To qualify for bonus incentive credits under the Inflation Reduction Act of 2022, several specific criteria must be met for different types of bonuses.
Bonus Criteria for Domestic Content
- Domestic Content Requirement: For taxpayers to qualify for the domestic content bonus credit, their qualified facility, energy project, or energy storage technology must be built with a certain percentage of steel, iron, or manufactured products that were mined, produced, or manufactured in the United States.
- Increased Tax Credits:
- 10% Increase for Investment Tax Credit (ITC): Projects that meet the domestic content requirement and have a maximum net output of less than 1 megawatt, or began construction before January 29, 2023, or meet prevailing wage and apprenticeship requirements, receive a 10-percentage point increase to the applicable “energy percentage.”
- 2% Increase for ITC: If none of the above conditions are met, a 2-percentage point increase is applied.
- Production Tax Credit (PTC) Increase: The bonus also increases the available PTC by 10%.
Bonus Criteria for Prevailing Wage and Apprenticeship
- Prevailing Wage Act (PWA): For projects that meet the PWA requirements, the base applicable tax credit is increased significantly.
- Apprenticeship Requirements:
- The taxpayer must ensure that a specified percentage of total labor hours are performed by qualified apprentices. The required percentage increases based on the construction start date.
Other Criteria
- Low-Income Communities: Bonus credits are available for solar and wind facilities placed in service in connection with low-income communities.
- Energy Community Tax Credit Bonus: Projects may qualify for additional bonuses based on community-specific factors.
These bonuses aim to incentivize projects that meet specific environmental, economic, and social criteria.
Original article by NenPower, If reposted, please credit the source: https://nenpower.com/blog/what-specific-criteria-must-be-met-for-bonus-incentive-credits/
