Understanding the Inflation Reduction Act: What CPAs Need to Know

As a seasoned CPA with over 25 years in the field, I’ve seen many legislative changes impact our profession and our clients. But few have been as sweeping or as opportunity-rich as the Inflation Reduction Act (IRA) of 2022. Signed into law on August 16, 2022, the IRA represents a historic investment in clean energy, healthcare affordability, and tax reform. For CPAs, it’s not just about compliance—it’s about becoming a trusted advisor in a rapidly changing financial landscape.

In this article, we’ll break down the key tax provisions of the IRA, with a focus on green energy incentives and how CPAs can help clients unlock their benefits.

1. Overview: What Is the Inflation Reduction Act?

The IRA is a $739 billion legislative package aimed at reducing inflation, promoting energy security, and cutting greenhouse gas emissions. It includes:

• $369 billion for energy and climate programs

• $64 billion for extending Affordable Care Act subsidies

• Corporate tax reform (including a 15% corporate minimum tax)

• Expanded IRS enforcement funding

But for most small businesses, individuals, and investors, the real value lies in the tax credits and incentives—especially those tied to green energy and sustainability.

2. Key Tax Provisions CPAs Should Know

A. Clean Energy Tax Credits

The IRA supercharges existing energy incentives and introduces new credits to encourage clean energy investments. Key ones include:

• Residential Clean Energy Credit (Section 25D)

Formerly the Residential Energy Efficient Property Credit, this now offers a 30% credit for installing solar panels, battery storage, geothermal heating, and more—extended through 2034 (with phaseouts starting in 2033).

• Energy Efficient Home Improvement Credit (Section 25C)

Reinstated and expanded: Clients can claim 30% of the cost (up to $1,200 annually) for upgrades like windows, doors, insulation, heat pumps, and energy audits.

• Clean Vehicle Credit (Section 30D)

Up to $7,500 for new EVs and $4,000 for used EVs, with income limits and final assembly in North America required.

• Commercial Clean Vehicle Credit (Section 45W)

Businesses can claim credits for commercial electric vehicles up to $40,000, depending on weight class and battery size.

• Production and Investment Tax Credits (Sections 45 & 48)

These credits now apply to solar, wind, geothermal, and new tech like hydrogen. Credits are more generous if projects meet prevailing wage and apprenticeship requirements.

3. Who Benefits Most? CPA Planning Opportunities

As a CPA, your clients likely fall into several buckets—each with unique planning opportunities:

Individuals and Homeowners

• Guide clients on timing energy-efficient home improvements to maximize yearly caps.

• Help them understand income limits for EV credits and confirm manufacturer eligibility.

• Assist with documentation—receipts, certifications, and tax forms (e.g., IRS Form 5695 for residential energy credits).

Small Business Owners

• Evaluate opportunities for installing solar panels or EV charging stations at commercial properties.

• Explore Section 179 deductions for energy-efficient business property improvements.

• Educate on the new Section 45L New Energy Efficient Home Credit (for builders and contractors—up to $5,000 per unit).

Real Estate Investors and Developers

• Significant credits are available for multifamily housing with energy-efficient upgrades.

• Bonus credits apply if projects are in low-income communities or meet certain domestic content thresholds.

• Consider the transferability and direct pay provisions—a game-changer allowing non-profits and government entities to benefit from credits.

4. IRS Funding and Enforcement: Be Prepared

The IRA allocates $80 billion to the IRS over 10 years to improve operations and enforcement, especially on high-income taxpayers. For CPAs, this means:

• Expect more audits, especially for complex returns involving green energy credits or large capital deductions.

• Document everything. Maintain clear audit trails for credit eligibility and substantiation.

• Stay current on guidance—many credits have evolving IRS rules and certification requirements.

5. Action Plan for CPAs: How to Leverage the IRA

To best serve your clients:

1. Educate Yourself and Your Team

Attend CPE sessions focused on energy credits and IRS updates. Knowledge is your biggest differentiator.

2. Proactively Identify Opportunities

Don’t wait for clients to ask. Initiate conversations about energy-saving upgrades, EV purchases, or sustainability planning.

3. Model the Tax Impact

Run projections to show before-and-after tax liability with and without credit utilization.

4. Partner with Experts

For large projects, collaborate with energy consultants or contractors who understand credit eligibility and documentation.

5. Update Your Tech Stack

Ensure your tax software is updated for all relevant IRA provisions—especially Forms 5695, 8936, and 3800.

Final Thoughts

The Inflation Reduction Act isn't just another piece of legislation—it’s a roadmap for a greener economy and a more proactive CPA profession. By understanding its provisions and educating clients, we can play a vital role in both financial and environmental stewardship.

As always, the real value we bring is not just in preparing returns—but in planning ahead and navigating change with confidence.

About the Author

Cherie Sayban is a certified public accountant. She has over 25+ years of experience in Finance, Accounting and Bookkeeping.  

​Cherie Sayban CPA provides various financial and accounting solutions to small and mid-size businesses. Our portfolio includes: tax preparation, payroll preparation, accounts receivable and payables, general ledger, and QuickBooks . Our bookkeeping workshops are offered both in-person and virtually.

To learn more about how Cherie Sayban CPA can help you and your business, click HERE

Follow Cherie Sayban CPA on Facebook and LinkedIn

#AccountingTrends2025 #SmallBusinessSuccess #TaxPlanningTips #1099Compliance #AutomationInAccounting #FinancialSuccess #Cybersecurity #SustainabilityReporting #CPAAdvice #CherieSaybanCPA #BusinessFinance #SmallBusinessOwners #TaxStrategy #FinancialManagement #EntrepreneurshipTips

Let’s Connect

To learn more about Cherie Sayban CPA's website finance services, how we can help grow your business through social media or even strategize with you on some ideas to better manage your businesses finances. Visit us at www.CherieSaybanCPA.com