The Inflation Protection Act (IRA) is expected to be passed by Congress this weekend and signed into law by the President shortly thereafter. This is an appropriate time to repeat a reminder that there will be no significant change in income tax liability to anyone reading our publications. This message repeats the tax forecast offered in 2020 and repeated in 2021, shared by virtually all professional tax forecasters including ABA and AICPA, that predict no significant tax changes for the vast majority of Americans under the 2020-2022 federal government structure.
In other words, there is no reason to call your tax adviser to schedule a talk about modifying your tax strategy to adapt to the new law. Your adviser may be pleased to hear from you as a social thing, but not because a planning meeting is triggered now.
The reminder of ‘no change’ is triggered by the unusual pattern of political and social media messages that imply something different. Already this week tax professionals report receiving phone calls from clients anxious about the changes the new law will bring. A scan of social media reveals a torrent of propaganda by those opposed to the new law, much of it completely void of factual basis.
Based on this, we can anticipate tax questions like “But I read on ….”. It’s not true.
To put the new law into perspective, the most significant tax change in IRA that may might possibly affect a small number of working-class Americans is the replacement of the $500 lifetime energy efficiency tax credit with a $500 annual limit. The number of items that trigger the credit will increase. So if you are
Also, for the relative few who may purchase electric vehicles, there may be a difference in the amount and method that the tax credit will be factored into the price. In many cases the buyers likely will not notice the change in credit since the credit partly offsets an increase in the price of the vehicles. Both of these may be factored into their monthly auto payments as a hidden cost component.