We cannot let a year go by without changes to the income tax regulations. The new Inflation Reduction Act of 2022 brings a number of tax law changes. The following are some of the more significant items:
For those who receive Advance Premium Tax Credits for their Health Insurance Exchange (Obamacare) premiums, the Inflation Reduction Act extends the enhanced subsidies initiated in 2021 through the 2025 tax year.
The Non-Business Energy Property Credit, now the Energy Efficient Home Improvement Credit, is extended through the 2032 tax year, with potentially higher credits.
Congress has approved over $45 million in additional funding for IRS enforcement activities. With this infusion, we can expect an increase in audits on individual income tax returns.
Additionally, the new law provides more than $4.7 million to modernize IRS systems. Expected results should include quicker tax return processing and less time on the telephone with the IRS.
A new 1% excise tax is imposed on the fair market value of any corporation stock which is repurchased by the company. This may result in higher dividend payouts as a less expensive option to provide higher value to shareholders.
The New Electric or Hybrid Car Credit is now composed of two parts – $3,750 when the vehicle satisfies the critical minerals requirement, and $3,750 when it satisfies the battery components requirement. Both requirements relate to assembly in North America. Also, the 200,000 car limit per manufacturer is removed. A new modified adjusted gross income limit, and a new manufacturer’s suggested retail price limit, also apply.
After December 31, 2022, purchasers of previously-owned “clean” vehicles (electric battery or fuel cell) may also be eligible for a credit.
As always, Cowen Tax Advisory Group is available for your tax preparation and tax planning needs.
Steve Pelletier
steve@cowentaxgroup.com
Prior to joining Cowen Tax Advisory Group in 2018, Steve accumulated over 25 years of tax preparation and financial experience in various settings. Over the course of his career, he has been an integral member of Big 8 CPA firms, CIGNA’s investment accounting department, Prudential’s retirement and investment services, and several consulting projects. Steve is an enrolled agent allowed to practice before the IRS.
