A Consumer Guide to the Inflation Reduction Act

The Inflation Reduction Act (IRA) was passed by the United States Congress in August 2022, aiming to reduce the federal budget deficit by lowering prescription drug costs, investing in domestic energy production, and promoting clean energy investments.

The IRA contains around $370 billion and directs nearly $1.2 trillion to clean energy/climate-related initiatives, making it the most significant action Congress has taken on clean energy and climate change in the nation’s history. Because much of the funding is in the form of incentives, the total amount invested will depend on how many people, businesses, and entities take advantage of the incentives.

Goals of the IRA

  1. Lower energy costs for families and small businesses

  2. Accelerate private investment in clean energy solutions in every sector of the economy and every corner of the country

  3. Strengthen supply chains for everything from critical minerals to efficient electric appliances

  4. Create good-paying jobs and new economic opportunities for workers

The IRA adds to benefits granted by the Bipartisan Infrastructure Law (BIL), which was passed by Congress in 2020. The BIL is known as the “largest long-term investment in our infrastructure and economy in our nation’s history.”

The Bipartisan Infrastructure Law (BIL) “Provided billions of dollars to modernize the electricity grid, build a nationwide network of electric vehicle chargers, strengthen the battery supply chain, expand public transit and passenger rail, invest in new clean energy and emissions reduction technologies, improve resilience in physical and natural systems, and clean up legacy pollution in communities across the country—all while creating new, high-quality jobs, including union jobs, with good benefits and supportive services that build pathways for all to the middle class.”

— White House Guidebook 5

Together, the IRA and BIL could reduce emissions by more than 1,000 million metric tons of CO2e in 2030 (equivalent to the combined annual emissions released from every home in the United States).

The IRA emphasizes a commitment to working families, equity, and environmental justice, which is illustrated through its extra focus on investment in underserved communities. The Biden Administration’s Justice40 Initiative is a cornerstone of this legislation, with the commitment of

“40 percent of the overall benefits of climate, clean energy, and related federal investments to communities that are marginalized, overburdened by pollution, and underserved by infrastructure and other basic services” (White House Guidebook 2).