President Biden’s elimination of tax credits for electric vehicles assembled overseas sees increased pushback. With the passing of the Inflation Reduction Act, the $7,500 EV tax credit no longer applied to imported plug-in hybrid or electric vehicles. Foreign automakers like Hyundai Motors have since been lobbying against the new legislation as they anticipate the dramatic impact on their business. Korean trade representatives have also offered to work on addressing supply chain issues in the interest of strengthening US-Korea partnerships.
Hyundai, which is also the parent company of Kia, is currently the second top-selling maker of electric vehicles sold in the US. The South Korean automaker is topped only by Tesla, which supplies about 67% of new EVs sold. Hyundai has argued that they intend to continue to invest in the US market, stating that almost half of their vehicles sold in the US in 2021 were also manufactured in the States.
Supporters of the Inflation Reduction Act emphasize the need to reduce US reliance on foreign companies and encourage domestic production of electric vehicles and batteries as the price for essential components continues to rise.
The recent increase to Social Security benefits may be offset by increased taxation. The Social Security Administration just announced an 8.7% cost-of-living adjustment due to rising inflation. However, this could become less of an overall income bump for taxpayers who find themselves in a higher tax bracket. Taxes on Social Security benefits are based on your “combined income,” which is the sum of your adjusted gross income, non-taxable interest, and half of your Social Security benefits. The current combined income tiers are:
- Less than $25,000 for single filers (or $34,000 for married couples) = no tax
- Between $25,000-34,000 (or between $32,000-44,000 for married couples) = tax on up to 50% of benefits
- More than $34,000 (or $44,00 for married couples) = tax on up to 85% of benefits
Unfortunately, these income thresholds are not adjusted for inflation, which means that beneficiaries have had to pay more and more taxes on Social Security as years have gone by. For a point of comparison, only 8% of beneficiaries paid taxes on benefits when they were first introduced in 1983. In 2021, 56% of beneficiaries paid taxes on benefits.
The taxation factor may impact retirees who may have been planning to make larger withdrawals from their retirement accounts. Since these withdrawals increase a taxpayer’s overall income, retirees may want to consult a tax adviser to determine how much they can take out without advancing to the next income threshold.