The Biden Administration has recently signed into law a major piece of legislation. You may be asking yourself what impact will be seen by the Inflation Reduction Act in Florida. We have the answers.
Our tax attorneys at Casais & Prias have been fielding calls and emails concerning the Inflation Reduction Act and how it might affect Florida residents. Of the most concern is the potential hiring of new IRS agents and how that could impact future tax returns.
The good news for most Floridians is that your taxes will not be affected by this legislation. Here, we break down the highlights of this bill and what you can expect from the Inflation Reduction Act in Florida.
Corporate Tax Increase
With this bill comes the creation of a 15% corporate minimum tax rate. This affects corporations with at least $1 billion in income. Individuals and households will not see this tax increase.
Reform On Prescription Drug Prices
If you have a Medicare plan, you could see the price of your prescriptions go down. This reduction is due to Medicare being able to negotiate the prices of certain medications. Your out-of-pocket cap will be $2,000 as a Medicare recipient. These changes begin to take place in 2025.
Here is where the big budget increase for the Internal Revenue Service comes in. For years, the IRS has been sounding the alarm that it is woefully underfunded which makes it difficult for it to do its job.
The Inflation Reduction Act will distribute $80 billion to the IRS over the next ten years. This funding will likely go towards enabling the IRS to better enforce tax laws and is expected to bring in an estimated $203 billion in tax revenue.
ACA Subsidy Extension
The Affordable Care Act signed into law under President Obama in 2010 subsidizes medical insurance premiums for those who meet the income requirements. These subsidies were scheduled to expire at the end of 2022. You will see that with the Inflation Reduction Act in Florida, these subsidies will continue through 2025.
If these subsidies were allowed to expire, an estimated three million Americans could have lost their medical insurance according to the U.S. Department of Health and Human Services.
Energy And Climate Change Initiatives
With the numerous investments in climate protection, the Inflation Reduction Act in Florida will offer tax credits for households that make choices to reduce their energy consumption. Tax credits will also be available to corporations that reduce their carbon emissions.
Inflation Reduction Act In Florida And Your Taxes
If you are a business owner and you earn less than $400,000 a year, your taxes will not be affected. Individuals who fall under this threshold will also not be affected. This legislation is aimed at larger corporations and individuals making over $400,000 so for the average Floridian, you will not see a change in your tax rate.
Inflation Reduction Act And Inflation
Will the Inflation Reduction Act in Florida lower inflation? According to the Congressional Budget Office, this bill will only make a dent in inflation in the short term and could even make it go up.
If you are concerned about inflation affecting your taxes, the IRS can adjust certain tax provisions so that the value of some federal tax credits and deductions are higher. This negates inflation somewhat when it comes to the amount of taxes you will owe.
Still Have Questions? Casais & Prias Can Help
We know that any new legislation can be confusing. You want to know how the Inflation Reduction Act in Florida will affect you and your family. We are here to answer any questions you have. Contact us today.