The 15% minimum corporate tax under the Inflation Reduction Act could help in addressing tax loopholes and generate billions of dollars to fund clean energy and healthcare initiatives. The minimum tax rate specifically targets certain large corporations, including Nike and Amazon, which have often been criticized for avoiding taxes despite raking in billions of dollars in profits.

After much delay, the U.S. Senate recently passed the $430 billion climate, healthcare, and tax bill called the Inflation Reduction Act. If signed into law, the Inflation Reduction Act aims to fight climate change and lower healthcare costs. The significant investments under the bill will be partly funded by a 15% minimum corporate tax imposed on large corporations with an average book income exceeding $1 billion over a three-year period.

This minimum tax provision is expected to impact companies like Nike (NYSE: NKE), Amazon.com (NASDAQ: AMZN), FedEx (FDX), and several other companies that have often been criticized for paying low or no federal income taxes by using many deductions and exemptions.

Inflation Reduction Act Aims to Address Tax Loopholes

Many large tax-avoiding corporations generally report much lower profits to the Internal Revenue Service for tax purposes compared to the book profits that they reveal to shareholders. As per a report released by the Institute on Taxation and Economic Policy (ITEP) in April 2021, at least 55 of America’s largest corporations didn’t pay any federal income tax in 2020.