A Few Highlights of the Recently Signed Reconciliation Bill
The news has been filled with talk about the Reconciliation Bill known as the Inflation Reduction Act of 2022 that was recently signed into law. As is common with most bills, they are lengthy (this one being more than 300 pages) and contain many provisions that are not highlighted and therefore are overlooked. To keep things simple, I will highlight a few of the changes recently enacted:
- There are some changes for corporations with regard to alternative minimum tax as well as stock repurchases.
- The IRS has received an increased budget. The IRS has a budget set by Congress and acts as a collector of taxes on behalf of the U.S. government. Their budget has been slashed in recent years which has led to job cuts affecting taxpayer service. An increase in their budget will enable them to close the “tax gap” which is the difference between what taxes should be collected and what taxes are actually collected. With increased resources, it is hoped that the collection of billions of dollars in uncollected taxes could help to leverage lower taxpayer bills.
- A major portion of the Act is devoted to incentives for green energy. Credits for electric vehicles and residential energy property are provided for as well as credit for the production of clean electricity. Entities involved in the production of clean electricity can receive certain credits due to meeting workforce and wage requirements in construction or operation of the facility.
- Residential Energy Incentives for energy efficient windows and doors and certain HVAC systems and heat pumps are available.
- Purchase of both plug-in electric vehicles and fuel cell vehicles are eligible for credit. This credit has certain limitations such as income and manufacturer’s suggested retail price. New as well as previously-owned clean vehicles can be considered for these credits.
- Also included in the Act are new or extended/modified credits with regard to alternative fuels, efficient homes, biofuels, zero-emission nuclear power facility credit for energy produced, credit for sustainable aviation fuel and production of clean hydrogen.
We can only hope that some of these changes may help consumers to benefit in the long run.
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