New Buyback Tax May Impact Stock Returns

Jan. 23, 2023 4:00 AM ETPKW2 Comments


  • The excise tax does not apply to repurchases under $1 million, so many companies that repurchase stock will be impacted by this tax.
  • More recently, the BuyBack Index seems to be underperforming, especially since the beginning of 2023.
  • The short-term underperformance is just that, short-term, and does not necessarily indicate a longer stretch of weakness.

Clean, renewable energy or electricity production tax credits and incentives, financial concept : Green energy symbols atop coin stack e.g solar panel, wind turbine, fuel cell battery and the word TAX

William_Potter/iStock via Getty Images

In August of last year Congress passed the so-called Inflation Reduction Act and included within the Act is a 1% excise tax on the fair market value of stock repurchased by companies effective 1/1/2023. On December 27 the

BuyBack Index S&P 500


Buyback Index S&P 500 PKW SPX


This article was written by

HORAN Capital Advisors is an SEC registered investment advisor that manages investment portfolios for individuals and institutions. Our firm utilizes a disciplined investing approach that should create wealth for our clients over time. Our investment bias is to invest in companies that generate a steady return over time, i.e., singles and doubles. This singles and doubles approach tends to lead to investments in higher quality dividend growth/cash flow growth companies. On the other hand, there are times when a company's stock price seems to be trading below its fair valuation. Short term gains are possible in these situations. I have been managing investment portfolios for individuals and institutions for over fifteen years and believe investing is like running a marathon and not a sprint. Taking the road less traveled, more often than not, leads to higher returns. Visit: The Blog of HORAN Capital Advisors at (

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