Following its approval by the U.S. Senate on August 7, the U.S. House of Representatives has passed the Inflation Reduction Act (IRA) – also referred to as the $700 billion climate, health care, and tax bill. The legislation is now expected to be signed into law by President Biden.
While Pinion advisors continue to assess the entirety of the 755-page bill, they have outlined the key highlights below for what ag businesses, landowners, biofuel companies, and manufacturers can expect.
Inflation Reduction Act Takeaways for Ag
- Sweeping tax incentives and funding for U.S. food and agriculture, renewable energy, and manufacturing: These provisions include significant programs available to agricultural landowners. The bill also contains one of the largest boosts to U.S. renewable fuels production in our nation’s history
- Investment in energy security and climate change: The legislation invests roughly $369 billion in energy security and climate change response
- Extension of Affordable Care Act: The act invests another $64 billion to extend the ACA for an additional four years
- Deficit reduction: Finally, the legislation will reduce the federal debt by more than $300 billion
The IRA will raise $725 billion in revenue with more than $313 billion coming from a 15% corporate minimum tax and a 1% tax on stock buybacks; $288 billion coming from prescription drug pricing reform; and $124 billion coming from IRS enforcement.
Ag Conservation and Climate Provisions: Proactive Farmers and Ranchers Poised to Benefit
The Inflation Reduction Act provides over $18 billion in funding for agricultural programs administered by the USDA including the Environmental Quality Incentives Program (EQIP) and the Conservation Stewardship Program (CSP).
This funding will be provided to farmers and ranchers who implement voluntary agricultural practices designed to combat climate change. This funding may expedite consideration of the 2023 Farm Bill since many of the conservation programs will already be funded through the Inflation Reduction Act.
Biofuels – Ethanol and Biodiesel: Extended and New Tax Credits for Biofuel Companies; Corn, Soybean Producers will also Benefit
The Inflation Reduction Act represents one of the largest boosts to U.S. biofuels production in history. The bill includes $500 million for new biofuels infrastructure – enough to deploy an additional 10,000 E15 gas pumps nationwide.
The bill also extends existing tax credits for biofuels and launches new significant tax credits that will dramatically expand biofuels production in the United States for road vehicles and for aviation. These provisions will greatly benefit corn and soybean growers nationwide.
Renewable Energy, Transmission, and Energy Efficiency: Expanded Incentives and Extended Credits Available
The Inflation Reduction Act incentivizes installation of residential-scale and commercial-scale renewable energy systems as well as transmission lines needed for expansion of renewable energy. By extending energy credits through 2034, the IRA will create a significant push for renewable energy development throughout the United States.
Pinion advisors will continue to evaluate the new legislation under IRA and provide updates to applicability and guidance around its benefits for businesses.
Click here for a breakdown of the Inflation Reduction Act tax credits impacting agribusinesses.
Contact a Pinion advisor with questions on eligibility and applicability.