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The sweeping health, climate, and tax bill signed by President Joe Biden will allow almost $370 billion to be invested in fighting climate change and improving America’s energy security. To engage taxpayers in these efforts, the law provides for tax breaks and fiscal incentives to encourage energy efficiency.
Under the law, you may be eligible for the following three tax credits, dubbed the “Inflation Reduction Act” by its Democratic sponsor.
If you’re looking for an electric car, now might be the time to buy one. Adjusted Gross Income (AGI) is less than $150,000 ($300,000 for couples filing jointly).
Unlike the existing tax credit, the new version includes a vehicle value requirement. The MSRP of a new vehicle must be less than $55,000. The MSRP of vans, pickups and SUVs must be less than $80,000 to qualify for credit.
If you are buying a used electric car, the rules are different. The tax credit is up to $4,000 or 30% of the purchase price, whichever is less.
Similar to how credit works with new electric vehicles, you must meet income requirements. But when you buy used, the limit is lower. For single filings, your AGI cannot exceed $75,000. The amount for couples applying jointly increases to $150,000.
The purchase price of a used electric vehicle cannot exceed $25,000 to qualify for a loan, and the vehicle must be at least two years old.
The new law will provide tax breaks if you install solar panels in your home. The loan is an extension of an existing tax credit allowing taxpayers to receive a 26% tax credit on solar panels installed between 2020 and 2022. The loan is scheduled to shrink to 22% in 2023 before it expires in 2024.
New climate and health laws allow taxpayers to receive up to 30 percent tax credits on residential solar panels through 2032. Credit drops to 26% in 2033 and then to 22% in 2034.
You can claim a credit on your federal income tax return to reduce your tax liability. To qualify for the new version of the credit, your solar system must have been operating for the applicable tax year and must be generating electricity at your home in the United States.
While the rules are yet to be sorted out, under the new law, taxpayers may be eligible to buy up to $8,000 worth of energy-saving appliances.
The Department of Energy will provide the states with billions of dollars in funding. They will use the money to create a tax credit scheme to encourage people to buy energy efficient appliances, including those used in kitchens and laundries.
Taxpayers can receive up to $840 in rebate when they purchase an electric cooker, cooker, cooker, or oven. However, buying a water heater heat pump can save you up to $1,750. When you buy a new heat pump to heat or cool your home, the discount goes up significantly, up to $8,000.
Kemberley (@kemcents) Washington, CPA, former IRS agent, news writer, author, and owner of Washington CPA Services, LLC. Check out more of her work at kemberley.com.
Post time: Aug-22-2022