May 29, 2024

Treasury, IRS Release Sections 45Y, 48E Inflation Reduction Act Tech-Neutral Credit Guidance

Holland & Knight Alert
Nicole M. Elliott | Amish Shah | Mary Kate Nicholson | Brad M. Seltzer | Roger David Aksamit | Joshua David Odintz | Bryan Marcelino | Daniel Graham Strickland | Kenneth W. Parsons | Eli Brander | Rachel T. Provencher

The U.S. Department of the Treasury and IRS on May 29, 2024, released a notice of proposed rulemaking (NPRM) regarding the clean electricity production credit determined under Section 45Y and the clean electricity investment credit determined under Section 48E of the Internal Revenue Code. Enacted by the Inflation Reduction Act, Section 45Y and Section 48E replace the traditional Section 45 production tax credit and Section 48 investment tax credit and apply to projects placed in service after Dec. 31, 2024. The credits are in effect until at least 2032, when they become subject to a three-year phaseout.

For a project placed in service after 2024, the construction of which begins before 2025, the project may be eligible for more than one of the credits determined under Sections 45, 45Y, 48 or 48E, although a taxpayer can claim only one of these credits with respect to such a project. Taxpayers seeking the Section 45 or Section 48 credit should begin undertaking activities to begin construction under either the physical work test or the 5 percent safe harbor.

Among other things, the NPRM provides rules for:

  • determining greenhouse gas emissions rates resulting from the production of electricity
  • petitioning for provisional emissions rates
  • determining eligibility for Section 45Y and Section 48E
  • setting the phaseout for Section 45Y and Section 48E

The Holland & Knight Energy Tax Team is reviewing the NPRM and will provide additional analysis. To be sure you receive this forthcoming analysis, please subscribe to our alerts.

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