In an article with Accounting Today, Baker Tilly Director Chad Resner and Principal Michelle Abel were quoted sharing their thoughts, highlighting the importance of the Inflation Reduction Act's provisions, such as the 48C credit for advanced manufacturing, which offers significant incentives for renewable energy projects and has garnered considerable interest.
The Internal Revenue Service (IRS) and the Treasury Department released updated guidance on a provision in the Inflation Reduction Act that aims to encourage investment in communities affected by declines in fossil energy production, particularly coal-mining towns.
The guidance focuses on the energy community bonus, which offers incentives for clean energy projects through the Investment Tax Credit and Production Tax Credit.
The eligibility for the energy community bonus has been updated based on local unemployment rate data and technical clarifications. Communities with closed coal mines or coal-fired power plants, as well as those with significant employment, local tax revenues, and higher than average unemployment, may qualify. Check out Baker Tilly's Energy Community Mapping tool to see if your project may qualify.
Developers can receive the bonus for locating projects in historically fossil energy-dependent communities or on brownfield sites, which are properties with potential environmental hazards or contamination.
The Inflation Reduction Act aims to lower energy costs, combat climate change, promote economic opportunity, and create jobs in energy-producing communities, with a particular focus on coal communities.
The tax credits provided by the Inflation Reduction Act, such as the advanced manufacturing investment credit, can significantly impact large-scale renewable energy projects and benefit low-income communities, including Native American tribes.
The IRS and Treasury Department have been gradually issuing guidance and regulations related to the Inflation Reduction Act, expanding incentives for renewable energy and advancing clean energy initiatives.