Income limits by year under the Inflation Reduction Act

[shaunshaun]

I think that for an EV credit the income limit is $150,000 and it's the lesser of the current or prior tax year's income (which is good because I qualify for 2023 based on my 2022 income).

What I can't find is whether the sale either-year rule applies to:
Solar panels (I have a carry-forward from last year)

and/or
Electrical panel upgrade

and/or

EV car charger

and/or

Induction range

I may need to increase my taxable income to make sure I use up the non-carry-forwardable $7500 car credit, but not blow past the income limit, which I can do by converting a Roth or taking capital gains.

[DoninGA]

No, the energy efficient home improvements and residential clean energy property credits do not have a sale either-year rule.  There is not an upper income limit to be eligible for either the Residential Clean Energy Credit or the Energy Efficient Home Improvement Credit.

[NCperson]

@shaunshaun - I am a little confused - 

1) the lower of your current year or prior year income is the requirement for the  EV Credit.  So if that is 2022, then you don't have to worry about your 2023 income.  this is my understanding: let's say your 2022 income is $140,000 but your 2023 income is $500,000.  You still qualify in 2023 for the EV Credit based on the income criteria.  

2) you are correct that the EV credit can not be rolled over, but all the energy credits can be rolled over to a future year.  The EV credits are posted first when you complete your 2023 tax return.  So as long as Line 22 of Form 1040 is at least $7500 PRIOR TO the credits being applied, you are able to consume the entire EV Credit. 

Yes, you would need to ensure that your 2023 income is high enough that your 2023 tax liability is at least $7500, but you don't have to worry that you blow past the income limit for EV eligibility (as your 2022 income already satisfies that requirement is the way I read your comments).  Am I missing something? 

[shaunshaun]

Thanks. I know I'm good for the EV credit. I was worrying about income limits for some of the other tax credits, but a previous response says there aren't any (although there are some limits for rebates on appliances based on income vs. average income for my area, which I think is around $130k).

So I'm going to have to walk the fine line between earning enough to get the $7500 EV credit but not too much to qualify for appliance credits.

Unfortunately I don't think that 2023 Turbotax will be released before year-end, right? So tax planning becomes complicated. I have a bunch of carryforwards (solar and charitable donations).

[DoninGA]

Frequently asked questions about energy efficient home improvements and residential clean energy property credits - https://www.irs.gov/pub/taxpros/fs-2022-40.pdf

Note - There are no energy credits for appliances such as stoves, ovens or dishwashers on a federal tax return.

Q1. What home improvements are eligible for the Energy Efficient Home Improvement Credit, and how much is the credit? (added December 22, 2022)
A1. The following energy efficient home improvements are eligible for the Energy Efficient Home Improvement Credit:
• Building envelope components satisfying the energy efficiency requirements in Q1 under the Energy Efficiency
Requirements section:
o exterior doors (30% of costs up to $250 per door, up to a total of $500);
o exterior windows and skylights (30% of costs up to $600); and
o insulation materials or systems and air sealing materials or systems (30% of costs).
• Home energy audits (30% of costs up to $150, see Q5 under General Questions section).
• Residential energy property (30% of costs, including labor, up to $600 for each item) satisfying the energy
efficiency requirements in Q1 under the Energy Efficiency Requirements section:
o central air conditioners;
o natural gas, propane, or oil water heaters;
o natural gas, propane, or oil furnaces and hot water boilers; and
o improvements to or replacements of panelboards, sub-panelboards, branch circuits, or feeders that are
installed along with building envelope components or other energy property listed in these FAQs and
enable its installation and use.
• Heat pumps and biomass stoves and biomass boilers (30% of costs, including labor) satisfying the energy
efficiency requirements in Q1 under the Energy Efficiency Requirements section:
o electric or natural gas heat pump water heaters;
o electric or natural gas heat pumps; and
o biomass stoves and biomass boilers.

Q2. Is there a limit on the amount of the Energy Efficient Home Improvement Credit that I can claim? (added
December 22, 2022)
A2. Yes. There is a $1,200 aggregate yearly tax credit maximum for all building envelope components, home energy audits, and energy property. Electric or natural gas heat pump water heaters, electric or natural gas heat pumps, and biomass stoves and biomass boilers have a separate aggregate yearly credit limit of $2,000. Thus, the maximum total yearly energy efficient home improvement credit amount may be up to $3,200.

[NCperson]

@shaunshaun try out this website for 2023 planning -quite accurate 

https://www.dinkytown.net/java/1040-tax-calculator.html