Individual Tax Services

The Inflation Reduction Act Includes Wide-Ranging Tax Provisions

Inflation Reduction Act (IRA) was signed into law on August 16, 2022. The IRA includes significant provisions related to climate change, health care, and, of course, taxes. The IRA also addresses the federal budget deficit. According to the Congressional Budget Office (CBO), the IRA is projected to reduce the deficit by around $90 billion over the next 10 years.

Recorded Webinar: Tax Impacts for Business Owners: Inflation Reduction Act and More!

Although the IRA falls far short of Biden’s originally proposed $2 trillion Build Back Better Act, the $430 billion package nonetheless is a sprawling piece of legislation bound to affect most Americans over time. Here’s an overview of some of what the bill includes.

Inflation Reduction Act Overview

What are the Latest Tax Updates?

What are the 2022 Tax Rates and Deductions?

Individual Tax Rates: 2022 tax bracket thresholds were increased by approximately 1% over 2020 levels. Download the SVA tax guide: 2022 Tax Rate Card
Standard Deduction:

Single: $12,950
Head of Household: $19,400
Married Filing Jointly: $25,900
Married Filing Separately: $12,950

Child Tax Credit: $2,000 per qualifying child/year. The eligibility is extended to age 17.
Alternative Minimum Tax (AMT):
- Single or Head of Household: $75,900
- Married Filing Jointly: $118,100
- Married Filing Separately: $59,050
- Single or Head of Household: $539,900 - $843,500
- Married Filing Jointly: $1,079,800 - $1,552,200
- Married Filing Separately: $539,900 - $776,100

Exemption Phaseouts Based on AMT Income:

Estate and Gift Tax Exemption: The lifetime exemption is $12,060,000 with a top tax rate of 40%. A surviving spouse may be able to use the deceased spouse’s unused estate tax exemption. The annual gift tax exclusion is $16,600 per recipient ($32,300 if spouses elect “split-gift” treatment.
Section 199A Deduction for Owners of Pass-Through Entities: Up to 20% of qualified business income is subject to various limitations. When an owner’s taxable income exceeds $170,050 ($340,100 for joint filers), the following limits are phased in over a $50,000 range ($100,000 range for joint filers):
- 50% of the amount of W-2 wages paid to employees by the qualified business during the tax year, or
- The sum of 25% of W-2 wages plus 2.5% of the cost of qualified property.

Deduction isn’t available for income from specified service businesses.
Deduction can’t exceed the greater of the owner’s share of:

Section 179 Expensing and Bonus Depreciation:

Section 179 expensing limit: $1,080,000
Section 179 phaseout threshold: $2,700,000
Bonus depreciation limit: 100%

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Services Offered: How SVA Can Help

Business professionals need easy access to information to make timely decisions. SVA has what you need, when you need it. Choose a topic below or just contact us directly. Our expertise is ready anytime you need it.

Planning for current and future education expenses is especially important. Several tax incentives can help reduce the cost of paying for higher education. These incentives include the American Opportunity Tax Credit, Lifetime Learning Credit, Qualified Tuition Programs, Student Loan Interest Deduction, 529 Plans, and the Coverdell Education Savings Account. The incentives can be a credit deduction or exclusion and may be limited by income.

The more you pay in taxes, the less money you have to invest in your personal financial goals. The key to reducing your tax liability rests in proactive planning. We can identify and implement key planning opportunities to minimize your current tax liability. Reach out to our experienced tax professionals who can look at your overall tax situation and help you understand and reduce your tax impact.

We can help you with:

At Risk Rules and Passive Activity
Individual Audit Assistance
Divorce Tax Planning
Health Savings Accounts (HSAs) Planning
Payment Planning
Stock-Based Compensation Planning
Tax Planning for Retirement
Estate and Trust Tax Planning
Charitable Giving Strategies

Being delinquent in your tax payments can result in a vast array of problems and cause substantial amounts of undue stress. Our qualified professionals can work with you in dealing with the IRS and other taxing authorities on delinquent tax liability, tax penalty, and interest issues, as well as challenges in your ability to pay the amount due. Offer in Compromise (OIC), bankruptcy, and negotiated payment schedules are a few of the strategies we can utilize in helping you deal with delinquent and disputed tax issues.