The Impact of the Inflation Reduction Act on Small Businesses and Main Street Entrepreneurs

Introduction

In the summer of 2022, U.S. President Joe Biden signed The Inflation Reduction Act, a key part of his Investing in America Agenda. This legislation aims to support small businesses and working Americans by focusing on deficit reduction, fighting inflation, boosting manufacturing, lowering drug prices, and creating a fairer tax system.

Provisions of the Inflation Reduction Act

Investing in Fairer Taxes

The Inflation Reduction Act allocates additional funding to the Internal Revenue Service (IRS) to address years of underfunding. This funding enables the IRS to hire more agents to target high-earning taxpayers and large corporations evading taxes. Recent reports indicate that the IRS has recovered millions in overdue taxes and expects a significant increase in tax revenues in the coming years.

Doubling the Research and Development Tax Credit for Small Businesses

Under the Inflation Reduction Act, small businesses can now benefit from a doubled research and development tax credit, rising from $250,000 to $500,000. This credit can be applied to various expenses, encouraging greater private sector investment in research and development activities.

Consumer tax credits

The law also includes provisions for clean energy investments, such as tax credits for home energy improvements and electric vehicle purchases. Families can receive tax credits for installing energy-efficient systems in their homes, while individuals can access credits for buying used electric vehicles. These measures aim to promote clean energy adoption and reduce electricity rates by up to 9% by 2030.

Opportunities for Small Businesses

Small businesses and entrepreneurs can still take advantage of the tax credits provided by the Inflation Reduction Act. Visit the Treasury Department’s Inflation Reduction Act Taxpayer Resource Hub” data-ga-track=”ExternalLink:https://app.high.powerbigov.us/view?r=eyJrIjoiYzY1ODQ0ODYtZTk1My00NDAwLWE0ZGEtYjE0YjNhOGNhZDBjIiwidCI6IjU4ZjFlM2ZhLTU4Y2ItNGNiNi04OGNjLWM5MWNhYzIwN2YxOCJ9″ aria-label=”Inflation Reduction Act Taxpayer Resource Hub”>Inflation Reduction Act Taxpayer Resource Hub to explore available opportunities.

Read More of this Story at www.forbes.com – 2024-04-02 14:12:43

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