Tax Credit Provisions within the IRA
Signed into law on August 16, 2022 by President Biden, the IRA delivers $369 billion towards clean energy and carbon reduction investments over the next 10 years. Over $160 billion of which comes in the form of tax credits for renewable energy. Here’s a summary of the key tax credit provisions within the IRA:
Extends the ITC at 30% through 2032. In 2033, ITC steps down to 26%, and 22% in 2034.
Standalone storage ITC.
Standalone ESS projects with a minimum capacity of 5 kWh are now eligible for the 30% ITC.
Prevailing wage and apprenticeship requirements.
Introduces new construction labor requirements to qualify for the full 30% rate.
Enables certain tax-exempt customers, including state and local government, to receive a direct cash payment in lieu of tax credits.
Production Tax Credit (PTC).
Establishes a PTC for solar PV projects that can be taken in lieu of the ITC.
Additional 10% ITC adder credits for: (i) domestic content, (ii) energy community, and (iii) low-income communities.
Starting in 2023, entities will be allowed to transfer their tax credits to a third-party.
See our blog for more information on the IRA and its key provisions:
Standalone Energy Storage – Investment Tax Credit (ITC) in the Inflation Reduction Act of 2022: What You Need to Know