inflation reduction act tax credits - clean energy projects

Inflation Reduction Act Resource Center

The Inflation Reduction Act (IRA) of 2022 includes the largest clean energy incentive effort in U.S. history. Find out how your organization can leverage IRA tax credits to save as much as 50% or more on qualifying project costs.

Inflation Reduction Act Resource Center

  1. Tom Unke

    Thomas E. Unke

    CPA

    Partner

  2. Cory Wendt

    Cory R. Wendt

    Principal

  3. David Capitano

    David Capitano

    CPA

    Partner

  4. Gideon Gradman

    Gideon Gradman

    Baker Tilly Capital, LLC Managing Director

  5. Doug Baldessari

    Doug Baldessari

    CPA

    Partner

  6. Jeff Petrell

    Jeffrey J. Petrell

    J.D., CPA, CGMA

    Partner

  7. Michelle Abel

    Michelle Abel

    J.D.

    Principal

  8. Tyler R. Inda

    Tyler R. Inda

    J.D.

    Principal

  9. Bryan Halpin

    Bryan Halpin

    Director

Maximize tax credits. Save on project costs. Create community impact.

The Inflation Reduction Act (IRA) requirements are everchanging and only a limited number of tax credits are offered. Lean on our specialists to help your organization effectively position your project to maximize and receive eligible Inflation Reduction Act tax credits.

What is the Inflation Reduction Act of 2022?

The Inflation Reduction Act of 2022 includes the largest energy incentive effort in U.S. history. It builds on the energy initiatives included in 2009’s American Reinvestment Recovery Act, generating opportunities for organizations across various industries to receive tax credits for implementing clean energy solutions.

The IRA includes more than 70 investment, production and excise credits designed to facilitate the transition to cleaner energy production, promote advanced manufacturing, encourage the adoption of clean vehicles (CVs) and reduce greenhouse gas emissions through the use of alternative fuels and energy efficient technologies. Additionally, significant enhancements have been made to the U.S. Department of Agriculture (USDA) and Department of Energy (DOE) loan programs.

IRA services

The IRA is complicated, and guidance and compliance requirements continue to be released. Baker Tilly’s energy, tax and industry specialists can help your organization understand the complexities and how to effectively position your project to receive and maximize eligible credits.

  • Provide technical expertise to help organizations understand the credits and identify potential steps to take to secure the credits
  • Determine project eligibility and develop enterprise strategies to leverage IRA opportunities
  • Manage development projects to maximize available credits (e.g., prevailing wage and apprenticeship (PW&A), domestic content requirements)
  • Help ensure compliance with requirements
  • Advise on how IRA credits align with other aspects of an organization’s capital stack
  • Generate workpaper files to support investment tax credit claims
  • Provide funding support and tax credit monetization or transfer

New IRA guidance

IRA guidance is everchanging, and we'll keep you informed. Our specialists do a deep dive into proposed, final and updates to IRA regulation. Our insights and key takeaways can help your organization maximize and receive eligible credits and remain compliant.

Explore the IRA regulatory guidance and check back here for continued updates.

IRS releases pre-registration portal for IRA elective pay and transferable credits

The IRS has opened the pre-filing registration portal for claiming tax credits under the Inflation Reduction Act and the CHIPS Act of 2022. Taxpayers must register through the portal to acquire a registration number – a separate number for every credit it will claim within the filing – and to ultimately claim the tax credits. The pre-filing registration portal seeks general information about the taxpayer and specific details about the credits.

The section 45X tax credit

Eligible to a wide range of manufacturers, Section 45X Manufacturing Production Tax Credit (PTC) of the Inflation Reduction Act was created to expand the domestic supply chain of critical components used in advanced energy production. To obtain the credit, manufacturers who produce and sell qualifying products and meet program requirements can claim the credits on their tax return.

Explore the available credits

There are more than 70 available tax credits within the IRA to facilitate the clean energy transition. What is your organization eligible for? Get started with an IRA specialist.

IRA FAQ

  • What are the energy provisions in the Inflation Reduction Act?
  • What is meant by a "credit"?
  • What are existing credits vs. new credits?

What are the energy provisions in the Inflation Reduction Act?

The Inflation Reduction Act includes four broad areas of credits. Many of these credits start with a base amount and can be increased by a factor of five if a project pays prevailing wages and employs apprentices. More details are found in the overview. Baker Tilly advisors are available to help address your project’s specific needs and requirements.

  • Clean energy production and investment: Production tax credit (current section 45 and new section 45Y), investment tax credit (current section 48 and new section 48E clean electricity investment credit)
  • Advanced manufacturing: Advanced energy project credit (section 48C), advanced manufacturing production credit (section 45X)
  • Electric vehicles and alternative fuels: Clean vehicle credit (section 30D), previously owned clean vehicles (section 25E), new credit for qualified commercial clean vehicles (section 45W), alternative fuel vehicle refueling property (section 30C), biodiesel and renewable diesel used as fuel credit (section 40A), alcohol fuel, biodiesel and alternative fuel mixtures credit (section 6426), new sustainable aviation fuel credit (section 40B), new clean fuel production credit (section 45Z)
  • Energy efficiency: Nonbusiness energy property credit (section 25C), residential clean energy credit (section 25D), new energy-efficient home credit (section 45L), energy-efficient commercial buildings deduction (section 179D)

What is meant by a "credit"?

The Act provides for a direct offset to federal tax liability in the form of a tax credit. These credits represent a financial offset for an organization’s qualified construction or production costs, making the economics of many projects work better than they would have without the credits. Most credits are good through 2032, the longest U.S. “energy policy” time frame ever.

Three ways credits bring value to projects:

  • Owner(s) can simply use the tax credit against their own tax liability, in most case back three-year and forward 22 years.
  • If owner(s) doesn’t have tax liability or taxable income, they can now sell certain credits to another taxpayer* (“Transferability”).
  • Tax – exempt owners can receive a “direct payment” in the form of cash payment from the IRS. These include state and local governments, not-for-profits, tribes and others (“Direct Pay”) for certain credits.

Essentially, the IRA Act is enabling all entities to utilize this legislation regardless of tax status.

*passive activity rules can apply

What are existing credits vs. new credits?

There are many types of funding opportunities under the IRA. The below provides an overview of the existing and new tax credits. Qualifying Energy Property projects has a broad definition and can include but is not limited to the following project types:

Existing credits with enhanced features are available in the following areas:

  • Biomass
  • Carbon capture utilization and storage
  • Combined heat and power (CHP)
  • Geothermal heating and cooling
  • Low carbon fuels (biodiesel, ethanol, renewable diesel, renewable natural gas, propane)
  • Waste to energy recycling
  • Wind, solar, hydro electric

New credits are available for the following:

  • Clean hydrogen
  • Clean transportation fuels
  • Electric vehicles (EVs) and EV infrastructure
  • Energy efficiency construction
  • Energy equipment and component manufacturing
  • Energy storage (batteries)
  • Qualifying biogas
  • Solar production tax credit (PTC)
  • Sustainable aviation fuels
  • Zero emission nuclear

Connect with IRA leaders

Baker Tilly energy and tax specialists can help your organization navigate The Inflation Reduction Act tax credits and guide you along the steps to secure the maximum eligible credits. We leverage industry specialization to help evaluate your projects that involve energy efficiency, renewable energy or other eligible components under the IRA – prior, current or future projects.