It seems like 2023 will be a better year for Americans who are concerned about the dangerous effect of climate change and the staggering effect of inflation.
From the newly released inflation adjustments with a wider tax bracket that could significantly reduce your tax bill in 2023 to the climate tax breaks under the Inflation Reduction Act of 2022, there are a lot of ways your tax specialist can help you save more tax money in 2023.
Did you know you could save over $10,000 with the new climate tax breaks? Here’s why!
As pollutants are increasingly destroying the climate, it’s only a matter of time before severe climate disasters destroy the earth if nothing is done, and that’s why the Inflation Reduction Act was created. Although the Inflation Reduction act contains several incentives for companies to decarbonize, it also includes a rare gem that quietly encourages the Clean Air Act.
The Inflation reduction act includes a lump sum of dollars in tax credits and rebates for consumers who install solar panels, buy electric vehicles or upgrade their homes to become energy efficient. This IRA package is projected to pump about $369 billion into measures to combat climate change, reduce electricity costs, and boost consumer energy security.
What Climate Tax Breaks Can You Enjoy In The Inflation Reduction Act Of 2022?
Beyond the financial incentives, you’ll learn from your tax specialist that when you make efficiency-focused home or business upgrades, you’ll be reaping direct benefits such as lower heating and electric bills. There are a lot of benefits to enjoy from climate tax breaks. Whether you are buying a new electric car or buying renewable energy, here’s a closer look at the benefits.
Save Up To $1,250 On Energy-Efficient Appliances
With the new climate tax breaks, you can get tax credits for buying new energy-efficient appliances and products such as:
- Energy Star air source heat pumps: $300 tax credit
- Energy Star central air conditioning units: $300 tax credit
- Energy Star gas, propane, and oil furnaces and fans: $150 tax credit
- Energy Star non-solar water heaters (gas or electric): $300 tax credit
- Advanced main circulating fan: $50 tax credit for fans that don’t consume more than 2% of your furnace’s total energy
- Energy Star gas-powered boilers: $150 tax credit
Get Up To $1,500 On Energy Efficient Home Improvements
In addition to energy-efficient appliances, your tax specialist will tell you that you can also get climate tax breaks when you invest in the following climate-friendly projects:
Roofs: save up to $500 with a tax credit that gives you 10% of the amount you spend on an energy-efficient roof. However, roofing must be Energy Star-certified asphalt or metal with the appropriate cooling granules or pigment coatings.
Insulation: save up to $500 with a tax credit that gives you 10% of your qualifying insulation purchases. Qualifying purchases for insulation include expanding sprays, batts, rolls, rigid boards, spray foam in a can, blow-in fibers, weather stripping, caulk, and house wrap.
Windows, doors, and skylights: save up to $500 with a tax credit that gives you 10% of the amount you spend on Energy Star-certified windows, skylights, and doors.
30% Tax Credit On Renewable Home Energy Systems
If you’ve been considering investing in renewable energy for your home or business, this year might be a good time to start. The other catch is that, unlike the home improvement credit, you can also include installation costs when calculating the credit. The following renewable home energy systems are eligible for tax credits worth 30% of their price if installed between 2022 and 2032.
- Solar water heaters
- Solar panels
- Fuel cells
- Biomass fuel stoves
- Geothermal heat pumps
- Small wind turbines
Save Up To $7,500 Tax Credit For New Vehicles.
When you buy new energy-efficient vehicles like electric cars, plug-in hybrids, and hydrogen fuel cells, you’ll be eligible for a tax credit worth up to $7,500. In addition, if you’re buying pre-owned electric vehicles, you’ll have access to a $4,000 tax credit. A big bonus from this tax break is that you don’t have to wait till tax time to receive the benefits.
However, the downside is that there are limits that apply to the buyer and the vehicle they buy for both used and new vehicles.
Income requirement: for new vehicles, married couples can only qualify for the tax break if their modified adjusted gross income on a joint tax return is less than $300,000. The limit for single tax filers is $150,000. For used electric vehicles, consumers will qualify if their modified adjusted gross income is less than $150,000 for married couples or $75,000 for single filers.
Vehicle price: with new electric vehicles, for your sport utility vehicle, van, or pickup truck, the sales price can’t be more than $80,000. Other vehicles come with a sticker price of $55,000. For pre-owned vehicles, the sales price can’t exceed $25,000
Go Green And Save More Money.
If you’re passionate about lowering your carbon footprint and you’ve been considering going green, there’s no better time to start. These climate tax breaks save you more money by reducing your utility bill and home maintenance expenses. However, while the climate tax breaks are great, it is also essential to research and understands the rebates and tax credits you are eligible for to enjoy the maximum benefit. So whenever you’re ready to go green, you need a tax specialist like Tax Goddess to help you do the vital research, maximize your benefits and save more tax money.
Ready to go green? Contact the Tax Goddess Team to help you make the most of it and claim all the tax breaks you can!
