Inflation Reduction Act of 2022

Inflation Reduction Act of 2022: What it Means for You
and Your Taxes
From Intuit’s TurboTax.blog – by TurboTaxLisa - 18Aug2022
Today the President signed the Inflation Reduction Act of 2022 into law,
which includes new tax provisions, extensions, and expansions of tax
benefits related to energy efficiency and healthcare.
Here’s what’s included in the Inflation Reduction Act and what it can mean
for you and your taxes.
Energy Efficient Tax Benefits
A portion of the tax bill will go to consumer home energy rebate programs
and include the Clean Vehicle Credit, the Alternative Fuel Vehicle Credit,
and energy credits for your home.
Clean Vehicle Credit
Before the Inflation Reduction Act people were able to claim a credit of up
to $7,500 for the purchase of a new electric vehicle. Under the new law
people still may be eligible for a tax credit up to $7,500 for purchasing a
new electric vehicle under the renamed Clean Vehicle Credit, and for the
first time, starting January 1, 2023 people purchasing used electric vehicles
may be eligible for a tax credit up to the lesser of $4,000 or 30% of the
sales price , depending on their income. Since credits are a dollar for dollar
reduction of taxes you owe, you can lower your taxes by up to $7,500 and
save money on gas.
Some of the changes related to the Clean Vehicle Credit include:
• The manufacturer limitation is eliminated for cars sold after December
31, 2022
• Requires final assembly in North America(Effective immediately on
August 17, 2022, unless you have entered into a binding contract to
purchase a new electric vehicle before August 16,2022)
• Manufacturer must be a qualified manufacturer

• Manufacturer’s suggested retail price for vans, sport utility vehicles,
and pick ups is limited to $80,000 and other cars are limited to
$50,000
• For new cars, modified adjusted gross income cannot exceed
$300,000 married filing jointly, $225,000 Head of Household,
$150,000 single
• For used cars, modified adjusted gross income cannot exceed
$150,000 married filing jointly, $112,500 head of household, $75,000
single
Most of the changes are effective with electric vehicles purchased starting
January 1, 2023.. The only change in the law that is effective immediately
starting on August 17, 2022 is that new electric vehicles must receive final
assembly in North America. People who entered a binding contract to
purchase a new electric vehicle before the Inflation Reduction Act passed
can follow the previous rules in place.
For business owners, the Inflation Reduction Act also adds a tax credit of
up to $7,500 for new commercial clean vehicles placed in service after
December 31, 2022.
Credit for Electric Chargers Installed at Your Home or Business
Prior to the Inflation Reduction Act a tax credit was available for electric
charging stations put in place by businesses and main homes prior to
January 1, 2022. The new law extends the credit for charging stations put
in service before January 1, 2033.
Energy Credits Available for Your Home
Before the Inflation Reduction Act people were allowed a credit up to 10%
of the amount paid for nonbusiness energy property like windows, doors,
and skylights and the amount of residential energy property placed in
service before January 1, 2022. Now you may take the credit at an
increased amount up to 30% if you place the property in service before
January 1, 2033.
The provision also eliminates the lifetime credit limit that was previously in
place and limits the credit per taxpayer per year.
Credits for Solar Energy

Before the Inflation Reduction Act, if you purchased residential energy
efficient property like solar panels and solar water heaters for your home,
the tax credit was 26% of your purchase. Under the new law the credit
increased to 30% if you purchase the energy efficient equipment January 1,
2022 through December 31, 2032.
Healthcare Tax Benefits
The tax law extends healthcare subsidies if health insurance is purchased
in the Health Insurance Marketplace, further extending benefits that were
expanded for 2021 and 2022 under the American Rescue Plan. Healthcare
subsidies can help lower the health insurance premiums you pay and can
also show up as a premium tax credit when you file your taxes if you don’t
receive enough subsidy based on your income when you purchase health
insurance in the Health Insurance Marketplace. The Premium Tax Credit is
generally available to people with households between 100% and 400% of
the Federal Poverty Level, but under the American Rescue Plan individuals
with income above 400% of the Federal Poverty Level were eligible for the
Premium Tax Credit for tax year 2021 and 2022 only. Under the Inflation
Reduction Act these benefits will continue.
The law also caps Medicare beneficiaries out-of-pocket expenses for
prescription drugs at $2,000 per year and will allow Medicare to negotiate
some of the more expensive drugs on the market.
Corporate Tax Changes
Corporations making 1 billion dollars or more will see 15% minimum tax
and a tax of 1% of the fair market value on repurchased stock.