The Inflation Reduction Act – Lowering Costs for Californians

Pictured: Senator Padilla at a press conference in support of the Inflation Reduction Act

Dear Friend, 

I recently voted to pass the Inflation Reduction Act, which was signed into law by President Biden this month. This landmark new law will help lower energy and health care costs for millions of Californians, boost air quality, and improve drought and wildfire resiliency—all while reducing the federal budget deficit. There is a lot in this legislation, so I am writing to share some of the key highlights for Californians.

Lowering Health Care and Prescription Drug Costs

The Inflation Reduction Act is the biggest health care reform since the Affordable Care Act and will help lower health care prescription drug costs for millions of Californians, particularly for those on Medicare.

  • Extends the American Rescue Plan’s Affordable Care Act health insurance premium subsidies, which have helped 1.8 million Californians access and retain affordable health insurance coverage.
  • Caps out-of-pocket costs at $2,000 per year for California’s 6.5 million Medicare beneficiaries.
  • Reduces prescription drug prices for Medicare beneficiaries by requiring Medicare to negotiate prices for prescription drugs each year.
  • Caps insulin costs at $35 per month for Medicare beneficiaries.

Tackling the Climate Crisis, Drought, and Wildfires 

I worked closely with my Senate colleagues to ensure the Inflation Reduction Act builds on California’s climate leadership and prioritizes support for drought and wildfire resiliency–two of the biggest challenges facing California right now. The Inflation Reduction Act is the largest investment in history to combat the climate crisis.

  • $369 billion for clean energy and environmental projects over the next decade to lower U.S. carbon emissions by roughly 40 percent by 2030.
  • $4 billion to address historic drought in the West, including for inland water bodies like the Salton Sea and for bolstering the resiliency of the Colorado River Basin and watersheds up and down California experiencing extreme drought.
  • $5 billion to reduce the risk of catastrophic wildfires, support more fire-resilient forests, expand forest conservation, and increase urban tree planting–which will help address extreme heat in many of our cities.

Lowering Energy Costs 

The Inflation Reduction Act will make it more affordable for California families to purchase energy-efficient appliances, and save money on their utility bills each month.

  • $9 billion in consumer home energy rebate programs to electrify home appliances and support energy-efficient retrofits.
  • 10 years of consumer tax credits to make homes more energy efficient, making heat pumps, rooftop solar, electric HVAC and water heaters, and electric appliances more affordable.
  • A new consumer tax credit of up to $4,000 for middle- and lower-income people to buy used clean vehicles (available for individuals with incomes up to $75,000, married couples earning up to $150,000 who file taxes jointly, and head of household filers making up to $112,500).

The Inflation Reduction Act will be fully funded by requiring large, billion-dollar corporations to finally pay their fair share in taxes. There are no new taxes in this bill on families making $400,000 or less and no new taxes on small businesses. Economic and policy experts agree that this legislation will effectively fight inflation and reduce the federal deficit.

More information on the Inflation Reduction Act’s benefits to Californians is available here.

Some news coverage about the impact of the Inflation Reduction Act:

I’m proud to have helped deliver this historic legislative achievement that takes on special interests and delivers for California families.

Thank you, 


Alex Padilla
United States Senator for California