What the Inflation Act Means For You - Tax Credits

Another way that inflation is being combatted is through the use of tax credits as a way to incentive the general public to live greener, more eco-friendly.

These tax credits will ensure that by living greener, you'll have more options in terms of your financial health.

 

The Inflation Reduction Act was signed into law on Tuesday, August 16. While the $430 billion package includes many provisions, this article highlights three key areas where you may benefit the most.

1. Tax credits for energy-related home improvements - The bill includes a 30% tax credit for installing energy-efficient windows, heat pumps, or newer appliances. There’s another tax credit for installing solar panels, and up to $14,000 worth of rebates for upgrading to new, energy-efficient appliances.
   
   
2. Expanded EV tax credits - If you have an electric vehicle, you’re in luck! New tax credits are immediately available, with up to $4,000 offered for used EVs and up to $7,500 for new EVs. There’s also a tax credit for installing an electric charger in your home (just read the fine print to ensure you qualify).
   
   
3. Prescription drug caps - Some changes don’t take effect right away. For example, insulin payments will be limited to $35 per month for Medicare Part D beneficiaries starting next year. In 2024, overall out-of-pocket drug costs will be limited to $4,000 annually, dropping to $2,000 in 2025.

New legislation can come with benefits as well as new complexities. For more information on these tax credits and how to strategize how to incorporate these into your retirement, feel free to contact us at California Retirement Advisors where you can speak with a licensed financial advisor.

By Christian Cordoba
CERTIFIED FINANCIAL PLANNER™
Founder, California Retirement Advisors