The Inflation Reduction Act was signed into law in 2022 and included several tax changes that may encourage more people to invest in sustainable energy improvements. Most of the changes outlined in the act will be in effect beginning in tax year 2023, but some changes may have affected your 2022 return.
Here’s a summary of the tax law changes included in the Inflation Reduction Act and what they could mean for you.
A new Clean Vehicle Tax Credit
Prior to 2023 and the Inflation Reduction Act, the tax credit for electric vehicles (EVs) was called the Plug-In Electric Drive Motor Vehicle Credit.
The Inflation Reduction Act renamed the credit the Clean Vehicle Tax Credit and introduced new eligibility requirements. The new Clean Vehicle Tax Credit applies to tax year 2023 (returns filed in 2024) and later.
Not all EVs – and not all taxpayers – are going to qualify for this tax credit, so it’s important to read the requirements carefully.
How much is the new Clean Vehicle Tax Credit?
The Clean Vehicle Tax Credit is worth up to $7,500 for the purchase of a new vehicle, and up to $4,000 for the purchase of a used vehicle.
Which electric vehicles qualify for the new tax credit?
The new credit applies to any “clean vehicle,” so a hydrogen fuel cell car or a plug-in hybrid vehicle with four to seven kilowatt hours of battery capacity could qualify.
To claim the new Clean Vehicle Credit for a new vehicle:
- If it’s a car, it must cost less than $55,000; if it’s a van, SUV, or pickup truck, it must cost less than $80,000
- Your EV must receive final assembly in North America if purchased after August 17, 2022*
- Your EV must be made by an eligible manufacturer
- Your modified AGI cannot exceed $300,000 if you’re married filing jointly, $225,000 if you’re head of household, or $150,000 if you file as single
To claim the new Clean Vehicle Credit for a used vehicle:
- The vehicle must cost less than $25,000
- Your modified AGI cannot exceed $150,000 if you’re married filing jointly, $112,500 if you’re head of household, or $75,000 if you file as single
*If you signed a purchase agreement before August 16, 2022 for an electric vehicle manufactured outside the U.S., you can still qualify for this credit if all other criteria are met.
Find out if your specific vehicle will qualify for this tax credit at fueleconomy.gov.
Can I claim the EV tax credit using TaxSlayer?
Yes! See how to claim this credit using TaxSlayer.
How much is the new Energy Efficient Home Improvement Tax Credit?
If you purchase energy-efficient equipment for your home between January 1, 2023 and December 31, 2032, you could receive a tax credit worth 30% of the cost of the eligible property, up to $1,200 per year.
Learn all about this credit and how to claim it using TaxSlayer here.
Is there a tax credit for smart appliances?
There isn’t a tax credit for smart appliances. Instead, the Inflation Reduction Act provides a rebate for low- and middle-income families who purchase energy efficient appliances like thermostats, washers and dryers, refrigerators, etc.
