There’s a new 1% tax on stock buybacks — here’s what it means for your portfolio

The new 1% excise tax on corporate stock buybacks — a late addition to President Joe Biden’s sweeping tax, health and climate package — adds a new levy to the controversial practice.

But there are mixed views on how it may affect investors. The Inflation Reduction Act provision levies a 1% excise tax on the market value of net corporate shares repurchased starting in 2023.

When a profitable public company has excess cash, it can purchase shares of its own stock on the public market or make an offer to shareholders, known as a stock buyback or share repurchase.