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By Nick Strain, CFP®, CPWA®, AIF®, Senior Wealth Advisor at Halbert Hargrove

After much negotiation this year in the Senate and House, the Inflation Reduction Act was passed and signed by President Biden on August 16th 2022.

The package includes $368 billion of investment and tax credits to companies investing in renewable energy projects and producing energy from renewable sources. It also includes tax credits for manufacturers to create electric vehicles and other components within the low carbon economy.

The bill will spend $98 billion to extend Affordable Care Act coverage for low to middle income individuals and families for three years. Prescription cost relief to those on Medicare is also a cornerstone of the Inflation Protection Act’s reforms.

The reach of this Act is vast, from changes to the tax code to renewable energy stimulus. But how will it impact your personal finances? Here are three areas that could make a difference.

Electric vehicle and clean energy vehicle purchases

The Act’s provisions for tax credits for new and used vehicles are fairly complex. We suggest that you reach out to your CPA to discuss if you are eligible for a tax credit of up to $7,500 for new electric vehicle (EV) cars and up to $4,000 for used EV cars. Some of the fine print:

  • Those already under contract for a new electric vehicle will be grandfathered into the previous tax credit rules.
  • To receive the potential $7,500 tax credit, buyers need to be under the new income limit of $150,000 for single filers and $300,000 for married couples filing jointly.
  • There’s a MSRP price cap of $55,000 for EV sedans and $80,000 for EV SUV/Trucks.
  • The law allows some cars to receive the tax credit for car manufacturers that have exceeded the current 200,000 production cap. The final assembly of qualifying clean energy cars must take place in North America and minerals and key components must be primarily sourced from North America.
  • Used cars are eligible for a new separate tax credit of either up to $4,000 or 30% of the price of the used EV or clean energy vehicle, whichever is less. The used car must be at least two years old.

Home improvement projects

Many energy-efficient home improvements are eligible for tax rebates. It’s important to keep good records to give to your CPA as part of your tax preparation process, to determine if you are eligible for tax credits. Projects covered by the Act include solar panels, energy storage, and energy-efficient windows and heating systems.


The Act’s changes to Medicare center around prescription drug price reform. These are several of the most impactful:

  • A new out-of-pocket cap on prescription drugs of $2,000 a year will begin in 2025.
  • Medicare will start negotiating pricing on 10 prescription drugs starting in 2026, 15 drugs in 2027, and an additional 20 drugs in 2029.
  • Starting this year, those who are covered by Medicare will only need to pay $35 a month out of pocket for insulin.
  • Other changes include limits on Medicare Part D premium increases; no cost-sharing requirements for vaccines; and an inflation cap on drug price increases.

How are we going to pay for all this?

Since there have been many iterations of this bill, it’s worth noting that there are no direct personal income tax increases on individuals and families.

These are the Act’s chief sources of revenue generation:

  • Creating a new 15% minimum tax rate for very large corporations with over $1 billion on their income statements
  • Imposing a 1% excise tax on certain stock repurchases
  • The Act’s provisions include $80 billion to be added to the IRS budget to hire more IRS staff and improve their systems. The Congressional Budget Office (CBO) estimates that these changes will help collect $204 billion of additional tax revenue for a net of $124 billion over a 10-year period.
  • Changes to Medicare are estimated to save $322 billion.

In fact, the Act’s creators claim that these provisions will ultimately result in a Net Deficit Reduction. With total revenue estimated at $790 billion and a total cost of $485 billion, the envisioned net of $305 billion would decrease the national deficit by that amount.

Will the Act succeed in reducing inflation?

Of course the overarching debate is: Will there be reduction in inflation – and if so, when? According to a study by Penn Wharton of the University of Pennsylvania, “The Act would have no meaningful effect on inflation in the near term but would reduce inflation by around 0.1 percentage points by the middle of the first decade.”[i]

Ultimately, time will tell us about long-term outcomes. For the purposes of this article, the central question for us is how the Act will impact you – and whether there are provisions that could provide opportunities and/or savings for you and your family. Everyone’s experience of the Act’s reforms and tax credits will vary, based on lifestyle, aspirations and resources. We’re here to discuss your options if you’d like to engage with us.



Halbert Hargrove Global Advisors, LLC (“HH”) is an SEC registered investment adviser located in Long Beach, California. Registration does not imply a certain level of skill or training. Additional information about HH, including our registration status, fees, and services can be found at This blog is provided for informational purposes only and should not be construed as personalized investment advice. It should not be construed as a solicitation to offer personal securities transactions or provide personalized investment advice. The information provided does not constitute any legal, tax or accounting advice. We recommend that you seek the advice of a qualified attorney and accountant. All opinions or views reflect the judgment of the author as of the publication date and are subject to change without notice. All information presented herein is considered to be accurate at the time of writing, but no warranty of accuracy is given and no liability in respect of any error or omission is accepted.