H.R. 5376 — Inflation Reduction Act of 2022

This bill imposes an alternative minimum tax of 15% of the average annual adjusted financial statement income of domestic corporations (excluding Subchapter S corporations, regulated investment companies, and real estate investment trusts) that exceeds $1 billion over a specified 3-year period. The tax is effective in taxable years beginning after December 31, 2022. Part 2--Excise Tax on Repurchase of Corporate Stock

The bill imposes a non-deductible 1% excise tax on the fair market value of stock repurchased by a publicly traded domestic corporation after 2022, with certain exceptions, including for repurchases that are part of a reorganization, are less than $1 million, that are contributed to certain tax-exempt retirement plans, or that are treated as a dividend. The tax applies to purchases of corporate stock by certain corporate subsidiaries and foreign corporations. Part 3--Funding the Internal Revenue Service and Improving Taxpayer Compliance

The bill provides additional funding for the Internal Revenue Service for taxpayer services and enforcement, including for operations support, business systems modernization, and the development of a free direct e-file tax return system. It also provides additional funding for the Department of the Treasury Inspector General for Tax Administration, the Office of Tax Policy, the Tax Court, and Treasury departmental offices. Subtitle B--Prescription Drug Pricing Reform Part 1--Lowering Prices Through Drug Price Negotiation

The bill requires the Centers for Medicare & Medicaid Services (CMS) to negotiate the prices of certain prescription drugs under Medicare beginning in 2026. Specifically, the CMS must negotiate maximum prices for brand-name drugs that do not have other generic equivalents and that account for the greatest Medicare spending. The CMS must negotiate the prices of 10 drugs that are covered under the Medicare prescription drug benefit in 2026, 15 drugs that are covered under the Medicare prescription drug benefit in 2027, 15 drugs that are covered under the Medicare prescription drug benefit or under Medicare medical services in 2028, and 20 drugs that are covered under the Medicare prescription drug benefit or under Medicare medical services in 2029 and each year thereafter. The selected drugs must be among the 50 drugs with the highest total spending over the most recent 12-month period under the Medicare prescription drug benefit or Medicare medical services and must have had market approval for at least 7 years (for drug products) or 11 years (for biologics). The bill excludes (1) orphan drugs that are approved to treat only one rare disease or condition, (2) plasma-derived products, and (3) drugs that account for less than $200 million in annual Medicare spending (adjusted annually for inflation). The CMS must enter into agreements with drug manufacturers to negotiate prices; manufacturers must submit information relating to costs and other data as part of the negotiation process. Manufacturers that fail to comply with negotiation requirements are subject to civil penalties.

The CMS may delay negotiations for certain biologics with pending biosimilars for up to two years upon manufacturer request.

Drug manufacturers are subject to excise taxes for failing to comply with negotiation requirements, such as failing to furnish required information during the negotiation process or failing to reach an agreement by the required deadline. The tax does not apply if manufacturers withdraw their drugs from Medicare and Medicaid coverage.

The bill provides funds for FY2022 for the CMS to implement this program. Part 2--Prescription Drug Inflation Rebates

In addition, the bill requires drug manufacturers to issue rebates to the CMS for brand-name drugs without generic equivalents under Medicare medical services that cost $100 or more per year per individual and for which prices increase faster than inflation. Manufacturers that fail to comply are subject to civil penalties. The bill provides funds through FY2031 for the CMS to implement this rebate program.

The bill similarly requires drug manufacturers to issue rebates to the CMS for brand-name drugs without generic equivalents under the Medicare prescription drug benefit that cost $100 or more per year per individual and for which prices increase faster than inflation. Manufacturers that fail to comply are subject to civil penalties. The bill provides funds through FY2031 for the CMS to implement this rebate program. Part 3--Part D Improvements and Maximum Out-of-Pocket Cap for Medicare Beneficiaries

The bill eliminates beneficiary cost-sharing above the annual out-of-pocket spending threshold under the Medicare prescription drug benefit beginning in 2024 and caps annual out-of-pocket spending at $2,000 in 2025 (with annual adjustments thereafter). It also establishes a program under which drug manufacturers provide discounts to beneficiaries who have incurred costs above the annual deductible beginning in 2025. The bill also limits base premiums under the Medicare prescription drug benefit for 2024 through 2030 to a 6% annual increase or the amount that would otherwise apply under the prior methodology, whichever is less. The bill provides funds through FY2031 for the CMS to implement these changes and requirements.

The bill also establishes a process through which beneficiaries, including those eligible for low-income subsidies, may have their monthly out-of-pocket costs capped and paid in monthly installments beginning in 2025; it provides funds for FY2023 for the CMS to implement this process. Part 4--Continued Delay of Implementation of Prescription Drug Rebate Rule

The bill further delays until 2032 implementation of a Department of Health and Human Services rule relating to the treatment of certain Medicare prescription drug benefit rebates from drug manufacturers for purposes of federal anti-kickback laws. Part 5--Miscellaneous The bill establishes a series of additional programs and requirements relating to coverage under the Medicare prescription drug benefit and other programs.

The bill eliminates cost-sharing under the Medicare prescription drug benefit for adult vaccines that are recommended by the Advisory Committee on Immunization Practices.

Beginning July 1, 2024, the bill limits payment under Medicare medical services for biosimilars that do not have an initial average sales price to the payment amount for the reference biologic or the amount that would otherwise apply under the prior methodology, whichever is less.

The bill also temporarily increases payment for other biosimilars under Medicare medical services.

Beginning in 2024, the bill expands eligibility under the low-income subsidy program of the Medicare prescription drug benefit to allow those with income of up to 150% of the federal poverty line to receive full premium subsidies and a $0 deductible.

It also requires coverage, without cost-sharing, of adult vaccines that are recommended by the Advisory Committee on Immunization Practices under Medicaid and the Children's Health Insurance Program (CHIP).

In addition, the bill caps cost-sharing under the Medicare prescription drug benefit for a month's supply of covered insulin products at (1) for 2023 through 2025, $35; and (2) beginning in 2026, $35, 25% of the government's negotiated price, or 25% of the plan's negotiated price, whichever is less. The bill provides funds for FY2022 for the CMS to implement these provisions.

The bill also waives the deductible for insulin furnished through covered durable medical equipment under Medicare medical services and limits coinsurance to $35 for a month's supply of such insulin beginning July 1, 2023.

The bill provides that a health insurance plan may still be considered a high deductible health plan even if it does not have a deductible for insulin products. Subtitle C--Affordable Care Act Subsidies

The bill modifies and extends through 2024 the tax credit for producing electricity from renewable resources, specifically wind, biomass, geothermal and solar, landfill gas, trash, qualified hydropower, and marine and hydrokinetic resources. The bill allows additional credit amounts for facilities that pay prevailing wages and meet registered apprenticeship requirements. The bill also allows a bonus credit amount for facilities that meet domestic content requirements for certain steel, iron, and manufactured projects and for facilities located in an energy community (i.e., a brownfield site or an area with significant employment related to oil, gas, or coal activities). The bill reduces the credit amount for facilities financed with tax-exempt bonds.

The bill extends through 2024 the tax credit for investment in certain energy properties (e.g., solar, fuel cells, waste energy recovery, combined heat and power, small wind property, and microturbine property). It extends through 2034 the credit for geothermal heat pumps. The bill extends the credit to include as energy property energy storage technology, qualified biogas property, electrochromic glass, and microgrid controllers. The bill allows an increased credit rate for projects that pay prevailing wages and meet registered apprenticeship requirements. The bill also allows a bonus credit amount for facilities that meet domestic content requirements for steel, iron, and manufactured projects and for facilities located in an energy community.

The bill modifies the energy tax credit to allocate 1.8 gigawatts for environmental justice solar and wind capacity credits in low-income communities and Indian lands in 2023 and 2024. Facilities receiving allocations must be placed in service within four years after the allocation date.

The bill extends until December 31, 2032, the construction deadline date for carbon capture or direct air capture facilities under the tax credit for carbon oxide sequestration. It also modifies the capacity requirements and base credit amounts for the credit.

The bill creates a new tax credit for qualifying zero-emission nuclear electrical power produced and sold after December 31, 2023, and before 2033. Part 2--Clean Fuels

The bill extends through 2024 the income tax credit for biodiesel and renewable diesel used as fuel, the biodiesel excise tax credit, the alternative fuels tax credit, and the second generation biofuel producer tax credit.

The bill creates a new tax credit through 2024 for the sale or mixture of sustainable aviation fuel. The base amount of the credit is $1.25 per gallon, with additional amounts for greenhouse gas emission reductions. Producers and importers of such fuel must register with the Department of the Treasury.

The bill creates a new tax credit for the production of qualified clean hydrogen during a specified 10-year period. The bill defines qualified clean hydrogen as hydrogen that is produced through a process that results in a lifecycle greenhouse gas emissions rate of not greater than 4 kilograms of CO2e per kilogram of hydrogen. Part 3--Clean Energy and Efficiency Incentives for Individuals

The bill extends through 2032 the tax credit for nonbusiness (residential) energy property expenditures. It increases the rate of the credit to 30% and allows an annual $1,200 limitation of the credit amount in lieu of a lifetime limitation. The bill also allows an annual $2,000 credit for geothermal heat pumps and biomass stoves and increases the credit for windows and doors. The bill also allows a 30% credit, up to $150, for home energy audits. The credit is renamed the energy efficient home improvement credit.

The bill extends through 2034 the tax credit for residential clean energy, modifies the phaseout for such credit, and extends the credit to include qualified battery storage technology expenditures.

The bill modifies the tax deduction for energy efficient commercial buildings to revise the maximum amount of such deduction and energy efficiency requirements for such buildings.

The bill extends the new energy efficient home tax credit through 2032. It increases the credit to allow a $2,500 credit for new homes that meet certain Energy Star efficiency standards and a $5,000 credit for new homes that are certified as zero-energy ready homes, and further allows a credit for energy efficient multifamily dwellings. Part 4--Clean Vehicles

The bill modifies requirements for the refundable income tax credit for qualifying plug-in electric vehicles. The modified credit is $3,750 for any vehicle meeting certain critical minerals requirements and $3,750 for vehicles meeting certain battery component requirements. The maximum allowable credit remains $7,500 per vehicle. Vehicles eligible for the credit include those made by qualified U.S. manufacturers and excludes those manufactured or assembled by a hostile foreign entity. The credit is not available to taxpayers whose modified adjusted gross income exceeds $150,000 ($300,000 for married couples filing jointly) The credit is not allowed for vehicles that have a manufacturer's suggested retail price in excess of $80,000 for vans, sport utility vehicles (SUVs), or pickup trucks, and $55,000 for other vehicles. The credit does not apply to vehicles placed in service after 2032.

The bill allows a new tax credit for buyers of previously-owned qualified clean plug-in and fuel cell vehicles. The credit is limited to the lesser of $4,000 or 30% of the vehicle purchase price. The credit is disallowed for taxpayers whose modified adjusted gross income exceeds certain levels and applies only to vehicles with a sales price not exceeding $25,000. It does not apply to vehicles acquired after 2032.

The bill creates a new tax credit for qualified commercial clean vehicles. The amount of the credit is the lesser of 15% of the cost of the vehicle (30% for vehicles not powered by a gasoline or diesel internal combustion engine), or (2) the cost of the vehicle in relation to a comparable vehicle. The credit amount may not exceed $7,500 for vehicles weighing less than 14,000 pounds ($40,000 for other vehicles). Eligible vehicles must have a battery capacity of not less than 15 kilowatt hours and be capable of being recharged from an external source of electricity. The credit does not apply to vehicles acquired after 2032.

The bill modifies and extends through 2032 the tax credit for alternative fuel refueling property. Beginning in 2023, charging or refueling property is eligible for the credit only if it is placed in service within a low-income or rural area. Part 5--Investment in Clean Energy Manufacturing and Energy Security

The bill provides addition allocations of the 30% qualifying advanced energy project tax credit for investments in projects that reequip, expand, or establish certain energy manufacturing facilities for the production or recycling of renewable energy property, energy storage systems and components, or other energy property.

The bill creates a new tax credit for the production and sale of solar and wind components, with a phaseout through 2032. Part 6--Superfund

The bill permanently reinstates the Hazardous Substance Superfund financing rate on domestic crude oil and imported petroleum products at 16.4 cents per barrel in 2023, adjusted annually thereafter for inflation. Part 7--Incentives for Clean Electricity and Clean Transportation

The bill creates a new tax credit for the production of clean electricity. The credit is for the sale of domestically produced electricity with a greenhouse gas emission rate not greater than zero. To qualify for the credit, electricity must be produced at a qualifying facility placed in service after 2024.

The bill creates a new clean electricity investment tax credit for investment in qualifying zero-emissions electricity generation facilities or energy storage technology.

The bill allows a five-year recovery period for the depreciation of clean electricity facilities placed in service after 2024.

The bill establishes a new tax credit for domestic clean fuel production beginning in 2025. Part 8--Credit Monetization and Appropriations

The bill allows certain tax-exempt entities, including state and local governments and Indian tribal governments, to treat certain energy-related tax credit amounts as direct payments of tax. Part 9--Other Provisions

The bill makes permanent the increased coal excise tax rate for funding the Black Lung Disability Trust Fund.

The bill allows an increased offset of research tax credit amounts against the Social Security payroll taxes of small businesses that are less than 5 years old with less than $5 million in gross receipts.

The bill reinstates the current-law suspension of the tax deduction for state and local taxes (i.e., 2018 through 2025). It also extends the limitation on the excess business losses of noncorporate taxpayers. TITLE II--COMMITTEE ON AGRICULTURE, NUTRITION, AND FORESTRY Subtitle A--General Provisions The bill provides funding to the Department of Agriculture (USDA) for a variety of programs related to conservation and renewable energy. The funds under this title shall remain available through FY2031. Subtitle B--Conservation

For example, the bill provides funding to DOE for a HOMES rebate program that awards grants to state energy offices. Under the program, states must provide rebates to homeowners and aggregators for certain whole-house energy saving retrofits made for low- and moderate-income households. A rebate provided under the program may not be combined with any other federal grant or rebate for the same single upgrade.

In addition, funding is provided to DOE for a high-efficiency electric home rebate program that awards grants to state energy offices and Indian tribes. Under the program, rebates must be given for qualified electrification projects in low- or moderate-income households. Qualified electrification projects includes the purchase and installation of certain heat pumps, electric stoves, electric ovens, electric load service centers, insulation, materials to improve ventilation, or electric wiring.

The bill provides funds for a program to train and educate contractors involved in the installation of home energy efficiency and electrification improvements. Funding for this part shall remain available through FY2031. Part 3--Building Efficiency and Resilience

The bill also provides funding to DOE for grants to states and local governments. Under the program, grants must be used to (1) adopt residential building codes for buildings that meet or exceed the 2021 International Energy Conservation Code, (2) adopt commercial building codes that meet or exceed the ANSI/ASHRAE/IES Standard 90.1--2019, or (3) implement plans for the jurisdiction to achieve full compliance with the codes. Funding shall remain available through FY2029. Part 4--DOE Loan and Grant Programs The bill provides funding for specified DOE loan programs, including certain loans issued under the Energy Policy Act of 2005. The bill also provides funding to support financing of energy infrastructure projects, including projects to replace energy infrastructure that is no longer operational or reduce the emissions of energy infrastructure.

For example, it provides funding for DOE's Energy Loan Program Office to guarantee loans for projects that (1) avoid, reduce, utilize, or sequester air pollutants or greenhouse gases; and (2) employ new or significantly improved technologies as compared to commercial technologies in service in the United States at the time the guarantee is issued. Funding for the program shall remain available through FY2026.

In addition, it appropriates funding, which shall remain available through FY2028, for DOE's program that provides loans to facilities that manufacture advanced vehicles that emit either a low amount of or no amount of greenhouse gas emissions. The bill revises the program to eliminate the cap on the total amount of loans that may be provided under the program.

It also appropriates funding to provide grants for the domestic production of efficient hybrid, plug-in electric hybrid, plug-in electric drive, and hydrogen fuel cell electric vehicles. Funding for the grants shall remain available through FY2031.

The bill also provides funding to support financing of energy infrastructure projects, including projects to replace energy infrastructure that is no longer in operation or reduce the emissions of energy infrastructure. The funding shall remain available through FY2026.

Finally, it provides funding for a DOE program that provides loans to Indian tribes for energy resource development. Funding for the program shall remain available through FY2028. Part 5--Electric Transmission

The bill provides funding to DOE for a program that provides loans for the construction or modification of electric transmission facilities that are located within a national interest electric transmission corridor. Funding for the program shall remain available through FY2031.

Further, DOE is authorized to make grants to facilitate the siting of interstate electricity transmission lines. Funding for the grants shall remain available through FY2029.

In addition, the bill provides funding to DOE to convene stakeholders and conduct analysis related to interregional electricity transmission and transmission of electricity that is generated by offshore wind. The funding shall remain available through FY2031. Part 6--Industrial

The bill also provides funding for DOE's Office of Clean Energy Demonstrations to carry out the advanced industrial facilities deployment program. Under the program, the office must deploy advanced industrial technology to accelerate the reduction and elimination of greenhouse gas emissions at industrial facilities. Funding for the program shall remain available through FY2026. Part 7--Other Energy Matters In addition, the bill provides funding for other energy matters.

Specifically, the bill provides funding for the DOE Office of Inspector General to oversight of DOE activities funding by this bill. Funding shall remain available through FY2031.

It also provides funding to DOE's Office of Science to implement activities related to science laboratory infrastructure projects, high energy physics construction, fusion energy science construction, nuclear physics construction, advanced scientific computing research facilities, basic energy sciences projects, and isotope research and development facilities. It also provide funding to the following offices for infrastructure and general projects: Office of Fossil Energy and Carbon Management, the Office of Nuclear Energy, and the Office of Energy Efficiency and Renewable Energy. The funding shall remain available through FY2027.

In addition, the bill provides funding for a DOE program that supports the availability of high-assay low-enriched uranium, a fuel used in advanced nuclear reactors. The funding for the program shall remain available through FY2026. Subtitle B--Natural Resources Part 1--General Provisions The bill provides funding for natural resources, water supplies, the Office of Insular Affairs, leases to develop energy on federal land, and other related issues. Part 2--Public Lands

The bill provides funding, which shall remain available through FY2031, to the Department of the Interior to carry out projects for the conservation, protection, and resiliency of lands and resources administered by the National Park Service (NPS) and the Bureau of Land Management (BLM).

It also provides funding, which shall remain available through FY2031, for the conservation and ecosystem and habitat restoration projects on lands administered by the NPS and the BLM.

In addition, it provides funding to the NPS, which shall remain available through FY2030, to hire more employees.

Finally, it provides funding to the NPS for priority deferred maintenance projects. Funding shall remain available through FY2026. Part 3--Drought Response and Preparedness The bill provides funding to the Bureau of Reclamation to address water supplies during drought.

The bill provides funding, which shall remain available through FY2031, to Reclamation for water supply projects. Specifically, it provides funding for grants, contracts, or financial assistance agreements for disadvantaged communities to pay for the cost of the planning, design, or construction of water projects in communities or households that do not have reliable access to domestic water supplies.

It also provides funding for projects to cover water conveyance facilities with solar panels. Funding for the projects shall remain available through FY2031.

Finally, it provides funding for drought mitigation in western states, with priority given to the Colorado River Basin and other basins experiencing comparable levels of long-term drought. Funding shall remain available through FY2026. Part 4--Insular Affairs

The bill provides funding to Interior's Office of Insular Affairs, which shall remain available through FY2026. The office must use the funding to provide technical assistance for climate change planning, mitigation, adaptation, and resilience to United States Insular Areas (i.e., American Samoa, Northern Mariana Islands, Guam, Puerto Rico, and the U.S. Virgin Islands). Part 5--Offshore Wind

The bill allows the Department of the Interior to grant leases to develop energy on federal offshore land in the Outer Continental Shelf (OSC) in areas that were withdrawn from leasing in 2020. Thus, the bill nullifies the presidential memorandum titled Memorandum on the Withdrawal of Certain Areas of the United States Outer Continental Shelf from Leasing Disposition published on September 8, 2020, as well as the Presidential Determination on the Withdrawal of Certain Areas of the United States Outer Continental Shelf from Leasing Disposition published on September 25, 2020. Further, it expands the definition of the OCS under the Outer Continental Shelf Lands Act to include land that is within the U.S. exclusive economic zone and adjacent to any territory of the United States, thus the bill expands the submerged lands that are available for energy leases. Interior may also conduct wind lease sales that are in such areas if the leases meet specified criteria. Part 6--Fossil Fuel Resources In addition, the bill modifies several provisions related to energy leases on public lands, including offshore land in the OSC.

For example, it increases the minimum royalty rates for bidding on offshore oil and gas leases.

The bill revises the Mineral Leasing Act to revise requirements governing the lease of federal land for energy development. For example, it increases rental rates and minimum bidding standards for onshore oil and gas leases and establishes a new fee that must be paid by any person who nominates public lands for such leasing.

Further, it requires royalties to be paid for methane gas extracted from federal lands, including offshore lands as specified by the bill.

Interior must accept the highest bid for oil and gas leases under the Gulf of Mexico Outer Continental Shelf Oil and Gas Lease Sale 257 within 30 days of the bill's enactment. It must also conduct (1) Lease Sale 258 by the end of 2022, (2) Lease Sale 259 by March 31, 2023, and (3) Lease Sale 261 no later than the end of the FY2023.

The bill limits Interior's authority to issue leases and rights-of-way to develop wind or solar energy on onshore or offshore land for 10 years. Interior may grant such rights-of-way and leases if it offers a certain amount of land for oil and gas leases and holds oil and gas lease sales. Part 7--United States Geological Survey

The bill provides funding for the United States Geological Survey to produce, collect, disseminate, and use 3D elevation data. Funding for this part shall remain available through FY2031. Part 8--Other Natural Resources Matters

It also provides funding to Interior's Office of Inspector General for oversight of activities funded by this subtitle. Funding for this part shall remain available through FY2031. Subtitle C--Environmental Reviews