How the Cut Inflation Act can help small businesses and all of us – The Observer
How the Cut Inflation Act can help small businesses and all of us
Published at 00:00 on Saturday, September 3, 2022
The Inflation Reduction Act (IRA) will reduce the costs of prescription drugs, health care and energy. It will reduce the deficit and no one earning less than $400,000 a year will pay a penny more in taxes. It will also fight against climate change. That’s pretty good business for most of us in the face of our changing weather patterns: scorching temperatures, escalating devastating storms, new monsoon seasons and all the havoc they cause. If we can slow climate change, we will all win.
Lower health care costs are also a win for the most part, both for families and small businesses. If you are a sole proprietor and get your health insurance from the Affordable Care Act marketplace or have employees who use it, health care costs will drop by up to $800 a year. Because the Biden/Harris administration has successfully tackled the climate crisis, the IRA will reduce energy bills, saving families (and small businesses) around $500 a year. With just these two measures, we could save about $1,300 per year.
But it does not stop there. The IRA will also reduce prescription drug costs by capping out-of-pocket prescription drug expenses for people on Medicare at $2,000 a year, cap insulin for Medicare patients at $35 a month, and finally allow Medicare negotiate prices. If you’re a former business owner with Medicare, these direct savings are for you.
The IRA creates new opportunities for small businesses to make a profit if they progress in environmental ventures – manufacturing and servicing solar panels and wind turbines, retrofitting buildings with energy-efficient windows, doors and HVAC units, or entry into the supply chain of new electric vehicles, whose components will have to be made in America. And if they want to get directly involved in the fight against climate change, small businesses can benefit from a tax credit covering 30% of the cost of switching to low-cost solar energy, which reduces operating costs. and protects against energy price volatility.
Additionally, small businesses can deduct up to $1 per square foot of their business for making energy-efficient upgrades. The per-square-foot deduction is increased if efficiency improvements are made by workers paid at prevailing wages, helping businesses save even more money while providing well-paying jobs.
IRA extends qualified business income deduction, pass-through deduction, from 2025 to 2027, providing 20% deduction on business income and expands People’s Research and Development Tax Credit and increases the amount that can be applied to payroll taxes. The R&D credit offers companies of all sizes the opportunity to reduce the taxes they owe according to a formula calculated from the expenses they incurred to develop new products. If the new products fight against climate change, it’s a double victory.
Finally, rural communities are not left out. IRA will help up to 280,000 farmers and ranchers apply conservation to about 125 million acres of land, providing relief to distressed USDA borrowers whose farming operations are threatened by loan modifications or payments and to provide financial assistance to farmers who have previously been discriminated against at the USDA. loan programs. We need every farmer to help reduce food inflation and feed the nation and the world.
With its bipartisan Infrastructure Act, the CHIPS and Science Act and the US bailout, President Biden’s economic plan shows that we have the courage to build a future where every American has a chance!
Ted James is the US Small Business Administration’s regional administrator for Region VI, overseeing SBA programs, offices, and operations in Arkansas, Louisiana, New Mexico, Oklahoma, and Texas. He can be reached at [email protected]