Update August 12, 2022: The Inflation Reduction Act passed the House of Representatives and is in route to be signed into law by the President. Check back with the TurboTax blog for more up to date information and to find out when the bill is signed into law and what it means to you.
This past weekend the Senate passed the Inflation Reduction Act of 2022. The bill is set to go for final vote by the House at the end of this week and includes incentives to combat climate change and some of the most substantial changes to the healthcare policy since the passage of the Affordable Care Act.
While much of the bill includes language to help you save on healthcare and medication and full details of the Inflation Reduction Act have not been released, here are some important things you need to know about provisions within the law that can save you money on taxes:
What is in the Inflation Reduction Act and What Can it Mean for Your Taxes
Energy Efficient Tax Incentives
To help address climate change, a portion of the bill will go to consumer home energy rebate programs.
People still may be eligible for up to a $7,500 tax credit for purchasing a new electric vehicle and for the first time, people may be eligible for up to a $4,000 tax credit for buying a used electric vehicle, 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 the environment and the money you would spend on gas.
The bill will provide an extension on healthcare subsidies if health insurance is purchased in the Health Insurance Marketplace, further extending benefits that were expanded for 2021 and 2022. 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 bill will also cap Medicare beneficiaries out-of-pocket medical expenses at $2,000 per year and will allow Medicare to negotiate some of the more expensive drugs on the market.
It is said that the bill does not include any new taxes for small businesses or families making $400,000 or less. Corporations making 1 billion dollars or more however will see 15% minimum tax and a tax of 1% of the fair market value on repurchased stock.
Please check back with the TurboTax Blog to find out information about final passage of the Inflation Reduction Act and the most up to date information on the details of what’s included in the bill and what it means to you.
Don’t worry about knowing tax law changes. TurboTax will be up to date and you can hand your taxes over to our TurboTax Live tax experts who can fully do your taxes from start to finish.
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