Inflation Reduction Act: Considerations for energy, utility, and resources companies

In brief

The “Inflation Reduction Act” (the Act), signed into law by President Biden on August 16, features $370 billion in spending and tax incentives on clean energy provisions. These provisions are intended to spur investments not only by traditional energy and utility companies but also by companies in adjacent industries, like transportation, real estate, and manufacturing. The Act includes significant enhancements if the projects meet certain wage, domestic content, or location requirements. It also reinstates certain Superfund excise taxes, imposes a fee on methane-related emissions, and includes various other excise taxes.

Key revenue-raising provisions of interest to the energy and utilities sector include (1) a 15% book-income alternative minimum tax (BMT) on corporations with adjusted financial statement income over $1 billion, which is estimated by Joint Committee on Taxation (JCT) staff to raise $222 billion over 10 years; and (2) a 1% excise tax on the value of certain net stock repurchases by publicly traded corporations, which is estimated by JCT staff to raise $74 billion over 10 years.

See our Insight, Senate passes “Inflation Reduction Act” reconciliation bill, for more information.