They call it the “Inflation Reduction Act.” When you read it, it has NOTHING to do with reducing inflation. Does that bother you? It bothers me. A little honesty is all I ask. They should have called this the “Biden Green Energy Junior Act.” So here are some of the actual tax related provisions in this bill.
The break for adding solar panels, etc. (renewable energy) to your home is extended through 2034. It is now including battery storage technology installed on your house. The credit equals 30% of the cost of equipment and installation. It drops to 26% in 2033, 22% in 2034 and then ends.
Here in western Nevada, wind is a real thing. Instead of blade-based wind generation, there are some really great bladeless vortex systems that are much less visible, more efficient, can handle high wind speeds, last much longer, etc., yet at least in Douglas County, I believe they are still not allowed. Somebody needs to get Douglas County up to date on wind energy generating technology. This may be one of the better provisions in this Act. There is NO WAY public electric generation is going to meet the demand as more and more electric vehicles are purchased.
Energy efficient improvements to your main home credit is back. It used to be limited to a lifetime maximum of $500, which almost everybody had already hit. Well, they expanded the “lifetime limit” to $1,200. (There are sub-limitations, such as only $600 for exterior windows; $500 for exterior doors; BUT there is an increased lifetime limit of $2,000 for biomass stoves or hot water boiler, or an electric or natural gas heat pump.)
Electric car buyers can get expanded credits starting in 2023. Maximum credit is still $7,500, but the manufacturer suggested retail price is limited to $55,000 for sedans and $80,000 for SUV and pickup trucks. Household adjusted gross income to qualify has been increased to $300,000 for joint filers, less for others. Buyers of used electric vehicles can get a credit equal to the lesser of $4,000 or 30% of the car’s sales price, but AGI is limited to only $150,000 for joint filers, less for others. This credit ends after 2032.
I guess Congress thinks the “rich” should buy new electric vehicles and the “poor” will buy used ones. Have you seen how much it costs to replace electric car batteries? The “poor” are going to get shafted when their used electric vehicle needs new batteries.
Congress thinks these following three tax increase provisions are going to pay for all these energy giveaways. 15% minimum tax on adjusted book income of large firms (those who average over $1 billion in profit). 1% excise tax on stock buybacks by publicly traded companies. The cap on business losses to be deducted on a personal return of over $540,000 for joint filers (smaller amount for other filers) was slated to expire in 2025 is now extended to 2028. Of course, Congress gave the IRS $80 billion to revamp computers, hire new agents, etc., and they promise to only increase audits on anybody over $400,000 a year in AGI.
Have you heard? Proverbs 12:17 says, “He who is truthful testifies honestly, but a false witness lies.”
Kelly Bullis is a Certified Public Accountant in Carson City. Contact him at 882-4459. On the web at BullisAndCo.com. Also on Facebook.