On August 16, 2022, the inflation reduction Act was signed and came into law. According to the experts, the act needs formidable changes and strategies to be more effective in reducing inflation. There are many economical changes which need to be made that include keeping pharmaceutical products more affordable for the common people. It also includes the preservation of health insurance and prescription drugs more economical for the citizens. The act needs the creation of incentives and enticements to produce cleaner energy by cutting down the taxes of companies involved in services. The trucking corporations that deliver services on a smaller scale, did not receive many benefits. Though there are many new opportunities to save tax money.
The senate democrats stated their goals of the inflation reduction act:
- Brighter prospects for Investments
- Creation of more energy credits for electric vehicles and residential apartments
- For the making of historic climate investment
- Lowering health care costs
- Extension of Affordable care act by 2030
- Creation of manufacturing jobs
- Closing of tax loopholes in use by multi-national corporations
The budget of the Inflation Reduction Act is more than $370 billion in incentives for energy and climate-related programs. Therefore, the incentives will be seen in the form of tax credits. The new tax credits will have the following effect on the owner-operators
Tax Credit For Brand-New Electric Vehicles
- 30% of the credit for the electric vehicle ($8000)
- Not allowance of adjusted blatant income of more than $300,000 married filing jointly ($150,000 single)
- Cost of vehicle should be less than $80,000 in terms of SUV, truck, or Van ($55,000 for other vehicles)
Tax Credit For Used Electric Vehicles
- 30% on the price of commercial electric vehicles (more than $4,000)
- The vehicle must be purchased from the dealership
- Should not have blatant gross income over $150,000 married filing jointly ($75,000 single)
- Cost of the vehicle should be less than $25,000
- Model year should always be 2 years prior to the year of purchase
- There is a three-year waiting period for receiving the credit again
Energy Tax Credits for Electric Tractor Trailers
- The credits are available for more than $40,000
- Rough estimation for the upfront costs of electric tractors at the estimation of $300,000(which is roughly twice the price of a Class 8 diesel vehicle)
This credit push can support trucking companies to purchase new fleets of electric vehicles. Therefore, it is not necessary to go out and purchase an electric vehicle based on a tax credit. There is a massive difference in the cost between an electric truck and an internal combustion engine which can vary from thousands of dollars. The credit of $40,000 is not enough to keep up with the difference. The analysis of the number of charging stations is yet to be seen and they can keep up with the number of electric vehicles. This could make the parking situation more difficult for truck drivers. If you have plans for the acquisition of electric tractors, the following facts must be kept in consideration:
- Communication with original equipment manufacturer (OEM).
- Analysis of the charging stations along the driving route
- Planning of the time that is taken for the charging of the battery.
- Check-ups with accomplished mechanics who are experienced in the repairs of electric vehicles.
Health Insurance and Care
The subsidies which were brought in by the affordable care act have been significantly extended by the inflation reduction act. Precisely, it has extended the subsidies which were brought by the premiums of health insurance. The subsidies will expire in 2023, but they will be extended by 2025 by the onset of the Inflation reduction act.
The owner-operators might find it difficult to find cheaper health insurance as employer coverage, but the employees are usually provided with affordable health insurance options. The extensions will provide more options for those who are self-employed over longer durations of time. The owner-operators must search the federal marketplace to check if they are qualified for the subsidies.
It is very important that the income levels are qualified enough to apply for the subsidy. In case, the income levels are more than the subsidies granted then the chunk or an entire number of subsidies are payable back to the IRS as the penalties.
The main goal of the Inflation reduction act is to significantly lower the amounts of health care costs. By 2024, the out-of-pocket drugs will be sold by $4000, and $2000 by the next year.
The insulin will be sold at $35 per month and vaccinations will continue to be free of cost. In case, the prices of drugs are increased at rates faster than inflation, the pharmaceutical companies will serve the rebates to the affected ones. All in all, it is a good disclosure for the owner-operators.