The Inflation Reduction Act of 2022 will make a historic down payment on deficit reduction to fight inflation, invest in domestic energy production and manufacturing, and reduce carbon emissions by roughly 40 percent by 2030. But what does this all mean to you and your family as it pertains to acquiring and preserving wealth. IDA’s Financial Planner and Wealth Adviser, David Reyes, CFP®, EA, AIF® breaks down the Inflation Reduction Act (IRA) 2022 that was just signed in to law by President Biden.
Financial Planning Related
- Significant relief on prescription drug prices for Medicare enrollees by allowing the government to negotiate on some drugs and by placing a $2,000 per year out-of-pocket cap on prescription drug costs starting in 2025.
- For individuals enrolled in Affordable Care Act exchange plans, the bill would also extend the expanded Premium Tax Credit (PTC) eligibility for moderate- to higher-income taxpayers for an additional three years, until 2025.
- Provisions aimed at increasing affordability for individuals making energy efficiency improvements, including tax credits for new doors and windows, energy-efficient appliances, insulation, and solar panels.
- Reduce the number of EVs eligible for the EV Credit by requiring components be sourced here in North America.
Non-Financial Planning Related
- An additional $80 billion in funding for the IRS over the next 10 years mostly to increase audit rates.
- Create a task force for designing a free “Direct E-file” tax return system for individuals to file their tax returns directly with the IRS. This has been heavily lobbied against by tax preparation software providers like Intuit and H&R Block that benefit from the lack of a free, government-owned option.
- A new minimum tax on certain billion-dollar corporations
- More than $300 billion will be invested in energy and climate reform
Goal of Act
- Expand Medicare benefits
- Reduce carbon emissions
- Lower energy bills
- Lower health care costs
- Create manufacturing jobs
- Deficit reduction
We would be happy to discuss how the Inflation Act may effect you and are available for complimentary consultations.
This is for educational and informational purposes only and should not be considered investment or tax advice, a recommendation to buy or sell securities, a solicitation, or intended to infer that the approach to investing discussed in this presentation will assure any particular results. Information in this report has been provided by Intelligence Driven Advisers and https://www.congress.gov/bill/117th-congress/house-bill/5376 and is based on their views and opinions as of the date of publication which are subject to change due to changes in market or economic conditions. Intelligence Driven Advisers is an SEC registered investment adviser; however, such registration does not imply a certain level of skill or training and no inference to the contrary should be made. For detailed information about our services and fees, please read our Form ADV Part 2A, which can be found at https://www.advisorinfo.sec.gov or by calling us at (760) 707-5555. The information presented here does not represent specific tax or legal advice, any tax or legal questions should be addressed with your tax and/or legal advisor.