President Biden Signs Comprehensive, Labor-Friendly Federal Inflation Reduction Act

On August 16, 2022, President Joe Biden signed the Inflation Reduction Act of 2022 into law. The Act allocates federal funds and provides new tax credits for a variety of initiatives, from fighting climate change to lowering health care costs.

The Act provides tax credits for energy-efficient vehicle use, paying prevailing wages to workers, and clean energy consumption—among others. The Act also allows Medicare to negotiate pricing for high-cost drugs and extends health insurance premium subsidies that were available under the Affordable Care Act.

Finally, the Act intends to raise government revenue by increasing funding for IRS enforcement, imposing a 1% surcharge on corporate stock buybacks, and widening the range of services that the IRS provides to taxpayers. 

On the whole, the Act is a comprehensive budget bill seeking to achieve many Democratic-Party priorities while at the same time steering clear of inflationary risks. The Congressional Budget Office estimated that the Act will have a “negligible effect on inflation” in 2022. In fact, some unions have praised the Act for directly addressing the causes of inflation, such as skyrocketing prescription drug costs. Accordingly, the Act may prove to be a boon to working families in a year of higher prices.

For more information about this new law or others, please contact your labor law counsel.