IRS sets deadline for low-income energy credit applications

The IRS has announced a Feb. 29 deadline to apply for a 2023 allocation of enhanced credit rates for solar and wind projects built in certain geographic locations or benefit specific low-income populations.

The Low-Income Communities Bonus Credit Program offers an increased credit of either 10% or 20% for solar or wind projects under 5 megawatts in connection with certain low-income communities. Unlike other bonus credit amounts, taxpayers must apply to receive a Section 48(c) allocation and funding is capped at 1.8 gigawatts worth of projects annually for 2023 and 2024.

Applications are processed on a rolling basis in 30-day periods until the funding allocation runs out. Treasury reported over 46,000 applications for new energy facilities in low-income communities in the first application period and will hold only one more round for 2023. If any categories are oversubscribed, the IRS will hold a lottery to determine which projects receive funding.

Projects that do not receive funding can resubmit in 2024.

Last September, the IRS issued final regulations and a revenue procedure (Rev. Proc. 2023-27) establishing the rules and the process for taxpayers to apply for the enhanced credit rates for solar and wind projects, which is done via this Department of Energy dashboard populations.

More information from Grant Thornton on the program can be found here.

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Dustin Stamper

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Managing Director, Tax Services

Grant Thornton Advisors LLC

Dustin Stamper is a managing director in Grant Thornton’s Washington National Tax Office and leads the tax legislative affairs practice for the firm.

Washington DC, Washington DC

+1 202 861 411

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Colin Wilhelm

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Grant Thornton Advisors LLC

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