Tax Law Changes With the
Inflation Reduction Act
The Inflation Reduction Act signed into law by President Joe Biden in August of 2022 has brought with it a myriad of tax law changes, for individuals and families, as well as for businesses, both small and large. Let’s take a look at what has changed and how you might be able to take advantage of these credits and deductions on your taxes this year.
Individuals and Families
Since the Inflation Reduction Act is centered around clean energy and ushering our country’s infrastructure into the future, it comes as no surprise to learn that the tax law changes this act brings are with regards to clean energy. Individuals and families who are paving the way for clean energy to take a foothold within our culture are given incentives to that end through various benefits such as tax refunds and credits from the US government.
If you have purchased an electric vehicle, either in 2022 or prior to 2022, you might be eligible for the clean vehicle tax credit, up to the maximum credit of $7500. For more information about this tax credit, you can visit the dedicated page for this credit on the IRS website to learn more.
If the home you’ve purchased is energy efficient, or if you’ve upgraded your home with energy efficient appliances, you might qualify for a tax credit as well.
Businesses
Businesses also get tax incentives to improve not only how they manufacture their goods, but to give specific focus to creating products that use clean energy. The list for business tax incentives is long, including such tax credits as the clean electricity production credit, the clean fuel production credit, the energy efficient commercial building deduction, the sustainable aviation fuel credit, and the zero-emission nuclear power production credit, just to name a few. To read the laundry list of various business deductions, visit the dedicated page on the IRS website.
What it All Means
By giving individuals, families, and businesses tax incentives to get on board with clean energy, the US government is paving the way for the energy of the future. There can be no argument that our country needs to wean itself from fossil fuels that pollute our air, land, and water. The only way to bring this new way of living about is to make it attractive to everyone in every facet of life, from the single individual all the way up the corporate ladder. With every level of our society being offered tax credits, deductions, and incentives, there is more likely to be a societal shift in this direction—which is the end goal of the Inflation Reduction Act—to harness electric, wind, and solar power within the next ten years.
This is exactly what the Biden Administration is banking on—a win/win scenario for America’s economy and also for the average American’s pocketbook.
To learn more about investing, closing the racial wealth gap, and growing generational wealth for Black and brown families, please visit Financial Joy School and become a part of our financial family.
