Income Planning to Keep Your Medicare Part B Premiums From Increasing

Medicare Part B covers certain doctor services, outpatient care, medical supplies and preventive services. You pay a monthly premium for Part B that is automatically deducted from your Social Security benefit payment.

Most people will pay the standard premium amount. If your modified adjusted gross income (MAGI) is above a certain amount, you may be charged an Income Related Monthly Adjustment Amount (IRMAA) - basically a higher premium.

Your MAGI is your total Adjusted Gross Income plus tax-exempt interest income, non-taxable Social Security benefits and untaxed foreign income on your tax return.

Medicare uses the MAGI reported on your IRS tax return from 2 years ago to determine your current year premium.

For example, the standard Part B premium in 2023 is $164.90. If your MAGI on your 2021 return was $97,000 or less if single or $194,000 or less on a joint tax return, you pay the standard 2023 premium.

If the MAGI on your 2021 tax return was between $97,000 up to $123,000 (single taxpayers) or between $194,000 up to $246,000 on a joint return, your 2023 premium would be $230.80.

There are additional income ranges that can bring your monthly premium as high as $560.50 per month in 2023, if your MAGI in 2020 was $500,000 or more for single or $750,000 or more for joint taxpayers. Visit www.medicare.gov/your-medicare-costs/part-b-costs for more details.

These bunnies are too young for Medicare but are discussing future healthcare options nonetheless.

ARE YOU FILING AS MARRIED FILING SEPARATELY? BE CAREFUL!! If your individual MAGI is above $97,000 and less than $403,000, your monthly premium jumps from $164.90 to $527.50. That’s a huge jump.

TAX PLANNING: Let’s say you are single and have $45,000 in Social Security, $35,000 in IRA distributions and $15,000 in interest and dividends in 2021. That brings you to $95,000 in MAGI, which is below the $97,000 threshold where they increase your premiums. If you sold a stock for a $2,001 gain, that would bring you to $97,001 in MAGI and your monthly premium would jump by $66 per month. Perhaps it would be wise to wait and sell that stock in 2022.

The only problem is, Medicare doesn’t announce next year’s premium parameters until the fall, which usually is after you’ve filed your previous year tax returns. What to do?

Well here we are near the end of 2023, which will be used to establish 2025 Part B premiums. The best you can do is just use the 2021 parameters and plan accordingly.

The MAGI cut-off for standard premiums in recent years have changed as follows:

• 2021 (for 2023): $97,000 (single), $194,000 (joint)

• 2020 (for 2022): $91,000, $182,000

• 2019 (for 2021): $88,000, $176,000

• 2018 (for 2020): $87,000, $174,000

• 2015-2017 (for 2017-2019): $85,000, $170,000

What happens if your income jumps really high one year? You sell a rental property, win the Lotto, take a new job, etc. Well, your premiums will jump if your MAGI leaps over those income parameters. Not much you can do about it. The good news is that it will drop back down the following year if your MAGI drops below the income threshold.

There are some unique situations where you are allowed to an appeal a Part B premium IRMAA after you receive your notice from the Social Security Administration. Certain life-changing events that cause an income decrease can be considered to reduce your premium, such as death of a spouse, marriage, divorce, reduction in work hours, loss of pension, involuntary loss of income-producing property due to a disaster and receipt of settlement from employer due to closure or bankruptcy.

Visit www.medicare.gov for more information.

All About the Previously Owned Clean Vehicle Credit

NOTE: New legislation signed in July 2025 eliminates the Previously Owned Clean Vehicle Credit beginning in October 2025.

A brand new tax credit, the Previously Owned Clean Vehicle Credit, came about from the Inflation Reduction Act of 2022. This new credit applies to pre-owned all-electric, plug-in hybrid and fuel cell electric vehicles purchased on or after January 1, 2023 through 2032. The credit, which is non-refundable, is 30% of the sales price, up to a maximum credit of $4,000.

As with pretty much every tax law, lawmakers made sure to make the requirements for this credit as confusing as possible. Here are the main parameters:

• The sales price, exclusive of taxes ad fees, much be $25,000 or less.

• The model year of the car must be at least two years prior to the calendar year the car is purchased.

• The car must be purchased from a licensed dealer, not a private party.

• The buyer’s modified adjusted gross income (AGI) cannot exceed $150,000 for married filing jointly taxpayers, $112,500 for head of household filing status and $75,000 for other taxpayers, in either the year of purchase or the previous year.

• The buyer cannot be claimed as a dependent by someone else.

• You can’t claim the credit more than once every three years, based on the actual purchase date of the car.

• The credit is applicable per taxpayer; the IRS as of this writing has not clarified if both spouses could claim the credit within the same three-year period. (That said, in theory they could file separately in the years they claim the credit.)

There are other specifics listed at www.fueleconomy.gov/feg/taxused.shtml#requirements.

Another important detail is that vehicles are only eligible for the credit for the first qualifying sale taking place on or after August 16, 2022. In other words, a used clean vehicle is not eligible for the credit after the first time, after 8/16/22, it is re-sold for $25,000 or less. How in the world will we know if that’s the case? Ask the dealer. They will know. What this means is that two cars with the same make, model and features offered at the same price of $25,000 or less…one them could be eligible for the credit while the other one is not.

As mentioned above, this is a non-refundable credit. This means that if you take the credit on your tax return, but your federal taxes are less than the credit, the excess goes away.

But wait…there’s a solution for that beginning in 2024! Starting this year, the credit can be transferred to the dealer and applied towards the sales price. The dealer, in turn, will receive the full credit from the IRS. The only catch is that you have to meet the AGI requirements mentioned above. If you file your tax return and do not meet those requirements, you’ll have to pay back the credit with your return. Whether you claim the credit at the dealer or on your return, you have to report the purchase on Form 8936.

Let’s use an example:

George is single and decides he wants to purchase a used EV. George expects his income to be $90,000 in 2024, but his 2023 return showed $70,000 in AGI, which qualifies him for the credit in 2024. He goes to the CarMax website and searches for electric cars at a price of $25,000 or less that are shown at www.fueleconomy.gov/feg/taxused.shtml.

George finds a 2013 Chevy Bolt for $13,000 but it shows it has had two owners. If it was already re-sold by a dealer to the 2nd owner after 8/16/22 for $25,000 or less, it is not eligible for the credit. The dealer will be able to tell you if this is the case. But let’s assume the previous sale took place before that date. George purchases the car for $13,000 plus sales taxes, license fees, etc., less the credit, because he chooses to transfer the credit to the dealer. The credit is 30% times $13,000, or $3,900. Enjoy your used Chevy Bolt, George! (Let’s hope the car’s battery still holds a decent charge.)

Looking for information on NEW clean vehicle car tax credits? Visit www.fueleconomy.gov/feg/tax2023.shtml.

What is Head of Household Filing Status and Who Qualifies for It?

My hair stylist brought up the fact that her elderly mother is going to move in with her and was wondering if that will benefit her taxwise. I told her she may be eligible to use the “Head of Household” filing status on her tax return, which could save her in taxes.

Filing Status Overview

The IRS has four tax filing statuses - Married Filing Jointly, Married Filing Separately, Single, Head of Household and Qualifying Surviving Spouse (before 2022, this was referred to as Qualifying Widow(er)). More than one filing status can apply to you; it is up to you to choose the one that will give you the lowest taxes.

Head of Household Status

Head of Household (HOH) filing status is available to taxpayers that are unmarried and that provide more than half the cost of a home for “certain other persons.”

It is preferable to use Head of Household filing status because the lower tax brackets are slightly more beneficial than for Single filing status, as follows for 2023:

• 10% Tax Rate: $0 to $11,000 for Single vs $0 to $15,700 for HOH

• 12% Tax Rate: $11,001 to $44,725 for Single vs $15,701 to $59,850 for HOH

• 22% Tax Rate: $44,726 to $95,375 for Single vs $59,851 to $95,350 for HOH

• 24% Tax Rate: $95,376 to $182,100 for Single vs $95,351 to $182,100 for HOH (practically the same)

• 32% Tax Rate: $182,101 to $231,250 for Single vs $182,101 to $231,250 for HOH (exactly the same)

Additionally, the standard deduction is an amount on your tax return that reduces your taxable income and is used by the majority of taxpayers who do not itemize deductions (which we will not go into here). The standard deduction for HOH is $20,800 in 2023 vs $13,850 for Single. This is another significant benefit of filing HOH.

Head of Household Qualifying Factor #1 - Unmarried

Seems simple, right? Unmarried is unmarried, i.e.. single. But you can actually be married but be considered unmarried for HOH purposes. Here’s what the IRS considers as “unmarried” for purposes of HOH status:

• You file a separate tax return from your spouse.

• You paid more than half the cost of keeping up your home during the tax year.

• Your spouse didn’t live in your home during the last 6 months of the year, exclusive of temporary absences for business, medical care, school, or military service.

• Your home was the main home of your child, stepchild or foster child for over half the year.

• You must be able to claim the child as a dependent (with some exceptions we won’t go into detail on here).

Qualifying Child for Head of Household Status

For a child to qualify you for HOH status,

• The child must be younger than the taxpayer and either under age 19, under age 24 an a full-time student or any age and permanently and totally disabled and

• Lived with taxpayer over half the year and

• Did not provide over half of their own support and

• Is one of the following: son, daughter, stepchild, foster child, brother, sister, stepbrother/sister, half brother/sister or descendant of any of them.

So, your 23 year old stepsister who is a full time student can qualify you for HOH status if she lives with you over half the year and you provide over half of her support.

While the taxpayer claiming HOH status must be considered unmarried, the qualifying child does not have to be unmarried. The qualifying child can be married, but if you can claim him/her as a dependent, they still qualify, assuming they meet the citizen test and joint return test (which we won’t go into detail here).

Confused yet? You’re not alone.

Qualifying Relative for Head of Household Status is a Parent

Your mother or father can qualify you for HOH status if you can claim him or her as a dependent.

So what does that mean for a parent to qualify as your dependent? They have to meet the following tests:

• They can’t be claimed as a dependent on someone else’s return.

• Generally they can’t file a joint tax return with someone else, unless they are only filing to get a refund and have no tax liability.

• They are a U.S. citizen, U.S. national, U.S. resident alien or a resident of Canada or Mexico.

• Taxpayer must have paid over half of the cost of keeping up a home for the parent during the year. That includes costs such as rent, mortgage interest, real estate taxes, homeowner’s insurance, repairs and maintenance of the home, utilities, food eaten in the home and other household expenses. It does not include personal expenses such as clothing, health insurance, transportation costs, etc.

• The parent’s gross income must be less than $4,700 in 2023 ($4,400 in 2022 - this amount changes every year). How is gross income determined? Gross income is all income that is not exempt from tax, such as wages, interest, taxable unemployment, taxable social security benefits, etc.

Additionally, for purposes of determining HOH status, a parent does not have to live with the taxpayer, as long as the parent meets the various dependency tests listed above.

So let’s stand back a second. If you are unmarried and are supporting over half the cost of your parent and they either live with you or elsewhere, and their only income is Social Security, chances are you can file your taxes using Head of Household status.

Qualifying Relative for Head of Household Status Other Than a Parent

To claim a relative other than a child or a parent for HOH status, the additional requirements are:

• Must be a brother, sister, half brother, half sister, step brother, step sister, niece, nephew, stepbrother or any other person, as long as it does not violate local law.

  • Individuals that are not related to you in any of the ways above cannot qualify you for HOH status, though they can stay possibly qualify as a dependent.

• Must have lived with you over half the year.

To Learn More About Filing Status

The IRS publishes Publication 501, “Dependents, Standard Deduction and Filing Information” for those looking for more detailed information on these topics. For the short version, read the Form 1040 instructions.

Tax Breaks to Pay For College

Section 529 plans give taxpayers the ability to invest for college and use the funds for college expenses at some point in the future tax-free.

Do you get a tax deduction for contributions to 529 plans? Not on the federal return. Your tax savings comes in the future, as any income generated by the investments made can be distributed tax-free in the future, as long as they are used for qualified educational purposes (defined below).

Some states do offer a tax deduction or tax credit on all or a portion of contributions you make to 529 plans. However, California (along with Kentucky, North Carolina, Delaware, New Jersey and Maine) do not offer such deductions or credits. That said, California does conform to federal law in that distributions used for qualified purposes are not taxed.

What are “qualified” uses of 529 plan funds? Tuition, room and board*, books, supplies, fees and computers, software and internet access

*Room and board includes the cost of housing and a meal plan at a college or university, be it on campus or off campus. However, the allowable amount under a 529 plan cannot exceed what the school’s published “cost of attendance” is. You can typically find this on a university’s website.

You have to be enrolled in school at least half-time to qualify to use 529 plan funds.

Expenses that do NOT qualify for reimbursement under a 529 Plan include travel expenses, health insurance and personal living expenses.

There are no income limits for funding the plan accounts.

What is the maximum you can put into a 529 plan? The California Scholarshare plan has an overall maximum account balance limit of $529,000, which applies to all accounts opened for a beneficiary. See www.scholarshare529.com for more information.

Can grandparents and other relatives contribute to my kids’ 529 plans? Absolutely! They do not get any tax benefits for these contributions and they are considered to be gifts*, but like with other contributions, they grow tax free, as long as the funds are eventually used for college or even a trade school or vocational school, as long as that school is eligible to participate in student aid programs offered by the Department of Education.

*The gift tax exclusion in 2023 is $17,000, up from $16,000 in 2022. That means you can give up to $17,000 per person without filing a federal gift tax return (IRS Form 709).

What happens if I can’t use the money in a 529 plan? First off, you can transfer funds from one kid’s 529 plan to another’s if you need to. That said, if you are unable to use the funds for qualified education, you can always take the money out and pay taxes on the earnings, plus a 10% penalty. And there are certain exceptions to the penalty too.

American Opportunity Credit

The American Opportunity Credit (AOC) can provide tax credits of up to $2,500 per student for the first 4 years of college. You cannot claim it for more than 4 years.

Up to 40% of the credit is refundable; the other 60% must be applied against your tax liability. The maximum credits is derived as follows: 100% of the first $2,000 in qualified expenses and 25% of the next $2,000 of qualified expenses.

Qualified expenses for the AOC includes tuition, books and fees, but DOES NOT include room and board that is allowed to be paid with 529 plan funds.

The challenge with this credit is that it phases out for single taxpayers with modified adjusted gross income between $80,000 and $90,000 and for married taxpayers, $160,000 and $180,000. If this is the case, something to consider for tax planning purposes is for the taxpayer to NOT claim the student as a dependent on their return (even if entitled to), and let the student claim the AOC credit.

Lifetime Learning Credit

If you have already used 4 years of AOC credit, you may qualify for the Lifetime Learning Credit (LLC), which has no limit on the number of years to claim the credit. However, there are even lower income phaseout levels for the LLC, phasing out between $59,000 and $69,000 in modified adjusted gross income for single and $118,000 to $138,000 for married taxpayers.

Additionally, the LLC is not a refundable credit. If you don’t owe taxes, you won’t be able to use the credit. The credit is calculated at 20% of the first $10,000 in qualified education expenses. Consistent with the AOC, the student can claim the credit if the parent does not claim the student on their tax return. However, if the student owes no taxes, there’s no use to this credit.

Qualified expenses for the LLC are the same as for the AOC, except course material expenses MUST be paid to the university as a condition of enrollment.

Scholarships

Keep in mind that any scholarships and grants received must be applied against the tuition and other expenses incurred. In other words, you cannot use 529 plan funds or obtain a education tax credit on expenses paid for with scholarship funds. That would be double dipping!

Speaking of paying for college, HERE IS A LINK to an article on how to complete a FAFSA form.

Should I Start Collecting Social Security Benefits Before Reaching Full Retirement Age?

Full Retirement Age (FRA) was 65 for many years. Congress passed a law in 1983 to gradually increase FRA to reflect increasing lifespans. FRA currently ranges from 65 for those born before 1943 to 67 for those born in 1960 or later. At what point should you start taking Social Security payments?

You can also start receiving Social Security benefits as early as age 62, but your monthly benefit would be reduced anywhere from 25 to 30% as a result. See www.ssa.gov/benefits/retirement/planner/agereduction.html for more information on how much you would receive, based on your year of birth.

You can also delay receiving Social Security beyond your FRA, up until age 70. The benefit to doing this is that your benefits are increased anywhere between 5.5% to 8% per year. See www.ssa.gov/benefits/retirement/planner/delayret.html for more information.

Let’s look at a simple example:

Conejo Joe was born in 1960 and thus turned 62 in 2022. His FRA is 67. His full retirement benefit is, say, $1,000 per month. If he chooses to start receiving payments at age 62, they would be reduced by 30%, to $700 per month. If he chooses to delay receiving benefits until age 70, they would increase by 8% per year over 3 years, to $1240 per month (ignoring increases for inflation).

If Conejo Joe started receiving $700 per month at age 62, by the time he reaches age 70 he would have received $58,800 (ignoring inflation increases). If he waited until age 70, he would receive $1240 per month, or $540 per month more than starting benefits at age 62. It would take him about 9 years to make up the gap.

But if Conejo Joe had other income or continued working at age 62, up to 85% of those $700 per month Social Security payments could be taxed at the federal level (most states, including California, do not tax Social Security benefits). Those taxes should be factored into the decision as to whether he should delay receiving benefits.

If Conejo Joe started taking Social Security at age 67, he would receive $1,000 per month. So by the time he reaches age 70, he would have received total payments of $36,000 (again, ignoring inflation). Had he waited until age 70, he would receive $1240 per month, or $240 more than the FRA benefits he received for the last three years. It would take him 12 1/2 years to make up the $36,000 gap. So if he anticipates living until at least age 82 1/2, in theory it makes sense to wait until age 70 to collect benefits, if possible.

Everyone’s situation is different. Some folks really need the payments early. Others can wait because they are still working. Visit www.ssa.gov for more information and talk to your financial planner and/or CPA for guidance.

One final point. The Social Security Administration says “If you decide to delay your benefits until after age 65, you should still apply for Medicare benefits within three months of your 65th birthday. If you wait longer, your Medicare medical insurance (Part B) and prescription drug coverage (Part D) may cost you more money.

All About the New "Clean Vehicle Credit" and "Previously Owned Clean Vehicle Credit" Applicable to Tax Years 2023 through 2032

NOTE: New legislation signed in July 2025 eliminates the Clean Vehicle Credit beginning in October 2025.

The Inflation Reduction Act of 2022 brought major changes to incentivize people to purchase electronic vehicles (EVs), plug-in hybrids and hydrogen fuel cell powered vehicles. The credit is now called the “Clean Vehicle Credit.” Here we will highlight aspects of the new laws for clean vehicle purchases in 2023 through 2032.

In the past, the major constraint on these credits has been a 200,000 car phase-out on the credits, which was blown through awhile back for several vehicles. This constraint is now gone.

However here are new requirements for taxpayers to receive clean vehicle credits of $7,500 per vehicle beginning in 2023. These new requirements include final assembly, MSRP and income limitations, and are highlighted below.

FINAL ASSEMBLY REQUIREMENTS

Final assembly of the vehicle must take place in North America. How do you find this out? View the list at https://afdc.energy.gov/laws/electric-vehicles-for-tax-credit and look up the Vehicle Identification Number (VIN) to see if the auto meets the requirements. In future years there will also be specific requirements regarding components of the battery. Your dealer should be able to quickly give you an answer on this.

MSRP REQUIREMENTS

There are manufacturer’s suggested retail price (MSRP) limitations for vehicles to be eligible for the new credits. MSRP includes options, accessories and trim, but not destination charges. The maximum MSRP allowed is $55,000 for passenger vehicles and $80,000 for vans, pick-up trucks and SUVs. What that means is that if the MSRP is greater than those amounts, even by $1, they will not be eligible for any Clean Vehicle Credit. Let’s take a look at some MSRPs as of January 2023 for selected 2023 EVs:

• Audi Q5 55 PHEV MSRP SUV starts at $57,400

• BMW 330e MSRP starts at $44,900

• BMW X5 PHEV SUV MSRP starts at $65,700

• Cadillac LYRIQ SUV MSRP starts at $62,990

• Chevy Bolt MSRP starts at $25,600

• Chevy Bolt EUV SUV MSRP starts at $27,200

• Chrysler Pacifica PHEV MSRP starts at $49,995

• Ford Escape Plug-In Hybrid (SUV) starts at $38,500

• Ford E-Transit Van MSRP starts at $49,575

• Ford F-150 Lightning truck EV MSRP starts at under $40,000

• Ford Mustang Mach-E (SUV) MSRP starts at $46,895

• GMC Hummer EV Pickup MSRP starts at $110,295 (ineligible)

• GMC Hummer EV SUV MSRP starts at $105,595 (ineligible)

• Jeep Grand Cherokee 4xe SUV MSRP starts at $60,260

• Jeep Wrangler 4xe SUV MSRP starts at $54,735

• Lincoln Aviator Plug-In Hybrid SUV starts at $53,340

• Lincoln Aviator Grand Touring SUV starts at $69,190

• Lucid Air MSRP starts at $89,050 (ineligible)

• Mercedes EQS SUV MSRP starts at $104,400 (ineligible)

• Tesla Model 3 MSRP starts at $46,990

• Tesla Model S MSRP starts at $96,820 (ineligible)

• Tesla Model X MSRP starts at $119,200 (ineligible)

• Tesla Model Y SUV MSRP starts at $65,990

• Nissan Leaf MSRP starts at $28,040

• Rivian R1S SUV MSRP starts at $72,500

• Rivian R1T Pickup MSRP starts at $67,500

• VW ID.4 SUV MSRP starts at $37,495

These MSRPs are not adjusted for inflation, which means that over the course of time, it is likely that, unless prices drop, less of these vehicles will be eligible for the credit.

INCOME AND OTHER LIMITATIONS

There are now income limitations to obtain the credit. Your “Modified Adjusted Gross Income” (MAGI*) must be $300,000 or less if you use the Married Filing Jointly filing status, $225,000 or less for Head of Household and $150,000 or less for other filing statuses in either the current or prior year to qualify for the credit. MAGI limits are not adjusted for inflation, which means that over time, less people will be eligible for the credits.

(*What is MAGI? For purposes of this credit, MAGI is basically all your taxable income, less various adjustments like IRA contributions, plus any untaxed foreign income. Ask your tax advisor for more specifics.)

The credit is non-refundable and any unused credit does not carryforward to future years. What this means is that if your taxes are less than $7,500 and your credit is $7,500, you will not receive the full amount of the credit.

You claim the credits on Form 8936 (Qualified Plug-In Electric Drive Motor Vehicle Credit) with your tax return.

Starting in 2024, you can apply the Clean Vehicle Credit towards the purchase of the vehicle at the dealership rather than wait and apply for the credit on your tax return. Yay! However, there could be some complications in doing this - what if your MAGI is too high? Will you have to pay the credit back on your return? These things will have to be sorted out.

USED CLEAN VEHICLE CREDITS - SOMETHING NEW

There are now tax credits available for certain used clean vehicles. It is aptly called the Previously Owned Clean Vehicle Credit (POCVC). If you purchase a used "clean vehicle” from an authorized dealer and the sales price is $25,000 or less, you may be able to take a tax credit of 30% of the sales price, up to a maximum credit of $4,000.

The MAGI limits to claim the used car credit are exactly half of the new car credits - $150,000 or less for joint filers, $112,500 for head of household and $75,000 for other filing statuses. So, if you are single and make $75,001 in 2022 and 2023, you will not be able to claim the POCVC for a 2023 purchase.

Tax planning (an example): Let’s say your W-2 wages are $76,000 this year and last year but you want to buy a $25,000 used clean vehicle and obtain a $4,000 POCVC on your 2023 tax return. Consider contributing to your employer’s 401k plan in 2023 enough to reduce your taxable W-2 income to $75,000. Or if your employer does not have a 401k, contribute $1,000 to an IRA to reduce your MAGI down to $75,000. (This is just one simple example; your tax advisor can help you with your particular situation.)

The POCVC, like the Clean Vehicle Credit, is not refundable and cannot be carried forward to future years.

Learn more on the IRS website at www.irs.gov/credits-deductions/credits-for-new-clean-vehicles-purchased-in-2023-or-after.

The state of California has its own array of rebates that can vary from $1,000 to $7,000 currently, increasing to $7,500 starting February 28, 2023. Learn more on the California Clean Vehicle Rebate Project website at cleanvehiclerebate.org/en. Best to apply the California rebates at the time of purchase of the vehicle….otherwise they are considered taxable on your federal returns.

(As with other tax matters, ask your tax advisor for details. The information herein is current as of January 2023.)

Summary of the New Residential Clean Energy Credit Signed Into Law on August 16, 2022

The Inflation Reduction Act was signed into law on August 16, 2022. Among other things, One of the things it changed was the Residential Energy Efficient Property tax credit, which is now called the Residential Clean Energy Credit.

Under the old law, the solar energy credit, which was previously dropped from 30% prior to 2020 to 26% in 2020-2022 and 22% in 2023, was set to expire in 2024.

Under the new law, the credit is retroactively increased back to 30% for residential solar systems installed in 2022 through 2032. Then it will drop to 26% in 2033 and 22% in 2034.

Additionally, starting in 2023, the tax credit covers battery storage technology with a capacity of three kilowatt hours.

The tax credit is a non-refundable credit, but can be carried forward to future tax years.