During this past year no new tax legislation was enacted.
In 2022 legislation was enacted which went into effect in 2023 that will affect your taxes.
Inflation Reduction Act
- Extended the Residential Clean Energy Credit and increased the amount of the credit. The lifetime credit limitation was removed and replaced by annual credit limitations.
- Changes were made to the Electric Car Credit and is now called the Clean Vehicle Credit. If you purchased a vehicle before Aug. 22, 2022, but it wasn’t delivered until 2023 the old rules apply. Beginning in 2023, the number of units sold limitation has been removed. Also beginning in 2023, there are limits on the credit based on income, price of the vehicle, and where the battery components are made. Also certain used electric vehicles will qualify for the credit.
- Credit for business vehicles also were increased beginning in 2023.
- Beginning in 2024 the Clean Vehicle Credit can be transferred to the dealer to reduce purchase price.
Secure Act 2.02
- Changes were made to when Required Minimum Distributions (RMD) must begin. The age for RMD’s will increase to 73 in 2023 for taxpayers who turn 72 after 2022 and 75 in 2033.
- Beginning in 2023 matching contributions can be made to a Roth account if the employee is 100% vested in the plan. Previously these matching contributions could only be made to pre- tax accounts
- Currently catch-up contributions can only be made on a pretax basis. Beginning in 2023, matching contributions can be made to Roth accounts.
There are inflationary increases to the standard deduction and tax brackets.
In 2024 the first $ 168,600 of earned income will be taxable for Social Security.