Everything Small Business Owners Need to Know About the Inflation Reduction Act
The bill passed the House of Representatives, despite unanimous Republican opposition, on August 12, and was signed by President Joe Biden on August 16.
This sweeping healthcare, climate, and energy bill is expected to lead to big changes in numerous industries, including the electric vehicle (EV) market. But, for small business owners around the United States, these “big picture” changes aren’t necessarily the focus.
These hard-working Americans want to know what the Inflation Reduction Act really means for them and their small businesses. Let’s dive in.
The Act also includes provisions for a 15% minimum tax on corporations with over $1 billion in revenue and a 1% excise tax on corporate share buybacks. USA Today pointed out that, while these two clauses won’t have a direct impact on small business owners, “the 15% minimum tax on huge corporations helps level the playing field. It applies to about 150 corporations, but should bring in more than $300 billion in tax revenue.”
Health care provisions
One key provision within the Inflation Reduction Act is the extension of Affordable Care Act subsidies through 2025. As USA Today’s report noted:
Under the American Rescue Plan, subsidies made health care more affordable for those buying insurance on ACA exchanges, but those subsidies were due to expire at the end of this year. This bill extends those subsidies through 2025. According to the SBA, the ACA exchanges are disproportionately used by small businesses, their employees and the self-employed.
Extending these subsidies will aid small business owners for at least a few more years, and could potentially be extended again by Congress.
It is worth noting that Small Business Majority CEO John Arensmeyer issued a statement praising the bill:
“The legislation includes measures that small businesses across the country have been calling for nearly a year. Most importantly, the legislation extends the Affordable Care Act’s premium subsidies through 2025 and lowers prescription drug prices. More than half of all healthcare marketplace participants are small business owners, employees, or self-employed entrepreneurs.”
“Access to affordable, quality healthcare is vitally important to them because they have historically comprised a disproportionate share of the working uninsured population and current healthcare provisions are hurting small business owners’ bottom lines.”
Clean energy and climate provisions
Notable clean energy and climate provisions within the Inflation Reduction Act include $369 billion in incentives for renewable energy use, Homeowners Clean Energy Tax credits for those who install solar panels or invest in energy-efficient appliances like water heaters, HVAC systems, and heat pumps, and tax credits up to $7500 for buying new or used electric vehicles that meet certain criteria.
USA Today spoke to Small Business Administration (SBA) Administrator Isabella Guzman, who said that these energy-related provisions will have an impact on small businesses around the nation, even if it is not immediate:
“Investments in reducing health-care costs and energy costs not only help provide better access and cost-savings for small businesses and their employees,” Guzman said, “but also help create small business contracting opportunities and therefore more job creation.”
As with any legislation, there are wins and losses – but, overall, the Inflation Reduction Act includes many provisions that could ultimately be beneficial to the small business community in the long run.
What do you think about the Inflation Reduction Act and its impact on small business owners?
Bob Mason is the founder of Coast Financial Services Inc. servicing both the Santa Cruz, and San Jose areas. Bob Mason is a skilled financial professional who is fully equipped to assist any of your accounting needs. Founding his firm in Santa Cruz, Bob understands the importance of small businesses and how they form the backbone of the area. Coast Financial Services, Inc. has been dedicated to the growth and profitability of businesses in Santa Cruz for 17 years. To learn more about Bob Mason and the rest of his team, visit their website.
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