Sign up for our tax news emails for the latest tax changes:

    We will not share your email with anyone else

    Inflation Reduction Act

    The Inflation Reduction Act of 2022 was enacted on August 16, 2022, and it contains important new tax provisions.

    The new law provides for an expanded residential energy credit. The credit, reported on Part II on page 2 of Form 5695, Residential Energy Credits, was subject to a lifetime limit of $500, and it most recently expired after December 31, 2021. The new law extends the credit so that it now expires after 2032.  Beginning in 2023, the credit is also expanded; the $500 lifetime limit will be replaced with an annual limit of up to $1,200 per year for qualified expenses, but there will be lower limits for specific types of residential energy property expenses.

    The new law extends the expiration date for the limit on business losses that is reported on Form 461, Limitation on Business Losses. The limit was scheduled to expire after 2026, and the new law changes the expiration date to after 2028.

    The new law extends the credit for the purchase of plug-in electric vehicles so that it now expires after 2032. It removes the limit on the credit that prohibited buyers from taking the credit once a manufacturer had produced a certain number of vehicles, but it adds new requirements about where the vehicle is assembled and where components of the vehicle are made. The new law also permits the credit for certain purchases of qualifying used vehicles.

    The new law also adds new credits for businesses and extends certain expiring credits to promote the production of energy from renewable sources.

    The new law also imposes a new alternative minimum tax on certain C corporations (generally applicable only if income exceeds $1 billion), and a new excise tax on publicly-traded corporations that buy back their own shares.

    The new law provides increased funding for the IRS. More than half of the appropriated funds are for increased enforcement and audit activities. The remaining appropriation is for improving customer service, modernizing the IRS systems and other operational support,

    We will discuss the new tax provisions from this law and provide practical details and in-depth guidance in our upcoming seminars in December and January. If you are not already registered, register here.

    The information provided herein is provided with the understanding that the author and publisher are not engaged in rendering legal, accounting or other professional service. As such, M + O = CPE, Inc. and the author disclaim any responsibility or liability for the information supplied herein or the application of said information.