The Inflation Reduction Act of 2022, signed into law by President Joe Biden on Aug. 16, 2022, will change the way large corporations are taxed. This new law will impose a minimum tax of 15% on the book income of corporations that made an average of $1 billion a year over the past three years.
The objective of the minimum book tax is to ensure that firms pay some taxes when they are making a profit. The Joint Committee on Taxation estimates that about 150 corporations would be subject to the minimum tax each year. The committee also estimates that this tax will result in a gain of $222 billion over 10 years. The new tax takes effect in 2023.
According to a Congressional Research Service report, about 30% of the Fortune 500 corporations could be subject to the minimum tax. It also states that about half the tax revenue would be collected from manufacturing companies (with about 16% from chemical manufacturing) and about 11% each from information and holding companies.
