36,887
Part 6—Reinstatement of Superfund
Total of Part 6
—
902
1,230
1,271
1,304
1,336
1,368
1,402
1,436
1,470
11,719
Part 7—Incentives for Clean Electricity and Clean Transportation
Clean electricity production credit
—
—
—
—
-12
-45
-571
-1,864
-3,497
-5,215
-11,204
Clean electricity investment credit
—
—
—
-39
-57
-6,575
-10,315
-10,742
-11,264
-11,865
-50,858
Cost recovery for qualified facilities,
qualified property, and energy storage
—
—
—
—
—
-26
-83
-134
-171
-211
-624
technology
Clean fuel production credit
—
—
—
-641
-791
-1,177
-337
—
—
—
-2,946
Total of Part 7
—
—
—
-680
-860
-7,823 -11,306 -12,740 -14,932 -17,291
-65,632
Part 8—Credit Monetization and Appropriations
Total of Part 8
Estimates Contained in Relevant Items Above
Part 9—Other Provisions
Permanent extension of tax rate to fund
Black Lung Disability Trust Fund
—
103
135
131
130
130
131
132
133
134
1,159
Increase in research credit against
payrol tax for small businesses
—
-16
-13
-15
-16
-18
-21
-22
-23
-24
-168
CRS-26

Provision
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2022-2031
Limitation on excess business losses of
noncorporate taxpayers extended for
—
—
—
—
—
17,666
26,198
9,453
-274
-284
52,759
two years
Total of Part 9
—
87
122
116
114
17,778
26,308
9,563
-164
-174
53,750
Total of Subtitle D
— -12,107 -14,412 -19,631 -24,493 -13,243
-8,101 -28,076 -41,076 -44,091
-205,231
NET TOTAL
—
28,269
27,721
10,478
1,790
14,338
21,535
3,283
-7,918
-8,791
90,703
Source: Joint Committee on Taxation, Estimated Budgetary Effect of the Revenue Provisions of Title I -Committee on Finance, of an Amendment in the Nature of a Substitute to
H.R. 5376, “An Act to Provide for Reconciliation Pursuant to Title II of S. Con. Res. 14,” as Passed by the Senate on August 7, 2022, and Scheduled for Consideration by the House of
Representatives on August 12, 2022,” JCX-18-22, August 9, 2022, https://www.jct.gov/publications/2022/jcx-18-22/.
Notes: A “—” indicates no estimated budget effect.

CRS-27

Tax Provisions in the Inflation Reduction Act of 2022 (H.R. 5376)

Appendix. Inflation Reduction Act as Initially
Proposed in the Senate
Table A-1. Subtitle A—Deficit Reduction
Section Title
Description
CRS Resources
Part 1—Corporate Tax Reform
Corporate
This provision would impose a new alternative minimum
For background, see
Alternative Minimum
tax of 15% on corporations based on financial income. It

CRS In Focus IF12179,
Tax
would apply to corporations with $1 bil ion or more in
The Corporate

average annual earnings in the previous three years. In the
Minimum Tax Proposal,
case of U.S. corporations that have foreign parents, it
Section 10101
by Jane G. Gravelle.
would apply only to income earned in the United States of
$100 mil ion or more of average annual earnings in the

CRS Report R46887,
previous three years (and apply when the international
Minimum Taxes on
financial reporting group has income of $1 bil ion or more).
Business Income:
It would apply to a new corporation in existence for less
Background and Policy
than three years based on the earnings in the years of
Options, by Mol y F.
existence.
Sherlock and Jane G.
Gravelle.
The provision would exclude Subchapter S corporations,
regulated investment companies (RICs), and real estate

CRS Insight IN11646,
investment trusts (REITs). The tax would apply to private
A Look at Book-Tax
equity companies.
Differences for Large
Corporations Using
Firms that file consolidated returns would include income
Aggregate Internal
allocable to the firm from related firms including control ed
Revenue Service (IRS)
foreign corporations (and any disregarded entities); for
Data, by Mol y F.
other related firms, dividends would be included. The
Sherlock and Jane G.
provision would allow special deductions for cooperatives
Gravelle.
and Alaska Native Corporations. It would make
adjustments to conform financial accounting to tax
accounting for certain defined benefit pension plans. It
would apply with respect to items under the unrelated
business income tax for tax-exempt entities.
The additional tax would equal the amount of the minimum
tax in excess of the regular income tax plus the additional
tax from the Base Erosion and Anti-Abuse tax. Income
would be increased by federal and foreign income taxes to
place income on a pretax basis.
Losses would be allowed in the same manner as with the
regular tax, with loss carryovers limited to 80% of taxable
income.
Domestic credits under the general business tax (such as
the R&D credit) would be allowed to offset up to 75% of
the combined regular and minimum tax. Foreign tax credits
would be allowed based on the allowance for foreign taxes
paid in a corporation’s financial statement.
A credit for additional minimum tax could be carried over
to future years to offset regular tax when that tax is higher.
This tax would apply to taxable years beginning after
December 31, 2022.
Part 2—Closing the Carried Interest Loophole

Modification of Rules
Under current law, partnership interest transferred to the
For background, see
for Partnership
taxpayer in connection with the provision of services to a
Congressional Research Service

28

Tax Provisions in the Inflation Reduction Act of 2022 (H.R. 5376)

Section Title
Description
CRS Resources
Interests Held in
trade or business (carried interest) held for at least three

CRS Report R46447,
Connection with the
years is taxed as a long-term capital gain.
Taxation of Carried
Performance of
This provision would modify the tax rules surrounding
Interest, by Donald J.
Services
“carried interest” by extending the holding period to
Marples.

qualify for long-term capital gains to five years for
Section 10201
taxpayers with adjusted gross income of $400,000 or
more, broadening the definition of carried interest to
include partnership assets under the taxpayer’s direct or
indirect control, and adding additional rules for measuring
the holding period (including for tiered partnerships).
Source: CRS analysis of the legislative text of the “Inflation Reduction Act of 2022,” as posted on the Senate
Democrats website on July 27, 2022, at
https://www.democrats.senate.gov/imo/media/doc/inflation_reduction_act_of_2022.pdf.
Notes: Both provisions in this table are effective for taxable years beginning after December 31, 2022. The
changes that would be made by these provisions are permanent. Part 3 of Subtitle A would provide additional
appropriations of $79.6 bil ion over the next 10 years to enhance IRS service and enforcement activities. For
background on IRS appropriations, see CRS In Focus IF12098, Internal Revenue Service Appropriations, FY2023, by
Gary Guenther.
Table A-2. Subtitle B—Prescription Drug Reform
Section Title
Description
CRS Resources
Part 1—Lowering Prices Through Drug Price Negotiations
Selected Drug
This provision would impose a new excise tax on drug
For background, see
Manufacturer Excise
manufacturers, producers, and importers who fail to

CRS Report R47056,
Tax Imposed During
enter into drug pricing agreements under Section 1193 of
Build Back Better Act
Noncompliance
the Social Security Act, as added by the bil on selected
(BBBA) Health Coverage
Period
drugs (i.e., are noncompliant with Section 1193). This
Provisions: House-Passed

excise tax would be found under the new Internal
and Senate-Released
Revenue Code (IRC) Section 5000D.
Section 11003
Language, coordinated
The excise tax rate would range from 185.71% to 1,900%
by Vanessa C. Forsberg
of the selected drug’s price depending on the duration of
and Ryan J. Rosso.
noncompliance. The provision does not specify these
rates explicitly, but instead defines an applicable
percentage which equals the share of the post-tax sale
price attributable to the excise tax. Specifically, the
applicable percentage as defined in the statute equals
tax/(tax+price) which simplifies to tax rate/(tax rate+1)
with the applicable percentages being 65% for the sales of
selected drugs during the first 90 days of noncompliance,
75% for sales during the 91st to 180th days of
noncompliance, 85% for sales during the 181st to 270th
days of noncompliance, and 95% for sales after the 270th
day of noncompliance. Hence, the corresponding tax
rates would be calculated as (applicable percentage)/(1-
applicable percentage) and equal 185.71%, 300%, 566.67%
and 1,900% respectively, depending on the duration of
noncompliance. For example, if a selected drug was
subject to the top tax rate of 1,900% and cost $10 pre-
tax, it would cost $200 post-tax with $190 of the $200
cost (or 95%, the applicable percentage) being attributable
to the excise tax.
Selected drugs would be those defined in Section 1192(a)
of the Social Security Act, as enacted under this bil , which
are manufactured or produced in the United States or
Congressional Research Service

29

Tax Provisions in the Inflation Reduction Act of 2022 (H.R. 5376)

Section Title
Description
CRS Resources
entered the United States for consumption, use, or
warehousing. The excise tax would not apply to drugs
sold for export, and the provision addresses the refund or
credit process if tax is paid.
Noncompliance periods as defined in the bil would
generally begin after the deadline to enter into an
agreement to negotiate or renegotiate, or to agree upon
a maximum price, had passed. Such periods would end
when such agreement has been reached. The earliest
potential noncompliance period would begin on October
2, 2023.
For sales that were timed to avoid the excise tax, the
Secretary of the Treasury could treat the sale as
occurring during a day in a noncompliance period.
Manufacturers would be prohibited from deducting excise
tax payments from their federal income taxes.
Internal IRS appeals would not be permitted with respect
to this new excise tax. Additionally, no suit or proceeding
for a refund of the tax would be permitted until the
taxpayer had made ful payment of the tax (including
applicable interest and penalties).
Source: CRS analysis of the legislative text of the “Inflation Reduction Act of 2022,” as posted on the Senate
Democrats website on July 27, 2022, at
https://www.democrats.senate.gov/imo/media/doc/inflation_reduction_act_of_2022.pdf.
Notes: This provision would apply after the date of enactment to the sale of drugs during a noncompliance
period. The first noncompliance period could begin on October 2, 2023. Within the description, “Section”
citations refer to the section within the Internal Revenue Code (IRC), 26 U.S.C., unless otherwise noted.

Congressional Research Service

30

Table A-3. Estimated Budgetary Effect of the Revenue Provisions of the “Inflation Reduction Act of 2022”
Provision
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2022-2031
SUBTITLE A—DEFICIT REDUCTION
Part 1—Corporate Tax Reform
—
52,618
44,000
29,738
26,464
27,191
29,697
32,160
34,463
36,808
313,138
Part 2—Closing the Carried Interest
—
1,594
1,511
1,430
1,389
1,379
1,389
1,413
1,445
1,487
13,037
Loophole
Part 3—Funding the Internal Revenue
Service and Improving Taxpayer
Estimates to be provided by the Congressional Budget Office (CBO)
Compliance
Total of Subtitle A
—
54,212
45,511
31,168
27,853
28,570
31,086
33,573
35,908
38,295
326,175
SUBTITLE B—PRESCRIPTION DRUG PRICING REFORM | SUBTITLE C—AFFORDABLE CARE ACT SUBSIDIES
Totals of Subtitle B and C
Estimates to be provided by the Congressional Budget Office (CBO)
SUBTITLE D—ENERGY SECURITY
Part 1—Clean Electricity and Reducing Carbon Emissions
Extension and modification of credit for
electricity produced from certain
—
-1,562
-2,183
-3,317
-4,822
-6,428
-7,677
-8,232
-8,329
-8,511
-51,062
renewable resources
Extension and modification of energy
credit
—
-2,140
-1,559
-2,458
-5,367
-2,359
-48
-38
-9
15
-13,962
Increase in energy credit for solar
facilities placed in service in connection
Estimated included in “Extension and modification of credit for electricity produced from certain renewable resources” and
with low-income communities
“Extension and modification of energy credit” above
Extension and modification of credit for
carbon oxide sequestration
—
-42
-303
-469
-495
-463
-429
-388
-343
-296
-3,229
Zero-emission nuclear power
production credit
—
—
-2,188
-3,524
-3,710
-3,838
-3,960
-4,050
-4,279
-4,452
-30,001
Total of Part 1
—
-3,744
-6,233
-9,768 -14,394 -13,088 -12,115 -12,709 -12,961 -13,243
-98,254
CRS-31

Provision
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2022-2031
Part 2—Clean Fuels
Extension of incentives for biodiesel,
-104
-2,672
-1,780
-1,015
—
—
—
—
—
—
-5,571
renewable diesel, and alternative fuels
Extension of second-generation biofuel
-7
-17
-20
-10
—
—
—
—
—
—
-54
incentives
Sustainable aviation fuel credit
—
-10
-25
-14
—
—
—
—
—
—
-49
Credit for production of clean hydrogen
—
-131
-362
-610
-918
-1,251
-1,627
-2,082
-2,667
-3,518
-13,166
Total of Part 2
-111
-2,830
-2,187
-1,649
-918
-1,251
-1,627
-2,082
-2,667
-3,518
-18,840
Part 3—Clean Energy and Efficiency Incentives for Individuals
Extension, increase, and modifications of
nonbusiness energy property credit
-253
-1,634
-1,348
-1,324
-1,345
-1,327
-1,277
-1,301
-1,314
-1,327
-12,451
Extension of residential clean energy
credit
-52
-407
-1,021
-2,692
-2,770
-2,850
-2,935
-3,019
-3,092
-3,185
-22,022
Energy efficient commercial buildings
—
-62
-50
-46
-42
-38
-35
-32
-30
-28
-362
deduction
Extension, increase, and modifications of
—
-273
-193
-203
-216
-230
-241
-240
-229
-217
-2,043
new energy efficient home credit
Total of Part 3
-305
-2,376
-2,612
-4,265
-4,373
-4,445
-4,488
-4,592
-4,665
-4,757
-36,879
Part 4—Clean Vehicles
Clean vehicle credit
—
-85
-451
-557
-681
-854
-1,024
-1,155
-1,303
-1,429
-7,541
Credit for previously-owned qualified
—
-99
-96
-120
-132
-146
-162
-179
-197
-215
-1,347
plug-in electric drive motor vehicles
Credit for qualified commercial clean
vehicles
—
-189
-177
-228
-298
-388
-469
-539
-607
-687
-3,583
Alternative fuel refueling property credit
—
-138
-128
-145
-164
-184
-207
-231
-257
-284
-1,738
CRS-32

Provision
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2022-2031
Total of Part 4
—
-511
-852
-1,050
-1,275
-1,572
-1,862
-2,105
-2,365
-2,615
-14,209
Part 5—Investment in Clean Energy Manufacturing and Energy Security
Extension of the advanced energy
project credit
—
-1,463
-1,377
-915
-926
-614
-442
-280
-196
-42
-6,255
Advanced manufacturing production
credit
—
-1,754
-2,502
-2,690
-3,164
-3,562
-3,937
-4,533
-4,561
-3,920
-30,622
Total of Part 5
—
-3,217
-3,879
-3,605
-4,090
-4,176
-4,379
-4,813
-4,757
-3,962
-36,877
Part 6—Reinstatement of Superfund
Total of Part 6
—
902
1,230
1,271
1,304
1,336
1,368
1,402
1,436
1,470
11,719
Part 7—Incentives for Clean Electricity and Clean Transportation
Clean electricity production credit
—
—
—
—
-12
-45
-571
-1,864
-3,497
-5,215
-11,204
Clean electricity investment credit
—
—
—
-39
-57
-6,575
-10,315
-10,742
-11,264
-11,865
-50,858
Cost recovery for qualified facilities,
qualified property, and energy storage
—
—
—
—
—
-26
-83
-134
-171
-211
-624
technology
Clean fuel production credit
—
—
—
-641
-791
-1,177
-337
—
—
—
-2,946
Total of Part 7
—
—
—
-680
-860
-7,823 -11,306 -12,740 -14,932 -17,291
-65,632
Part 8—Credit Monetization and Appropriations
Total of Part 8
Estimates Contained in Relevant Items Above
Part 9—Other Provisions
Permanent extension of tax rate to fund
Black Lung Disability Trust Fund
—
103
135
131
130
130
131
132
133
134
1,159
Increase in research credit against
payrol tax for small businesses
—
-16
-13
-15
-16
-18
-21
-22
-23
-24
-168
CRS-33

Provision
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2022-2031
Total of Part 9
—
87
122
116
114
112
110
110
110
110
991
Total of Subtitle D
-416 -11,690 -14,411 -19,630 -24,492 -30,908 -34,298 -37,528 -40,801 -43,806
-257,980
NET TOTAL
-416
42,522
31,100
11,538
3,361
-2,338
-3,212
-3,955
-4,893
-5,511
68,195
Source: Joint Committee on Taxation, Estimated Budgetary Effect of the Revenue Provisions of Title I -Committee on Finance, of an Amendment in the Nature of a Substitute to
H.R. 5376, the “Inflation Reduction Act of 2022,” #22-2-027, July 28, 2022,
https://www.finance.senate.gov/imo/media/doc/7.29.22%20Estimate%20of%20Manchin%20Schumer%20agreement.pdf.
Notes: A “—” indicates no estimated budget effect.

CRS-34

link to page 7 Tax Provisions in the Inflation Reduction Act of 2022 (H.R. 5376)

Author Information

Molly F. Sherlock, Coordinator
Jane G. Gravelle
Specialist in Public Finance
Senior Specialist in Economic Policy

Anthony A. Cilluffo
Donald J. Marples
Analyst in Public Finance
Specialist in Public Finance

Margot L. Crandall-Hollick

Specialist in Public Finance

Acknowledgments
Bernadette Fernandez, Specialist in Health Care Financing, contributed content related to the provision in
Table 3.

Disclaimer
This document was prepared by the Congressional Research Service (CRS). CRS serves as nonpartisan
shared staff to congressional committees and Members of Congress. It operates solely at the behest of and
under the direction of Congress. Information in a CRS Report should not be relied upon for purposes other
than public understanding of information that has been provided by CRS to Members of Congress in
connection with CRS’s institutional role. CRS Reports, as a work of the United States Government, are not
subject to copyright protection in the United States. Any CRS Report may be reproduced and distributed in
its entirety without permission from CRS. However, as a CRS Report may include copyrighted images or
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copy or otherwise use copyrighted material.

Congressional Research Service
R47202 · VERSION 4 · UPDATED
35