Inflation Reduction Act: The Tax Changes That Affect You

The Clean Vehicle Credit (formerly EV credit)

• Up to $7,500 for new qualifying clean vehicles
• Up to $4,000 for used clean vehicles (additional rules)
• Income caps: $300K MFJ / $150K single (new); $150K MFJ / $75K single (used)
• Price caps: $80K SUVs/trucks/vans, $55K cars
• Strict manufacturing and battery sourcing rules
• Starting 2024: can be transferred to dealer for point-of-sale price reduction

Energy Efficient Home Improvement Credit

Annual credit of 30% of qualifying costs, with category caps:

• $1,200 annual aggregate cap
• $2,000 separate cap for heat pumps, heat pump water heaters, biomass stoves
• $600 windows, $500 doors, $150 home energy audit
• Per-year cap — resets annually, plan multi-year projects

Residential Clean Energy Credit

30% of qualifying solar panels, solar water heating, wind, geothermal heat pumps, battery storage, fuel cells. No annual or lifetime cap through 2032, then phases down through 2034.

Premium Tax Credit (ACA) extended

The IRA extended the enhanced ACA Premium Tax Credit through 2025. Removed the 400% Federal Poverty Level 'subsidy cliff' — more middle-income households now qualify for marketplace subsidies.

Medicare drug pricing changes

• Medicare can now negotiate prices on select high-cost drugs (starting 2026)
• Out-of-pocket drug costs capped at $2,000/year starting 2025
• Insulin capped at $35/month for Medicare beneficiaries
• Free vaccines for Medicare Part D enrollees

IRS funding boost

The IRA allocated ~$80 billion to the IRS over 10 years (later partly reduced) — funding technology upgrades, taxpayer service improvements, and expanded enforcement targeted at high-income filers and large corporations.

Corporate minimum tax and stock buyback excise

• 15% corporate alternative minimum tax on book income for very large corporations
• 1% excise tax on net corporate stock buybacks

Both apply at the entity level — limited direct impact on individual returns.