The Inflation Reduction Act was approved by the House of Representatives and is now waiting for the President’s signature to become law. For more recent information, to learn when the bill is signed into law, and to learn what it means to you, check back with the TurboTax blog.
The Inflation Reduction Act of 2022 was approved by the Senate over the previous weekend. The package, which includes some of the most significant changes to healthcare law since the enactment of the Affordable Care Act, is scheduled to go before the House for a final vote at the end of this week.
Here are some crucial things you should know about provisions in the law that can save you money on taxes, even if the Inflation Reduction Act’s complete details have not been disclosed and much of the bill contains wording to assist you save on healthcare and prescription drugs:
What is in the Inflation Reduction Act and What Can it Mean for Your Taxes
Energy Efficient Tax Incentives
A section of the measure will fund consumer home energy rebate programes to combat climate change.
Depending on their income, customers may be eligible for up to a $7,500 tax credit for buying a new electric vehicle and for the first time, up to a $4,000 tax credit for buying a used electric vehicle. Since credits are a dollar-for-dollar reduction of the taxes you owe, you can save the environment and the money you would have spent on gas while reducing your taxes by up to $7,500.
If health insurance is acquired through the Health Insurance Marketplace, the measure will extend healthcare subsidies, further extending the benefits that were increased for 2021 and 2022. If you don’t get enough of a subsidy based on your income when you get health insurance in the Health Insurance Marketplace, it may also appear as a premium tax credit when you file your taxes. Healthcare subsidies can assist lower the health insurance premiums you pay.
The plan will also allow Medicare to negotiate some of the more expensive pharmaceuticals on the market and cap out-of-pocket medical spending for beneficiaries at $2,000 annually.
According to reports, the plan does not impose any new taxes on individuals, small enterprises, or families with incomes under $400,000. However, corporations generating $1 billion or more will pay a minimum tax of 15% as well as a tax equal to 1% of the fair market value of stock that is repurchased.