Here's what's in the Democrats' big climate, health care, and tax package, the Inflation Reduction Act

Chuck Schumer — (Image credit: Kent Nishimura/Los Angeles Times via Getty Images)

The Senate on Sunday voted to make major investments in climate change mitigation and sustainable energy production, significant changes in drug and health care policy, and modifications to tax law designed to reduce tax avoidance. The bill, called the Inflation Reduction Act, passed 51 to 50 along party lines, with Vice President Kamala Harris casting the tie-breaking vote. The House is expected to clear it on Friday, sending it to President Biden's desk.

Here's a look at what the legislation would do.

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$27 billion to create or support "green banks," which combine with private investments to drive clean energy projects, including in low-income areas.
$7,500 consumer tax credit for new electric vehicles and $4,000 for used electric vehicles, until 2032, with some income caps.
Tax credits to encourage power companies to increase green energy.
$60 billion in incentives and financing for domestic production of solar panels, wind turbines, batteries, critical minerals, electric vehicles, and other manufacturing.
$60 billion for environmental projects in low-income and disadvantaged communities.
New limits on the release of methane gas, including fines of up to $1,500 a ton for excess leakage and funds for monitoring and compliance.
Assured new oil and gas drilling leases on public lands and offshore.
Tax credits for carbon-capture technology.

Drugs and health care (Cost: $64 billion)

Medicare will be able to negotiate drug prices for the first time, starting in 2026 with 10 to-be-determined high-cost drugs. This is, Stat's Rachel Cohrs writes, "a BFD."
$2,000 annual cap on out-of-pocket drug expenses for Medicare recipients, starting in 2025.
$35 monthly cap on insulin costs for Medicare patients (but not people with private insurance).
Penalties for Medicare drugs whose prices rise faster than inflation.
Guaranteed free vaccines for Medicare recipients, starting in 2023.
Three-year extension of Affordable Care Act subsidies enacted in 2021 that lowered or eliminated premiums for nearly all ACA marketplace customers.

Taxes (Income: roughly $739 billion)

15 percent minimum tax on most companies that report $1 billion or more in income to their shareholders.
1 percent tax on corporate stock buybacks.
$80 billion to hire new IRS agents and increase compliance among wealthy companies and individuals; expected to bring in an extra $203 billion. "These resources are absolutely not about increasing audit scrutiny on small businesses or middle-income Americans," the IRS assured Congress.

Sources: The Wall Street Journal, The New York Times, Vox, Senate Democrats, Barron's, Stat News, The Washington Post

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Peter has worked as a news and culture writer and editor at The Week since the site's launch in 2008. He covers politics, world affairs, religion and cultural currents. His journalism career began as a copy editor at a financial newswire and has included editorial positions at The New York Times Magazine, Facts on File, and Oregon State University.