New Tax Guidelines

A stock buyback is the purchase of a company’s own stock by its management. The purpose of this type of transaction is to reduce the number of shares available to trade, thus increasing their value. This action is considered beneficial because it can increase the value of a company’s shares and increase earnings per share (EPS). The Inflation Reduction Act was enacted to reduce the federal deficit by raising revenue from corporations. The Act imposed a 1% excise tax on stock buybacks