President Biden signed into law The Inflation Reduction Act on August 16, 2022. The key provisions are:
- Clean energy tax credits for homeowners – current tax credits for solar and wind power are extended to 2032; eligible homeowners could qualify for a 30% tax credit.
- Rebates for electric cars – Existing tax credits for the purchase of a new electric vehicle are extended through December 2032 for any “clean” vehicle.
- Affordable Care Act premium subsidies – The act extends these subsidies, which were scheduled to expire at the end of 2022, to 2025.
- Managing prescription drug prices for seniors – This law allows Medicare to negotiate drug prices.
- Expanded IRS Enforcement – The act provides an additional $80 billion in funding over 10 years to allow the IRS to pursue more tax enforcement. The IRS Commissioner has given his assurance that there will not be an increase in audits for taxpayers earning less than $400,000 a year or $450,000 a year for joint filers. This act is good for taxpayers and tax practitioners because there will be a major increase in customer service with the hiring of more people to man both the IRS tax practitioner and public phone lines, which have been badly understaffed for several years.
- 15% corporate minimum tax – This provision only applies to those corporations earning more than $1 billion in profits.