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Are you working on a construction project? You could benefit from the Inflation Reduction Act.

Are you currently in construction on a project that could be done after 12/31/22 or considering an upcoming construction project and are wondering what opportunities may exist resulting from the Inflation Reduction Act (IRA). Read this short overview to learn more.

The IRA is a large, complex new law with over 700 pages of new tax credits, incentives and modification of existing incentives, which sets a new direction for U.S. energy policy. Additionally, much of the information is written to modify existing language from other existing law and guidance, making it even more difficult to decipher. 

Rest assured there is an easier way to learn more about the IRA’s energy provisions. The Act includes over 70 different mechanisms and incentives, many in the form of tax credits, that may allow you to access funding sources for your construction projects in the form of direct cash payments, tax credits that can offset your end-of-year tax liability, or tax credits that you can transfer and sell for immediate economic benefit depending on your tax status.

The IRA may be a great opportunity to decrease construction costs if you or your company are planning to:

  • Expend funds generally aimed at increasing energy efficiencies
  • Reduce dependence on carbon-based energy
  • Manufacture products that support renewable energy
  • Fuel space or overall reduce your carbon footprint

So, where do you start?

  1. Look at your capital budgets for the upcoming year(s).
  2. Ask yourself if any of these projects could affect the items listed above.
  3. If you answer yes, contact your energy tax advisor and discuss the opportunity.
  4. Given the timing of the project, you may need to execute some very important steps to both preserve and maximize available funding for your project.

After fully vetting your capital projects, you should be able to identify any potentially qualifying projects which will allow you to determine the viability of potential projects. It is important to note that while many qualifying projects may be able to recover 30%, 40%, 50% or higher, there are critical steps you need to take to maximize those opportunities.

Baker Tilly is here to help you along your journey. Connect with our team to learn more about the IRA and potential opportunities.

 

Thomas E. Unke
Partner
Team collaborates on client project
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