Senate passes Inflation Reduction Act. Here are some stocks that could be affected

Senate Democrats passed the Inflation Reduction Act of 2022 in a party-line vote after a marathon weekend session.

The legislation aims to fund clean energy initiatives, lower healthcare costs and create new jobs, among other things. Nearly $433 billion would be spent on new investments, while the bill would reduce government budget deficits by approximately $300 billion, according to the latest version published by the Senate.

The bill includes $4,000 tax credits for lower- and middle-income buyers to use to purchase used electric vehicles and up to $7,500 tax credit for new vehicles.

The plan provides $60 billion in incentives to bring clean energy manufacturing into the US. These include production tax credits to speed up the manufacture of US solar panels, wind turbines, batteries and key mineral processing. The plan also includes investment tax credits to build clean-technology manufacturing plants that produce electric cars, turbines and other products.

There would be tax credits for consumers who add renewable energy items to their homes under the legislation, including efficient heat pumps, rooftop solar, electric HVAC and water heaters.

The bill would direct the government to negotiate with drugmakers for lower prices on certain medicines—meaning patients would likely pay less. There would also be a $2,000 annual cap on Medicare enrollees’ out-of-pocket spending for prescription drugs. The measure also requires pharmaceutical companies to rebate Medicare if they raise the prices of their drugs more than just account for inflation.

The Inflation Reduction Act would require companies with at least $1 billion in income to apply a 15% tax rate on their book income. If that comes out to be higher than the traditional calculations—21% of profits fewer deductions and credits—companies would have to pay the 15% rate.

The legislation includes a 1% excise tax on corporate stock repurchases set to go into effect at the start of next year.