What is the Inflation Reduction Act (IRA)? And how can the IRA lower my taxes?
"Under the Inflation Reduction Act, there are some credits for electric vehicles," says Lisa Greene-Lewis, CPA and TurboTax expert. "The first credit is similar to under the old law. You get a credit of up to $7,500 for a new electric vehicle and then new, under this provision, you can get a credit of up to $4,000 for a used electric vehicle."
Read the full Q&A below or watch the video above.
The Inflation Reduction Act (IRA) Explained
Tracy Byrnes: We've been talking a lot about inflation these days, but you may or may not have heard of this Inflation Reduction Act of 2022 that has been potentially put in place, and there could be some potential savings for you. Lisa Greene-Lewis, CPA and TurboTax expert, is here with us to explain because it's murky as all get up right now. Let's start with the autos, cars, because there's some perks to having an energy-efficient car, right?
Lisa Greene-Lewis: Yes, under the Inflation Reduction Act, there are some credits for electric vehicles. The first credit is similar to under the old law. You get a credit of up to $7,500 for a new electric vehicle and then new, under this provision, you can get a credit of up to $4,000 for a used electric vehicle. Now, there are some limitations based on income as well as the type of car.
Tracy Byrnes: So do those pertain to now 2022 or 2023? Just to be clear for people.
Lisa Greene-Lewis: So all of the changes under the clean vehicle credit, most of them are effective beginning January of 2023. The only one that goes into effect on August 17 of this year, the day after it was signed into law, is your car has to have final assembly in North America.
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Tracy Byrnes: So those are important dates for people to remember. And if you are in the market for a car, make sure you check all that out. Another part of this new act is energy efficient in your home. What should people be aware of there?
Lisa Greene-Lewis: Yes, so the non-business property credit is still available, but it's increased. So it's up to 30% of anything that you put in your home, like energy-efficient windows or doors. And then also they've increased the residential energy property credit back to 30% And that's for solar panels.
Health Insurance Assistance
Tracy Byrnes: And Lisa, they also added something in this to help pay for health insurance, didn't they?
Lisa Greene-Lewis: Yes, so subsidies that help people pay for insurance in the health insurance marketplace are extended.
Tracy Byrnes: The thing is, Lisa, there's so much to remember and know. And if you're not taking notes right now, what should people be doing?
Lisa Greene-Lewis: One thing to remember. You don't need to know these tax rules. You can come to TurboTax and you can fully hand your taxes over to a TurboTax Live expert, and they'll do your taxes from start to finish.
Tracy Byrnes: So we have autos, home efficiency stuff, and health care. Everyone should look into this and pay attention and take advantage of these credits and deductions that will be available thanks to this Inflation Reduction Act. Lisa Greene-Lewis, thank you so much for walking us through it.
Lisa Greene-Lewis: Thank you for having me.