New Tax law changes

Hello,

For retirees, you likely won’t notice a difference in your tax situation, unless your income is over $400,000 per year.

Healthcare Tax Benefits

The tax law extends healthcare subsidies if health insurance is purchased in the Health Insurance Marketplace, further extending benefits that were expanded for 2021 and 2022 under the American Rescue Plan. Healthcare subsidies can help lower the health insurance premiums you pay and can also show up as a premium tax credit when you file your taxes if you don’t receive enough subsidy based on your income when you purchase health insurance in the Health Insurance Marketplace. The Premium Tax Credit is generally available to people with households between 100% and 400% of the Federal Poverty Level, but under the American Rescue Plan individuals with income above 400% of the Federal Poverty Level were eligible for the Premium Tax Credit for tax year 2021 and 2022 only. Under the Inflation Reduction Act these benefits will continue.

The law also caps Medicare beneficiaries out-of-pocket  expenses for prescription drugs at $2,000 per year and will allow Medicare to negotiate some of the more expensive drugs on the market.

Energy Subsidies

While perhaps not the most impactful for retirees, the energy subsidies included in the Inflation Reduction Act may still be helpful for a retired population. There are several credits included in the Act that provide relief for those purchasing electric vehicles, either new or used.

There are also energy rebates available for low-income households for various energy-efficient appliances, such as heat pumps or hot water heaters. These rebates can help with the cost of the item and installation, and the energy savings can help with reducing the cost of operation over the course of ownership.