Over the weekend, the U.S. Senate utilized the chamber’s reconciliation rules to pass the Inflation Reduction Act, along a party-line vote of 51-50, with Vice President Kamala Harris casting the tie-breaking vote. The majority of the provisions in the act concerns mitigating the effects of climate change, health policy, increased enforcement by the Internal Revenue Services (IRS), and increases in government revenue.
Not included in the package was any consideration of a change to the $10,000 State and Local Taxes (SALT) deduction cap. Public comments indicate that its exclusion will not preclude support from New Jersey congressional members who have previously indicated that the deduction cap removal must be included in the legislation.
Many of the details of the Inflation Reduction Act we previously shared in the July 29 Weekly Round Up remain, including:
- Allowing Medicare to negotiate on prescription drugs, including a $2,000 limit on out-of-pocket costs;
- Capping insulin at $35 per month for Medicare enrollees;
- Setting a corporate minimum tax rate of 15%;
- Creating a 1% excise tax on stock buybacks effective January 1, 2023;
- Investing more than $370 billion to fight climate change while also opening millions of acres in federal property to oil and gas drilling;
- A three-year extension of Affordable Care Act premium subsidies; and
- Cutting the deficit by several hundred billion dollars.
Included in the environmental section of the act are programs that municipalities can apply for once they are stood up, including:
- Environmental and Climate Justice Block Grants for projects related to climate change and air pollution, including air pollution monitoring, extreme heat risk mitigation, resiliency and adaptation, indoor pollution reduction, and community engagement. Local governments, in partnership with community-based non-governmental organizations (NGOs) are eligible, as well as individual or groups of community-based NGOs.
- Federal Highway Administration (FHA) grants to improve transportation access and mitigate negative safety or environmental impacts in underserved communities. Grants may be used for improvements to reduce air pollution and Greenhouse gas (GHG) emissions, manage stormwater run-off, address urban heat islands, and monitor air quality, transportation-related GHG emissions and pollution, and gaps in tree canopy coverage. Federal cost share of a project in disadvantaged or underserved communities may be up to 100%.
The Inflation Reduction Act does not include the following from the original Build Back Better Act:
- A bond title that would have included ways to help municipalities finance infrastructure;
- Universal pre-K;
- Child care tax credit;
- Money for child care;
- Money to improve housing;
- Free two-year community college;
- Workforce development and training;
- Earned Income Tax Credit (EITC) expansion;
- Closing Medicaid gap;
- Tax RATE hikes;
- Millionaire surtax;
- Ending carried interest; and
- Water infrastructure grant funding
The House of Representatives is returning from its August recess this Friday to consider the measure. It is anticipated that the vote will be along party lines.
Contact: Paul Penna, Senior Legislative Analyst, email@example.com or 609-695-3481, x110.