Heads Up — Frequently Asked Questions About the Stock Buyback Tax Under the Inflation Reduction Act of 2022

Published on: 27 Apr 2023

This Heads Up discusses the new Internal Revenue Code section, Section 4501, which was added by the Inflation Reduction Act of 2022. The new section imposes a 1 percent excise tax on stock repurchases by publicly traded companies that occur after December 31, 2022. Specifically, under Section 4501, a covered corporation is subject to a tax equal to 1 percent of (1) the fair market value of any stock of the corporation that is repurchased by this corporation (or certain affiliates) during any taxable year, with limited exceptions, less (2) the fair market value of any stock issued by the covered corporation (or certain affiliates) during the taxable year (including compensatory stock issuances).


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