The Inflation Reduction Act’s 1% stock buyback tax, 15% corporate minimum tax and big hopes for the green energy industry all have potential ripple effects for retail investors, experts say. If the bill becomes law, investors may quickly spot some related outcomes.

Senate Democrats eked the bill through on a 51-50 vote. It now heads to the Democrat-majority House of Representatives where a vote could happen Friday. The corporate tax floor and the 1% stock buyback would have a “minimal impact” on earnings expectations.

The Inflation Reduction Act’s 1% tax on stock buybacks would be a 15% tax that year for many people. President Joe Biden says he supports the bill. The S&P 500SPX, the Dow Jones Industrial Average and the Nasdaq are all down.

For stockholders, there’s no tax event on the higher-priced shares until they sell and pay capital gains tax. That is, unless they own the stock in a tax-deferred account like a 401(k) Critics say buybacks are an unfair move that have become increasingly popular.

The new legislation’s stock buyback tax, which taxes corporations 1% on the value of the repurchased shares. If the shares are later inherited and the new owner eventually sells, they can bypass plenty of potential tax through the “step up in basis” that re-pegs the starting basis.
Posted by WA wagmi
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