It’s been a big couple of weeks with Congress going through tense negotiations regarding the Inflation Reduction Act. The Senate passed the bill last week, and we saw the house did the same a few days ago, which means the bill will go to President Biden for his signature. Biden has been very voiceful in his support of the bill even though it has been scaled down from its initial creation, and he is expected to sign it in the coming days.

If you’re unfamiliar with the bill, it focuses broadly on climate, tax reform, and healthcare issues. While the bill is named the inflation reduction act, many analysts have said it will likely only have a modest effort towards directly affecting inflation. The bill includes tax credits for investment in renewable energy such as wind and solar. Additionally, for the average citizen, there can be tax incentives for residential high-efficient products like solar and heat pumps. Additionally, the bill would allow Medicare to negotiate some drug prices to lower prescription drug prices.

A significant portion of the bill addressed electric vehicles (EV), which has been a priority for the current administration and President Biden. The bill would provide up to a $7,500 tax credit for EV buyers, which could significantly offset the cost of a new vehicle. The bill would also provide up to a $4,000 tax credit for consumers purchasing a used EV. As with everything, there are significant stipulations tied to the EV credit:

  1. Single tax filers must make less than $150,000 annually and couples under $300,000 annually.
  2. New car prices cannot exceed $55,000 and $80,000 for an SUV/truck.
  3. To receive the full credit, battery materials must be sourced/produced in approved countries, which the majority are currently not, making most consumers ineligible to receive the full credit.

If you plan to purchase an EV and hope to take advantage of the tax credit, be sure to do your research, as many popular vehicles are currently ineligible to receive even a partial incentive. It could make a difference even in which model/trim package you buy if it qualifies.

Looking at the week overall, we saw some good gains within the stock market, and the Dow Jones closed the week on Friday up more than 400 points. Conversely, the slowing of the economy has forced many companies to start layoffs to cut costs and protect their profit margin. Companies such as Walmart, Peloton, and Netflix have all stated they’re beginning to lay off employees. Recent layoffs are a clear sign of the effects of inflation and a weakening economy. Regardless if you believe we’re in a recession, we all are paying higher for everyday items, significantly affecting our overall budgets.

According to AAA, the silver lining right now is that gas prices have continued to decrease, and the national average has finally fallen before $4.00 for the first time since March. While prices have been on the decline for a couple of months, don’t be fooled you’re saving money as gas prices were in the low $3.00 range just a year ago, so we’re still significantly above average. If trends continue and kids return to school, we’ll likely see a decrease in driving following Labor Day. This reduction in driving typically reduces the overall oil demand and, in turn, should lower gas prices, but time will tell if historical trends will continue.

For most families, summer is coming to a close, and families are preparing for kids to return to school. As you prepare your children, keep an eye out for those back-to-school sales for those school supplies. Stores such as Walmart and Target typically offer a variety of deals for needed school supplies, so you don’t have to break the budget. While school may be just starting, it’s never too early to start thinking about college options available to upcoming high school graduates. Be on the lookout for my college-focus articles next month so you can begin preparing your high school seniors for the best opportunities.