The Inflation Reduction Act of 2022 – As Proposed

The Inflation Reduction Act of 2022 as Proposed – No Direct Effect on Federal Estate Taxes, Gift Taxes, or Generation-Skipping Transfer Taxes.

The “Inflation Reduction Act of 2022,” which is a significantly scaled back version of the proposed “Build Back Better Act” that failed to pass in 2021, passed the Senate on August 7, 2022. This new Act addresses taxes, climate change, health care and inflation. It will be up for vote in the House later this week, where it is anticipated to pass without amendments.

The $430 billion package includes a 15-percent corporate minimum tax, a 1% excise tax on certain stock buybacks, provides multi-year IRS funding with a dramatic increase in funding for tax enforcement, and extends and expands tax incentives for clean energy.

What does this mean for the federal estate tax planning?

At this time, there are no changes to federal estate taxes, gift taxes, or generation-skipping transfer taxes. However, with the substantial increase in funding for the IRS, it is likely that the impact will be indirect, with an increase in enforcement in the form of audits and estate and gift tax returns will increase.

Jon