Inflation Reduction Act offers rebates for home energy, electric and hybrid autos

Michael Finney Image
Tuesday, September 6, 2022
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"You want to do your home improvement planning and your tax planning at the same time," advises one financial expert.

SAN FRANCISCO (KGO) -- When dealing with the increasing post-pandemic traffic, know that The Inflation Reduction Act can smooth out your ride with rebates for electric and other alternative fuel cars.

Jerry Milenbach lives in a solar-powered home and drives a hybrid car. He says when it comes to rebates and tax credits, take the long view.

"Ten years from now, or twelve years from now on," he says, "you're not going to get that money. So you're going to be ultimately having to buy it without any benefit... extra benefit from it."

A very good point, but in the near term, should you buy now or next year? That is important because next year there are new rules, including limits on how much you can earn and how much the car can cost.

CPA Larry Pon is keeping close track of all this.

"The limit is $300,000. If you're married. Jointly $150,000 if you're single and $225,000 if you're head of household," he says. "Now, the price limits on the car is based on MSRP."

The top price you can pay and still get a rebate is $55,000 for a car, $80,000 for trucks, vans, and SUVs. Play the system and you can save as much as $8,000 on a new electric or alternative energy car.

Now look at your home. The Inflation Reduction Act allows homeowners to get energy credits that can save them thousands of dollars. There are no income restrictions, but if you buy the wrong products you won't see the government savings.

"It's $600 on any one item, $600 for exterior windows and skylights, and $250 for exterior doors up to a maximum of $500 a year," Pon says.

And there are different rules for solar power and storage. Heating systems and hot water appliances. It gets complicated.

Here's some great parting advice from Pon: "You want to do your home improvement planning and your tax planning at the same time."

Bottom line before spending money on home improvements and electric or alternative fueled cars, you will want to stop and make sure you understand the rules before moving forward.

Take a look at more stories and videos by Michael Finney and 7 On Your Side.

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