The Inflation Reduction Act was signed into law on Tuesday, August 16. While the $430 billion package includes many provisions, I wanted to highlight three key areas where your financial plan may benefit the most.
- Tax credits for energy-related home improvements - The bill includes a 30% tax credit for installing energy-efficient windows, heat pumps, or newer appliances. There’s another tax credit for installing solar panels, and up to $14,000 worth of rebates for upgrading to new, energy-efficient appliances.
- Expanded EV tax credits - If you have an electric vehicle, you’re in luck! New tax credits are immediately available, with up to $4,000 offered for used EVs and up to $7,500 for new EVs. There’s also a tax credit for installing an electric charger in your home (just read the fine print to ensure you qualify).
- Prescription drug caps - Some changes don’t take effect right away. For example, insulin payments will be limited to $35 per month for Medicare Part D beneficiaries starting next year. In 2024, overall out-of-pocket drug costs will be limited to $4,000 annually, dropping to $2,000 in 2025.
Agree or disagree with how we got here, this bill is going to help my client's planning situation. This bill seems to put caps on major retirement expenses and give tax credits towards helping lower other fixed expenses in everyone's planning scenarios. New legislation can come with benefits as well as new complexities. I'll keep you updated on changes to the bill and how it affects your plan.
This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific situation with a qualified tax professional. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security.