August 18 Update: Inflation Reduction Act of 2022

The Inflation Reduction Act of 2022 was recently signed into law. There are many parts of the new law, including prescription drug reform, tax reform, and increased funding for the Internal Revenue Service. The law also represents the largest investment into addressing climate change in United States history. Below is a summary of a few of the major provisions for your review.  We also want to note, we recommend contacting our office if you consider purchasing a new electric vehicle, installing solar panels, or a heat pump as all of these could result in a reduction of your taxes.

Energy

• Extends electric vehicle tax credits (new and used vehicles). The new rules are quite different and include caps on income (taxable income of $150,000 single and $300,000 joint tax filers) and caps on the cost of the vehicle ($55,000 for cars and $80,000 for vans, trucks, and SUVs). The list of vehicles eligible for the EV tax credit has also changed, as final assembly must be done in North America. Here is a link to the updated list:https://afdc.energy.gov/laws/inflation-reduction-act
• Extends individual energy credits for energy efficient improvements to homes (solar panels, heat pumps, electric HVAC, and water heaters)
• Creates grant programs for energy efficient and renewable energy improvements for low-income households and domestic manufacturing

Health Care

• Provides free vaccines for Medicare participants
• Creates out-of-pocket cost caps for prescription drugs
• Controls Medicare Part D rising costs
• Lowers health costs for Affordable Care Act marketplace participants

Income Tax

• Implements 15% corporate minimum tax (for companies with $1B or greater in profits)
• Implements 1% fee on corporate stock buybacks
• Increases revenue to the IRS to update systems and hiring

Please feel welcome to call or email our office with any questions about how the new law could impact your tax situation.

Enjoy the rest of your summer – it is difficult to believe that Labor Day is just around the corner!

The Bond&Devick Team