On August 16, 2022, the Inflation Reduction Act was signed into law. While very few changes directly affect our clients in a significant way, there are noteworthy items.
Tax Credits (effective 2023)
- Tax Credits will be available for those who transition to clean energy such as electric vehicles, renewable energy, and energy efficient home improvements.
- Incentives such as a 30% tax credit for installing solar panels and up to $7,500 rebate for purchasing an electric vehicle will be introduced.
- Companies will be encouraged to invest in wind, solar, and geothermal energy through tax credits and new fees for methane emissions.
IRS Enforcement (effective now)
- Nearly $80 billion of the Inflation Reduction Act will go toward IRS enforcement. With this increase in funding comes additional staffing and enforcement. An estimated 87,000 hires will include both new and replacement employees in an assortment of positions.
- The risk of being audited will increase significantly, especially for those earning $400,000 or more a year.
The passing of the Inflation Reduction Act comes with increased IRS activity and provides an opportunity to evaluate your tax situation to ensure you’re paying the least amount of tax possible, and Five Stone is here to help. Speak to one of our tax professionals to review your current tax situation and look for ways to reduce your liability in the future.