Yahoo Finance 7 Biden-Backed Tax Incentives To See if You Qualify For Before the End of 2023
Almost every day, the federal government enacts policy changes through the executive branch and its agencies, but only a few will grab headlines like economic impact payments, child tax credits or student loan forgiveness proposals have during President Joe Biden’s tenure.
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When the Inflation Reduction Act (IRA) was passed in August 2022, it included provisions to raise corporate taxes, lower prescription drug costs and reduce the federal deficit. But it also contained the single biggest investment in climate in U.S. history and provided tax incentives to help Americans with the transition to clean energy.
Many Biden-backed incentives are available to those making efficiency improvements to their homes and to their drives. That’s a start, but there are also other tax breaks you need to look into before 2023 draws to a close.
While many incentives don’t expire this year, making sure you’re eligible for certain government programs or getting improvements done before the end of the year can save you a lot when the time comes to file your 2023 taxes. Some states have rebate programs for efficiency upgrades that can be combined with federal initiatives, so you owe it to yourself to look into those tax breaks, too.
1. Home Energy Assessments
According to the IRS, there are limits on the allowable annual credits and on the amount of credit for certain types of qualified expenses. For home energy audits, assessments that determine how much energy your home consumes and give you an idea of how to improve the comfort of your home, a $150 credit is available.
2. Heat Pumps
The tax credit for heat pumps provided by the IRA is good for 30% of the total cost of what you paid for your heat pump, including the cost of labor, up to $2,000 and is available through the end of 2032. Qualified electrification projects include heat pump water heaters (up to a $1,750 rebate) and heat pump HVAC systems (up to a $8,000 rebate). For this tax credit program, the new incentives applies to equipment installed on Jan. 1, 2023 or later.
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3. Home-Efficient Electrification
The $4.28 billion High-Efficiency Electric Home Rebate Program is providing rebates to Americans and is be administered by each state. The program runs through Sept. 30, 2031, and has a maximum rebate total of $14,000. To qualify for these rebates, a household income must not exceed 150% of the area median income as calculated by the Department of Housing and Urban Development (HUD).
Additional rebates available for upgrading electrical panels (up to $4,000 rebate), insulating and sealing a house (up to $1,600 rebate) and repairing wiring (up to $2,500 rebate) are now up for grabs, as are rebates up to $840 for electric load service panels and electric appliances.
4. Solar Panels
Homeowners who install residential solar panels or solar battery systems (with at least 3 kilowatt-hours of capacity) will qualify for a 30% tax credit for installations until Dec. 31, 2034, according to the IRA (but this credit dips to 26% for installations after Dec. 31, 2032, and before January 1, 2034). You might be eligible for this tax credit if your solar PV (photovoltaic) system was installed between Jan. 1, 2017.
5. Electric Vehicles
If you make under $150,000 or have a combined family income under $300,000, you can get a $7,500 tax credit for qualifying new electric vehicles. For used electric cars, a $4,000 credit is available to anyone buying one for under $25,000 from a dealer. To qualify, individuals can make up to $75,000 a year or $150,000 a year in jointly filed taxes
Those looking for alternatives to cars, SUVs and trucks might be in luck in 2024 as far as incentives go. There’s a lot of state-administered active and proposed E-bike programs gaining attention, so keep an eye out for these incentive programs to expand next year.
6. Child Tax Credit
The child tax credit, expanded significantly by the American Rescue Plan Act (ARP) for 2021, created the largest U.S. child tax credit ever and gave most working families $3,000 per child under 18 years of age ($3,600 per child six and younger).
While the credit reverted to its original maximum amount of $2,000 per child in 2022 under Biden’s charge, parents shouldn’t forget about this still-generous credit. For taxes filed in 2024, the partially refundable portion has risen to $1,600. If you have children, don’t forget to look into the Child and Dependent Care Credit and, for those with kids in college, the American Opportunity Tax Credit and the Lifetime Learning Credit.
7. 401(k) Contributions
Whether you have kids or not, you absolutely need to figure out which parts of your income contributions are tax deductible, regardless of who is running the country. Contribution limits change every year and under different government administrations, so there is always an opportunity to get some money back.
401(k) retirement accounts that are usually sponsored by employers are tax deferred. In 2022, the contribution limit was $20,500 ($27,000 if you were 50 or older). In 2023, those limits are $22,500 ($30,000 for those 50 and above). Check out your eligibility for the Saver’s Credit and any other deductions available to you as an IRA contributor.
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