Administration

When will Americans feel the impact of the Inflation Reduction Act?

The House moved Friday to pass a sweeping climate and health care bill, delivering a long-awaited legislative win to President Biden’s desk for his signature. 

The White House is preparing to deploy officials across the country to promote the historic action on climate change and lowering prescription drug costs contained in the bill, pitching it as a solution to ease the pain of consumers grappling with high inflation. 

However, while some of the provisions will take effect immediately or in early 2023, others will take years. Here are some answers on the timeline of the bill’s impact. 

A long road to reducing health care costs

On health care, some provisions take effect next year. Others, like most of the drug pricing provisions, won’t kick in for years. 

The enhanced subsidies for ObamaCare plans are already in effect, and the legislation will extend them for another three years. If the House doesn’t pass the bill, those subsidies will expire on Dec. 31, putting Americans on the hook for major premium increases.  


A provision capping insulin costs at $35 per month for diabetic Medicare patients takes effect in 2023. So too will a requirement that drug companies pay the government a rebate if they raise the price of a drug used by Medicare patients more than inflation.

A $2,000 cap on annual drug costs for people enrolled in Medicare’s prescription drug benefit won’t begin until 2025. And the most well-known aspect of the bill, letting Medicare negotiate the costs of select drugs, won’t start until 2026. Even then, the start will be limited to just 10 drugs; it will be expanded to 20 drugs by 2029.

Nearer gains on climate

The climate provisions of the bill will be felt soon, with some taking effect immediately and others at the beginning of next year. 

Most of the new residential clean energy credits will take effect immediately and apply to purchases made this calendar year. 

An existing credit of up to $7,500 for new clean vehicles will be extended through 2032, and the legislation adds a new credit of up to $4,000 for used clean vehicles that will apply to cars purchased next year. 

Still, there are complicating factors. Whether a vehicle qualifies for a full or partial $7,500 credit depends on it getting battery components for countries where the U.S. has a free trade agreement starting in 2024. It could take longer than that for most automakers to shore up their supply chains, meaning there could be a period of time where not all people can take advantage of the credit.

Credits for companies producing clean energy sources, like clean hydrogen, will also take effect in 2023. And credits for companies investing in clean energy manufacturing and energy security will be available at the start of next year. 

Josh Freed, who leads the climate and energy program at the centrist Democratic think tank Third Way, said that anticipation of the bill’s passage is already spurring investment in clean energy and would steadily reduce the cost of clean energy overtime. 

“Month on month, year on year, consumers are going to be able to have more and more affordable and cleaner energy that is less expensive,” he said. 

New taxes on the horizon

The law also has some significant tax provisions that will go into effect in relatively short order. 

The bill directs $80 billion to the Internal Revenue Service to beef up enforcement, funding that will flow immediately once the legislation is signed into law. 

The new 15-percent minimum tax on corporations will take effect in the tax year beginning in January 2023, as will the 1 percent excise tax on stock buybacks. 

Dems gear up to sell the bill

The bill’s passage comes just in time for Democrats to promote it as a major accomplishment with less than three months until the November midterm elections that will decide the balance of power in Washington. 

The White House made clear in a new memo this week that Biden and his Cabinet intend to make the case to voters that Democrats delivered for American families despite an onslaught of opposition from special interests and Republicans. 

But it may ultimately be difficult to convince some voters of the bill’s impact when many of the provisions do not take effect until after the midterm elections. 

Still, a senior White House official expressed optimism that Americans would feel at least some impacts of the bill quickly after Biden signs it into law. 

“A lot of these pieces are going to move very quickly and are going to be felt in people’s lives immediately. Others are going to follow soon after,” the official told reporters on a call Thursday.

During a press briefing on Friday, House Majority Whip James Clyburn (D-S.C.) seemed to preview a midterm message, arguing that voters need to keep Democrats in power so that the programs created by the law cannot be stripped down by Republicans if they regain control of Congress. 

“In November, it could very well be that you elect a group that will cut this bill off before we ever get started. So the question is very clear. Do you want to see this legislation in place in 2023? Or do you want to see it repealed in 2023?” Clyburn said. 

Rachel Frazin contributed.