In Brief:
- Increased Credit Amounts: Facilities in low-income communities or on Indian land can receive increased credit amounts.
- Final Regulations Issued: The IRS issued final regulations for the Code Sec. 48E(h) program.
- Eligible Credits: The bonus applies to the Clean Electricity Investment Tax Credit (ITC) under Code Sec. 48E.
- Application Process: Details on the application process, allocation of capacity limitations, and required documentation for the 2025 program year.
On January 8, the IRS issued final regulations for the Code Sec. 48E(h) Clean Electricity Low-Income Communities Bonus Credit Amount Program. This program provides additional incentives for clean electricity generation facilities located in low-income communities or on Indian land.
Increased Credit Amounts
The program allows investors in qualifying clean electricity generation facilities to apply for an allocation of capacity limitation, which increases the amount of the Clean Electricity Investment Tax Credit (ITC) under Code Sec. 48E for the tax year the facility is placed in service. Depending on the category of the facility, the increase is as follows:
- 10% if the facility is located in a low-income community as defined by Code Sec. 45D(e) (Category 1).
- 20% if the facility is located on Indian land pursuant to the Energy Policy Act of 1992 (Category 2).
- 20% if the facility is part of a qualified low-income residential building project (Category 3).
- 20% if the facility is part of a qualified low-income economic benefit project (Category 4).
Final Regulations
The final regulations define the requirements for the program and expand the list of zero-emission technologies eligible for the bonus credit. The regulations also provide guidance on the application process and selection criteria.
Application Process
The program’s annual allocation of 1.8 gigawatts will be distributed among the four categories as follows:
- Category 1: Located in a Low-Income Community – 600 megawatts
- Sub-Reservation 1: Eligible residential behind-the-meter facilities – 400 megawatts
- Sub-Reservation 2: Eligible front-of-the-meter facilities and non-residential behind-the-meter facilities – 200 megawatts
- Category 2: Located on Indian Land – 200 megawatts
- Category 3: Qualified Low-Income Residential Building Project – 200 megawatts
- Category 4: Qualified Low-Income Economic Benefit Project – 800 megawatts
The application period for the 2025 program year opens on January 16, 2025, and closes on August 1, 2025. Treasury expects the program to generate approximately $4 billion in public and private investment and offset energy costs by almost $350 million annually.
Required Documentation
Applicants need to provide the following information:
- Facility Details: Description of the facility, including location, technology used, and expected output.
- Category Selection: Indicate the category under which the facility qualifies (e.g., low-income community, Indian land, etc.).
- Proof of Eligibility: Documentation supporting the facility’s eligibility for the selected category.
- Project Plan: Detailed project plan, including timelines, budget, and expected benefits.
- Compliance Assurance: Evidence of compliance with prevailing wage and apprenticeship (PWA) requirements, if applicable.
- Additional Selection Criteria: Any additional information required for facilities meeting specific selection criteria, such as ownership or geographic location.
Applications submitted within the first 30 days of the application period will be treated as submitted on the same date and time. Applications submitted after this period will be considered on a rolling basis, subject to remaining capacity.
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