The Inflation Reduction Act was signed into law on Tuesday, August 16. Although it's questionable if the bill will actually reduce inflation, the $430 billion package includes many provisions that may affect you. Here are some key areas where you may be affected the most.
- 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.
- 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, but be sure to read the fine print to ensure you qualify.
- Prescription drug caps – Medicare can now negotiate the price of certain prescription drugs, which should bring down the price of medications for those with Medicare. There are some changes to the prescription drug caps for Medicare as well, but some of them 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.
- IRS tax enforcement – The IRS has been considered underfunded for years, but the bill provides $80 billion to the IRS over the next 10 years. The additional funding is expected to be used in large part for the IRS to increase audits of taxpayers.
- Affordable Care Act (ACA) subsidy extension – The federal subsidies to lower medical insurance premiums were expected to expire at the end of this year, but have been extended through 2025.
The changes in the Inflation Reduction Act could have an impact on your financial plan. For a financial plan update, or if you're interested in receiving assistance and advice with comprehensive financial planning, feel free to...
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