Inflation Reduction Act of 2022….

After countless hours studying the signed bill, I am still learning/deciphering what is in it, the implications and tax effects (good or bad) it will have on our clients. It has been well publicized that the IRS (Internal Revenue Service) will be hiring 87,000 new agents over the next 10 years.

We are here to help guide you through this 730-page bill. Here are some highlights that I see applicable to our clients!!!!

·        Energy efficient improvements to your main home have been reinstated for 2022. The lifetime credit of $500 still applies.

 ·        Effective 1/1/23 individual taxpayers can claim an annual credit up to $1,200 for residential energy property like exterior windows, exterior doors, heat pumps, and HVAC equipment.

 ·        The 30% solar panel credit has been extended through 2022-2034.  This 30% credit falls to 26% starting in 2033 and drops to 22% in 2034.  This credit applies to alternative energy systems too.

 ·        Effective 2022, hearing aids will be sold over the counter

 ·        Effective 1/1/23 New Electric Vehicle credit up to $7,500. Be careful there are income thresholds and limits to the cost of the vehicle now.

 ·         Effective 1/1/23 Used Electric Vehicle credit up to $4,000 that are at least 2 years old.  Be careful, these income thresholds and cost limits are lower than the New EV thresholds.

 ·        ACA (Affordable Care Act) – Marketplace Health insurance premiums will continue for 3 years (until 2025) for many taxpayers. This subsidy was scheduled to expire.

 ·        Effective 2025 the bill will put a $2,000 annual cap on out-of-pocket prescription drugs for people insured by Medicare.