Overview
Many existing tax credits were expanded, extended, and increased with the passing of the Bipartisan Infrastructure Law and Inflation Reduction Act. Other tax credits were newly created to increase clean energy production, energy efficiency, domestic manufacturing, and climate-smart agricultural practices. Credits incentivize investments in existing energy communities, prioritizing projects that reutilize retired fossil fuel infrastructure and employ skilled workers. They also include additional bonus credits for investments in low-income areas, Tribal land, and for sourcing materials domestically.
Notable changes include the option of direct pay or transferable credit options for tax-exempt entities such as nonprofits, charitable organizations, churches and religious organizations, governments, and schools. This allows tax-exempt entities to now directly qualify for many tax credits including those for clean commercial vehicles and renewable energy production or investment.
View information on opportunities below, organized by recipient and tax credit. Opportunities include energy efficiency and electric appliance upgrades, renewable energy development, electric vehicle purchase and charging incentives, as well as various manufacturing, clean energy development and production credits.
Tax credits are managed by the U.S. Internal Revenue Service (IRS). For information directly from the IRS, visit: Inflation Reduction Act webpage.
A summary of energy provisions can also be found at: Department of Energy Inflation Reduction Act Summary.
Building Energy Efficiency
- Eligible recipients: Residential (Homeowners, renters, single-family, multi-family, manufactured homes)
- Credits for residential home energy efficiency and appliance upgrades.
- Qualifying improvements: windows, doors, insulation, air sealing, electric of natural gas heat pump water heater, electric or natural gas heat pump, fuel-fired water heater, fuel-fired furnace or boiler, biomass stove or boiler, replacement of panelboard and circuits.
- Credits available for home energy audits and electric panel upgrades.
- Credit: 30% of project cost up to maximum annual limits.
- Categorical Annual Limit: Up to $1,200 for envelope improvements (windows, doors, skylights, insulation, electrical) and furnaces, boilers, and central air conditioners.
- Categorical Annual Limit: Up to $2,000 for heat pumps, heat pump water heaters, and biomass stoves/boilers.
- Total Annual Limit: $3,200 (can meet maximum of both categorical limits each year).
- Considerations:
- Can be paired with IRA energy efficiency and electric appliance rebates.
- Certain appliances may need to meet stricter efficiency standards for tax credits than for IRA rebates.
- Timeframe: Effective for products purchased and installed between January 1, 2023, and December 31, 2032.
- For more information, visit:
- Eligible recipients: Residential developers (single-family, multi-family) – New construction only
- Tax credit for newly built single family and multifamily homes.
- Credit dependent on home efficiency rating and prevailing wage incentive.
- Multifamily Developer: $500 - $5000
- Single Family Home Builder: $2500 - $5000
- New incentive for Zero Energy Ready Home qualified ratings.
- For more information, visit:
Eligible recipients: For-profit business, tax-exempt entities
- Tax exempt entities include charities, churches, private schools and universities, foundations, nonprofits, governments, and more.
- Energy efficiency improvements for commercial buildings
- Tax deduction for newly constructed buildings along with improvements to existing buildings that meet or exceed certain energy reduction requirements.
- Credit: $5.00/sqft in 2023 and beyond
- For more information, visit: DOE - 179D Commercial Buildings Energy-Efficiency Tax Deduction
Clean Vehicles, Charging Infrastructure, and Alternative Fuels
- Eligible recipients: Credit is available to individuals and their businesses.
- Tax credit for purchase of a new clean vehicle, up to $7,500.
- Qualifications:
- Vehicle criteria includes qualifications on assembly, cost, income, critical minerals qualifiers, battery component qualifiers.
- Additional restrictions apply in 2024 and 2025 involving battery material sourcing from foreign entities of concern.
- For more information, visit:
- Eligible recipients: Individuals (not business eligible).
- Tax credit for purchase of a used clean vehicle.
- Must be purchased through a licensed dealer.
- Vehicle must be $25,000 or less in price.
- Credit: 30% percent of the sale price up to a maximum credit of $4,000.
- Income and vehicle qualifications.
- For more information, visit: IRS - Used Clean Vehicle Credit Information Page
- Eligible recipients: For-profit businesses, tax-exempt entities
- Tax exempt entities include charities, churches, private schools and universities, foundations, nonprofits, governments, and more.
- Tax credit up to $40,000 for qualified clean vehicles.
- Businesses and tax-exempt organizations are eligible.
- Credit is the lesser of:
- 15% of your basis in the vehicle (30% if the vehicle is not powered by gas or diesel).
- The incremental cost of the vehicle.
- Maximum: $40,000
- Vehicle must meet certain criteria to qualify.
- For more information, visit: IRS - Commercial Clean Vehicle Credit
- Eligible recipients: Residential, for-profit businesses, tax-exempt entities
- Tax exempt entities include charities, churches, private schools and universities, foundations, nonprofits, governments, and more.
- Credit for electric vehicle charging and alternative fueling infrastructure.
- Urban, rural, and area income qualifiers.
- Eligible from January 1, 2023, through December 31, 2032.
- Residential: Credit up to $1,000 for qualified residential fueling equipment.
- Non-Residential: Tax credits available for the following:
- 30% of the cost of fueling equipment for natural gas, propane, hydrogen, electricity, E85, or diesel fuel blends containing a minimum of 20% biodiesel.
- 6% of the cost for property subject to depreciation.
- Not to exceed $100,000.
- For more information, visit: DOE Alternative Fuels Data Center
- Sellers of new clean vehicles and dealers who sell used clean vehicles must meet reporting requirements for those vehicles to be eligible for a credit under IRC 30D and 25E.
- For more information, visit: IRS - Clean Vehicle Credit Seller or Dealer Requirements
Renewable Energy
- Eligible recipients: Residential (Homeowners, single-family, multi-family, manufactured homes)
- Credits for residential investments in renewable energy and energy property.
- Qualifying equipment: solar photovoltaic/electric, solar water heating, fuel cell, small wind energy, geothermal heat pump, battery storage.
- Credit: 30% of project cost
- Timeframe: Effective at 30% credit through December 31, 2032.
- Credit will begin phaseout in 2032 and will expire in 2034.
- Phaseout:
12/31/21 - 1/1/33 = 30%
12/31/32 - 1/1/34 = 26%
12/31/33 - 1/1/35 = 22%
- For more information, visit:
- Low interest financing at: DEQ Alternative Energy Loan Program
- Eligible recipients: For-profit businesses, tax-exempt entities
- Extends the existing energy investment tax credit for technology-specific energy projects.
- This investment tax credit (ITC) ends in 2024 for most technologies and is replaced by the new tech-neutral Clean Electricity ITC (New Clean Energy Investment Credit 48E), which begins in 2025.
- Extends date of construction in most cases to 2024 and maintains a 10% or 30% credit.
- For more information, visit:
- Eligible recipients: For-profit businesses, tax-exempt entities
- Tax exempt entities include charities, churches, private schools and universities, foundations, nonprofits, governments, and more.
- Organizations that don’t pay federal taxes can take advantage of the tax credits through either direct pay or a transfer of credit.
- The investment tax credit (ITC) is a tax credit that reduces the federal income tax liability for a percentage of the cost of a solar system that is installed during the tax year.
- Replaces the Energy Investment Tax Credit (48) once it phases out at the end of 2024.
- Emissions-based incentive that is neutral and flexible between clean electricity technologies.
- Credit: 30% of the investment in the year the facility is placed in serviceBonus credits for specific siting, manufacturing, and low-income qualifiers.
- 10% bonus for projects located in energy communities (brownfield sites or fossil fuel communities).
- 10% bonus for meeting domestic manufacturing requirements for steel, iron, or manufactured components.
- 10% bonus for projects located in low-income communities or on Tribal land.
- 20% bonus for projects located in low-income residential buildings or part of low-income economic benefit projects.
- For more information, visit:
- Eligible recipients: For-profit businesses, tax-exempt entities
- Extends the existing production tax credit (PTC) for technology-specific renewable energy projects.
- This PTC ends in 2024 and is replaced by the new technology-neutral Clean Electricity PTC (45Y) which begins in 2025.
- Extends date of construction deadlines to 2024.
- Maintains credit amount but applies bonus credit for siting and domestic material sourcing specifics.
- For more information, visit:
- Eligible recipients: For-profit businesses, tax-exempt entities
- Tax exempt entities include charities, churches, private schools and universities, foundations, nonprofits, governments, and more.
- Organizations that don’t pay federal taxes can take advantage of the tax credits through either direct pay or a transfer of credit.
- The production tax credit (PTC) is a per kilowatt-hour (kWh) tax credit for electricity generated by solar and other qualifying technologies for the first 10 years of a system’s operation. It reduces the federal income tax liability and is adjusted annually for inflation.
- Replaces the Energy Production Tax Credit (45) once it phases out at the end of 2024.
- Credit: 1.5 cents per kWh of electricity produced and sold or stored at facilities placed into service after 2024.Must have zero or negative greenhouse gas emissions.
- Bonus credits for specific siting, manufacturing, and low-income qualifiers.
- 10% bonus for projects located in energy communities (brownfield sites or fossil fuel communities).
- 10% bonus for meeting domestic manufacturing requirements for steel, iron, or manufactured components.
- 10% bonus for projects located in low-income communities or on Tribal land.
- 20% bonus for projects located in low-income residential buildings or part of low-income economic benefit projects.
- For more information, visit:
Manufacturing, Power Generation, and Fuel Production
- Eligible recipients: For-profit businesses, tax-exempt entities
- Tax exempt entities include charities, churches, private schools and universities, foundations, nonprofits, governments, and more.
- Up to 30 percent credit for advanced energy manufacturing investments to projects in areas that have seen the closure of a coal mine or retirement of a coal-fired electric generating unit.
- The credit can be claimed for investment in projects that “re-equip, expand, or establish an industrial or manufacturing facility” used for production or recycling of a wide range of clean energy technologies.
- Credits can be used for facilities that produce renewable energy technologies including solar cells, wind turbines, geothermal energy equipment, and energy storage systems. Facilities that produce grid modernization equipment, carbon capture equipment, or renewable fuel electrolyzers also qualify, as do those that refine or recycle critical minerals. This credit is available for other uses outside the power sector, including for zero-emission vehicles, low- and zero-carbon heat systems, and industrial applications
- For more information, visit:
- Eligible recipients: For-profit businesses, tax-exempt entities
- Tax exempt entities include charities, churches, private schools and universities, foundations, nonprofits, governments, and more.
- Creates a tax credit for the production of clean energy technology components that are produced in the United States or by a U.S. possession.
- Eligible components include solar components, wind turbine and offshore wind components, inverters, many battery components, and the critical minerals needed to produce these components.
- The tax credits will be available for manufacturing components, completed equipment, and other necessary infrastructure, supporting domestic manufacturing up and down the supply chain.
- For more information, visit:
- Eligible recipients: For-profit businesses
- Credit for investments in semiconductor manufacturing facilities and equipment
- 25% tax credit for investment in semiconductor manufacturing to incentivize domestic semiconductor production.
- For more information, visit: 26 U.S. Code § 48D - Advanced manufacturing investment credit
- Eligible recipients: For-profit businesses, tax-exempt entities
- Tax exempt entities include charities, churches, private schools and universities, foundations, nonprofits, governments, and more.
- Creates a new technology neutral 2-year tax credit for low-carbon transportation fuel.
- Maximum credit is $1 per gallon (or $1.75 per gallon for sustainable aviation fuel) multiplied by an emissions factor.
- For more information, visit:
- Eligible recipients: For-profit businesses
- New incentive to lower aviation emissions.
- Credit starts at $1.25 per gallon for aviation fuel that reduces GHG emissions by 50%.
- Increases by one cent for each additional percent reduction, maxing at $1.75 per gallon.
- Credit is authorized through 2026.
- For more information, visit: 26 U.S. Code § 40B - Sustainable aviation fuel credit
- Eligible recipients: For-profit businesses, tax-exempt entities
- Tax exempt entities include charities, churches, private schools and universities, foundations, nonprofits, governments, and more.
- Creates a new 10-year incentive for clean hydrogen production with four tiers and a maximum of 4 kilograms of CO2 equivalent (CO2e) per kilogram of hydrogen (H2).
- Credits range from $0.60 - $3.00 per kg H2 dependent on carbon intensity (kg CO2e/kg H2).
- For more information, visit:
- Eligible recipients: For-profit businesses, tax-exempt entities
- Tax exempt entities include charities, churches, private schools and universities, foundations, nonprofits, governments, and more.
- Provides a nuclear power production credit of 1.5 cents multiplied by kilowatt hours (kWh) of electricity produced minus 16% of the facility’s gross recipients in excess of 2.5 cents per kWh.
- For more information, visit:
- Eligible recipients: For-profit businesses, tax-exempt entities
- Tax exempt entities include charities, churches, private schools and universities, foundations, nonprofits, governments, and more.
- Enhances the tax credit for carbon capture and direct air capture.
- Extends the deadline for construction, increases the credit, and decreases the minimum plant size.
- For more information, visit:
- Eligible recipients: For-profit businesses
- Extends existing tax credit through December 31, 2024.
- Credit for unblended pure biodiesel (B100).
- For more information, visit:
- Eligible recipients: For-profit businesses
- Extends existing tax credit through December 31, 2024.
- Applies to second-generation biofuel production after 2021.
- For more information, visit: