On August 16, 2022, President Biden signed The Inflation Reduction Act (IRA) into law. The legislation is considered a successor version of the Build Back Better legislative proposals of 2021. The legislation is aimed at reducing the deficit to fight inflation by lowering energy and health care costs. It also purposes to assist with domestic energy production, support manufacturing, and positively impact climate change by reducing carbon emissions by roughly 40% by 2030. If you’re wondering how this newborn legislation may affect you, below are several key tax provisions applicable to individuals and corporations.


  • Premium Tax Credit (PTC): The IRA extends the PTC through 2025. This refundable credit is available to eligible individuals and families to cover the premiums for their health insurance purchased through the Health Insurance Marketplace.
  • Electric Vehicle (EV) Credit: For EVs placed into service after December 31, 2022, the IRA extends the up to $7,500 EV tax credit for 10 years through December 2032. The exact amount of the credit will be based on a calculation that considers factors such as the vehicle’s sourcing and assembly. Additionally, used EVs will now have a separate tax credit of up to the lesser of $4,000 or 30% of the price of the vehicle. Income limitations apply to these credits.
  • Residential Clean Energy Credit: The IRA extends and expands an existing credit which defrays the cost of installing solar panels or other renewable energy equipment, extending the tax break to battery storage technology beginning in 2023. Costs incurred from the beginning of 2022 to the end of 2032 would qualify for a 30% tax credit. The credit would fall to 26% in 2033 and 22% in 2034. Prior to the IRA, individuals were eligible for a 26% break this year and 22% in 2023, after which time the credit was scheduled to end.
  • Nonbusiness Energy Property Credit: The IRA provides a 30% tax credit through 2032 for installing efficient exterior windows, skylights, exterior doors, water heaters, and other items. Homeowners could get up to a $2,000 total annual credit depending on the project. The prior credit was capped at 10% up to $500.
  • Home Energy Rebates: The IRA establishes two grant programs worth $8.8 billion which will be administered by the states according to parameters established by the U.S. Department of Energy. In general, taxpayers who reduce energy usage by 20% in their home would be eligible for a maximum rebate of the lesser of $2,000 or the cost of the project, increasing to a $4,000 maximum rebate when energy usage is reduced by 35%. The rebates are doubled for households with income less than 80% of the median income for their area.


  • Alternative Minimum Tax on Applicable Corporations: The IRA provides a 15% alternative minimum corporate tax for tax years beginning after Dec. 31, 2022. It applies only to corporations with profits over $1 billion and some foreign-owned corporations with profits over $100 million. The tax will be based on adjusted financial statement income, which is different from federal taxable income.
  • Stock Buyback Excise Tax: The IRA introduces a new 1% excise tax on the fair market value of stock repurchased by a publicly traded U.S. corporation. This provision replaced one in prior iterations of the legislation which would have changed tax treatment of carried interests.

Sequoia’s advisors are available to discuss planning opportunities that may apply to your personal and business circumstances based on the Inflation Reduction Act. We will continue to monitor guidance from the Treasury and Internal Revenue Service related to the Inflation Reduction Act, as well as other proposed legislative and regulatory changes including the IRS proposed regulations impacting Required Minimum Distributions (RMDs) and a series of bills commonly referred to as “SECURE 2.0” that would impact other retirement plan-related provisions.

The views expressed represent the opinion of Sequoia Financial Group. The views are subject to change and are not intended as a forecast or guarantee of future results. This material is for informational purposes only. It does not constitute investment advice and is not intended as an endorsement of any specific investment. Stated information is derived from proprietary and nonproprietary sources that have not been independently verified for accuracy or completeness. While Sequoia believes the information to be accurate and reliable, we do not claim or have responsibility for its completeness, accuracy, or reliability. Statements of future expectations, estimates, projections, and other forward-looking statements are based on available information and Sequoia’s view as of the time of these statements. Accordingly, such statements are inherently speculative as they are based on assumptions that may involve known and unknown risks and uncertainties. Actual results, performance or events may differ materially from those expressed or implied in such statements. Investing in equity securities involves risks, including the potential loss of principal. While equities may offer the potential for greater long-term growth than most debt securities, they generally have higher volatility. Past performance is not an indication of future results. Investment advisory services offered through Sequoia Financial Advisors, LLC, an SEC Registered Investment Advisor. Registration as an investment advisor does not imply a certain level of skill or training.

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Investment advisory services offered through Sequoia Financial Advisors, LLC, an SEC Registered Investment Advisor. Registration as an investment advisor does not imply a certain level of skill or training.

Inflation Reduction Act of 2022 | Sequoia Financial Group


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