Federal Transferable Investment Tax Credits
Generally, taxpayers choose between an Investment Tax Credit in Section 48(E), the various types of which are discussed below, or a Production Tax Credit in Section 45. The Investment Tax Credit (commonly referred to as “ITC”) offsets federal tax and is generally equivalent to a certain percentage of eligible renewable energy property. The tax credit rate depends on various factors, including the type of property or technology for which the tax credit is being claimed, the applicable construction, employment requirements, and many others.
Investment Credits
Investment Tax Credit
Current Tax Credits related to domestic and recycled clean energy products.
Investment Credits
Clean Electricity Investment Tax Credit
Tech-neutral Tax Credit that imports additional flexibility between clean electricity technologies.
Investment Credits
Qualifying Advanced Energy Project Credit
Tax Credits awarded to production of clean and recycled energy projects.
Investment Credits
Alternative Fuel Vehicle Refueling Property Tax Credit
Tax credit for clean refueling property.
Federal Transferable Production Tax Credits
The Inflation Reduction Act also makes various Production Tax Credits (commonly referred to as “PTC”) transferable, which award tax credits for different types of clean energy generated using qualified energy resources. The tax credit amount is commensurate to a qualified project’s clean energy production and can be claimed over a substantial period.
Production Credits
Renewable Electricity Production Tax Credit
Current Tax Credit for electricity produced from renewable sources.
Production Credits
Clean Electricity Production Tax Credit
Replaces the Renewable Electricity Production Tax Credit in 2025.
Production Credits
Zero-Emission Nuclear Power Production Tax Credit
Nuclear power production credit for new and existing facilities.
Production Credits
New Clean Fuel Production Tax Credit
Provides a tax credit for low-carbon transportation fuel.
Production Credits
Manufacturing Production Tax Credit
Benefits manufacturers of eligible components produced by a domestic
taxpayer.
Federal Hybrid Tax Credits (Both Direct Pay and Transferrable)
The Hydrogen Production Tax Credit and the Carbon Sequestration Tax Credit constitute hybrid tax credits in that they are initially subject to direct payment monetization rules and, thereafter, subsequent tax credits pertaining to the same project can be transferred to unrelated taxpayers.
Production Credits
Clean Hydrogen Production Tax Credit
Awards tax credit for clean hydrogen production.
Production Credits
Carbon Oxide Sequestration Tax Credit
Tax credits targeting the capture of carbon dioxide.