The Inflation reduction act, aka H.R.5376 of 2022, rewards businesses and other innovative projects that better their community by enriching the economy or society to lower healthcare and energy costs. This is achieved through stimulating the economy by rewarding businesses for implementing certain practices, which not only puts more money in the business owner’s pocket but also encourages customers to seek out these businesses. Further stimulating the economy and getting better benefits from businesses that are staying up-to-date with not only requirements but also choosing to go beyond the normal standard.
The Nonbusiness Energy Property Credit was extended through 2032 and renamed the Energy Efficient Home Improvement Credit. Starting in 2023, the credit will equal 30 percent of the costs of all eligible home improvements made during the year. Additionally:
The Residential Clean Energy Credit was scheduled to expire at the end of 2023 but has been extended through 2034. The Inflation Reduction Act also increased the credit amount with a phaseout of the applicable percentage.
Amount of Credit:
The credit no longer applies to biomass furnaces and water heaters, now covered under the Energy Efficient Home Improvement Credit. Starting in 2023, however, the new credit will apply to battery storage technology with a capacity of at least three-kilowatt hours.
The Inflation Reduction Act extends the Clean Vehicle Credit until the end of 2032 and creates new credits for previously-owned and qualified commercial clean vehicles.
Tax credits include up to:
Starting in 2024, the Inflation Reduction Act establishes a mechanism that will allow car buyers to transfer the credit to dealers at the point of sale so that it can directly reduce the purchase price. Restrictions will also be in place for the new vehicle credit based on adjusted gross income (AGI) thresholds. Limitations apply based on the manufacturer’s suggested retail price of the vehicle. For single or married filing separate taxpayers, the limit is $150,000, while taxpayers filing as head of household have a limit of $225,000. For married filing jointly or surviving spouse taxpayers, the limit is $300,000. Reduced AGI limitations apply to the used vehicle credit. Going forward, we would love for you or your business to reach out, as helping businesses with their unique challenges and goals is part of what drives us here at Interactive Accountants.
Here at Interactive Accountants, assisting businesses to grow and succeed financially is our number one goal. We are here to help because the better you do, the better we all do! If you still need convincing to call us, feel free to look at our other blogs regarding the help we offer various businesses and offices. Beyond the information we have presented in this article, we also focus on accounting for law firms, accounting for medical professionals, accounting for ecommerce, accounting for restaurants, and accounting for Amazon DSPs. If you are a professional in any field that these tips apply to or are simply curious about a topic in this article, please schedule a free consultation with our owner Matthew Shiebler, CPA. He’s been practicing accounting for over 25 years and is a business owner, just like you!