President Joe Biden on Tuesday signed into law the Inflation Reduction Act, a sweeping spending package aimed at addressing issues like healthcare and climate change, as well as issuing new corporate tax policies and beefing up the Internal Revenue Service (IRS).

According to a statement from Senate Democrats, the Inflation Reduction Act will make "a historic downpayment on deficit reduction" by investing in domestic energy production and manufacturing, which is expected to help the United States reach its goal of reducing carbon emissions by about 40% by 2030. The bill also has provisions to reform high-cost medical care like prescription drug pricing for Medicare patients and extends the Affordable Care Act program through 2025.

"With this law, the American people won and the special interests lost," Biden said in remarks during the signing of the bill on Tuesday.

The bill narrowly passed the U.S. Senate 51-50 on August 7, with no Republican voting for the Democrat-led legislation, leading Vice President Kamala Harris to cast the tie-breaking vote. The U.S. House passed the bill last Friday by a margin of 220-207, sending it finally to Biden's desk to sign into law.

The $437 billion spending package is significantly lighter than the $1.75 trillion Build Back Better plan Biden has been pushing to passing for more than a year. Through negotiations and compromise, Biden had to give up on some original pillars of his first bill, including universal child care and tax cuts for the middle class.

The new law is expected to raise $737 billion in revenue over the next decade, mainly through a new 15% minimum corporate tax rate on companies that earning more than $1 billion per year (estimated $222 billion) and prescription drug reform ($265 billion). The law also expects $124 billion in revenue from increased IRS tax enforcement.

The law is expected to reduce the nation's deficit by more than $300 billion over the next decade.

Here's the major components of the Inflation Reduction Act:

  1. Expansion of Medicare Benefits: free vaccines in 2023, $35 per month spending cap on insulin in 2023, limits out-of-pocket drug costs to about $4,000 or less in 2024 and $2,000 in 2025.
  2. Energy Bill Reduction: cuts energy bills by $500 to $1,000 per year.
  3. Climate Investment: reduces carbon emissions by roughly 40% by 2030.
  4. Lowers Health Care Costs: saves average Affordable Care Act enrollee $800 per year, allows Medicare to negotiate drug costs over the next decade, and requires drug companies to rebate back prices increases higher than inflation.
  5. Creates Manufacturing Jobs: invests over $60 billion to create millions of new domestic clean energy manufacturing jobs.
  6. Invests in Disadvantaged Communities: aims at taking steps to clean up pollution and reduce environmental injustice through $60 billion investment.
  7. Closes Tax Loopholes: creates a 15% corporate minimum tax, a 1% fee on stock buybacks and invests in enhanced IRS enforcement.