Inflation Reduction Act Energy and Manufacturing Incentives
Manufacturing Incentives
Tax Incentive	General Description	IRC Section	Amount	Date Restriction	
Advanced Manufacturing Production Credit	Tax credit for solar/wind/battery components, inverters, and critical minerals, produced in the U.S. and sold by manufacturer to unrelated person	45X	Varies by component type

Phases down over 2030-2032	Components and minerals produced and sold in 2023-2032 	
Advanced Manufacturing Investment Credit
(added by the CHIPS Act)	Tax credit for domestic manufacturing of semiconductors and equipment to manufacture semiconductors	48D	25% of investment in manufacturing facility	Construction begins before 2027	
Qualifying Advanced Energy Project Credit (investment credit for clean manufacturing)	Tax credit for project that (1) re-equips, expands, or establishes an industrial or manufacturing facility for the production or recycling of a range of clean energy equipment and vehicles; (2) re-equips an industrial or manufacturing facility with equipment designed to reduce greenhouse gas emissions by at least 20%; or (3) re-equips, expands, or establishes an industrial facility for the processing, refining, or recycling of critical materials.	48C(e)	6% of qualifying investment

30% of qualifying investment if wage & apprenticeship requirements are met	Taxpayers must submit concept paper to DOE by 7/31/23 to be considered for credit allocation in Round 1	

Renewable Energy Incentives
Tax Incentive	General Description	IRC Section	Amount	Date Restriction	
Renewable Electricity Production Credit	Tax credit for facilities generating electricity from wind, biomass, geothermal, solar, small irrigation, landfill and trash, hydropower, and marine and hydrokinetic renewable energy 	45	Base: 0.3 cents/kW, inflation-adjusted 

1.5 cents/kW qualified investment if wage & apprenticeship requirements are met

Increases:
10% (domestic content requirements for steel, iron, manufactured products) 

10% (located in energy community)

Reductions: Up to 15% for tax-exempt bond financing	Construction begins before 2025

First 10 years of operation only	
Energy [Investment] Credit	Tax credit for investment in renewable energy (fuel cell, solar, geothermal, small wind, energy storage, biogas, microgrid controllers, and combined heat and power) properties. 
“Solar” includes (1) equipment that uses solar energy to generate electricity, to heat or cool (or provide hot water for use in) a structure, or to provide solar process heat, and (2) equipment that uses solar energy to illuminate the inside of a structure using fiber-optic distributed sunlight or electrochromic glass that uses electricity to change its light transmittance properties in order to heat or cool a structure.	48	Base: 6% of qualified investment

30% of qualified investment if wage & apprenticeship requirements are met

Geothermal Heat Property: 
6% in 2023-2032 
5.2% in 2033 
4.4% in 2034

Increases: 
10% (domestic content requirements for steel, iron, manufactured products) 

10% (located in energy community)

10-20% for solar & wind facilities with maximum net output less than 5 MW on Indian land and in low-income communities, if facility is allocated §48(e) environmental justice solar and wind capacity limitation and property is placed in service within 4 years after notification of the allocation of capacity limitation

Reductions: Up to 15% for tax-exempt bond financing	Construction begins before 2025	
Clean Electricity Production Credit	Technology-neutral tax credit for generating electricity for which greenhouse gas emissions rate is zero	45Y	Base: 0.3 cents/kWh, inflation-adjusted 

1.5 cents/kWh if wage & apprenticeship requirements are met

Increases:
10% (domestic content requirements for steel, iron, manufactured products) 

10% (located in energy community)

Reductions: Up to 15% for tax-exempt bond financing

Additional Incentive: 
Facilities or property that qualify for this credit will be treated as a 5-year property for purposes of cost recovery (depreciation).
Pub. L. No. 117-169, §13703	Placed in service after 2024

Phaseout begins the later of
(a) 2032; or (b) when U.S. greenhouse gas emissions from electricity are 25% of 2022 emissions
or lower.	
Clean Electricity Investment Credit	Technology-neutral tax credit for investments in (1) facilities generating electricity for which greenhouse gas emissions rate is zero and (2) qualified energy storage technology	48E	Base: 6% of qualified investment

30% of qualified investment if wage & apprenticeship requirements are met

Increases:
10% (domestic content requirements for steel, iron, manufactured products) 

10% (located in energy community)

Reductions: Up to 15% for tax-exempt bond financing

Additional Incentive: 
Facilities or property that qualify for this credit will be treated as a 5-year property for purposes of cost recovery (depreciation).
Pub. L. No. 117-169, §13703	Placed in service after 2024

Phaseout begins the later of
(a) 2032; or (b) when U.S. greenhouse gas emissions from electricity are 25% of 2022 emissions
or lower.	
Zero-Emission Nuclear Power Production Credit	Production tax credit for electricity produced at zero-emission nuclear power facility	45U	0.3 cents/kWh, inflation-adjusted after 2024. Phases down depending on amount of energy produced and facility’s gross receipts

Bonus Credit Amount: 1.5 cents/kWh if wage requirement is met for workers doing alteration or repair

Stackability:  Can’t claim both 45J and 45U credits. 
Payments from federal, state, local subsidies reduce credit amount	Electricity produced and sold after 2023, in tax years beginning in 2024-2032	
Clean Hydrogen Production Credit	Tax credit for facilities producing low-emission hydrogen	45V	$0.60/kg multiplied by “applicable percentage” ranging from 20% to 100% depending on lifecycle greenhouse gas emissions. Inflation-adjusted.

$3/kg multiplied by the applicable percentage if wage & apprenticeship requirements are met	Construction begins before 2033

First 10 years of operation only	

Energy Efficiency Incentives
Tax Incentive	General Description	IRC Section	Amount	Date Restriction	
Energy Efficient Commercial Buildings Deduction	Accelerated cost recovery deduction for energy-efficient interior lighting,  building envelope, HVAC, or hot water systems for commercial buildings	179D	$0.50-$1 per square foot, depending on increase in efficiency, with deduction over four-year periods capped at $1/sq. ft. Inflation-adjusted. 

$2.50-$5 per square foot, depending on increase in efficiency, with deduction over four-year periods capped at $5/sq. ft. if wage & apprenticeship requirements are met.

Alternatively, taxpayers can deduct adjusted basis in "qualified retrofit plans" that reduce building's energy use intensity by at least 25%.	None (deduction is permanent); modified rules generally begin in 2023	
New, Used, and Commercial Clean Vehicle Credits	Tax credit for energy-efficient vehicles not powered by gasoline or diesel engines (e.g., EVs, plug-in hybrids, fuel cell vehicles)	30D, 25E, 45W	New: Up to $7,500: $3,750 for meeting critical minerals requirement + $3,750 for meeting battery component requirement
Credit unavailable to buyers with current or prior-year AGI above $300,000 (couples), $225,000 (heads of household), $150,000 (singles). 
Used: Lesser of $4,000 or 30% of sale price
Credit unavailable to buyers with current or prior-year AGI above $150,000 (couples), $112,500 (heads of household), $75,000 (singles).
Commercial: Up to $7,500 for vehicles < 14,000 lbs and $40,000 for all other clean vehicles
Lesser of 15% of cost basis (30% if not powered by gasoline or diesel engine) or amount by which purchase price exceeds price of a comparable internal combustion vehicle	New: Placed in service before 2033
Used: Acquired before 2033
Commercial:  Acquired before 2033	
Alternative Fuel Vehicle Refueling Property Credit	Tax credit for electric charging infrastructure (including bidirectional charging equipment) and other alternative-fuel refueling property placed in service in a low-income or rural census tract	30C	6% of cost

30% of cost if wage & apprenticeship requirements are met	Placed in service before 2033	
Carbon Oxide Sequestration Credit	Tax credit for carbon oxide (including carbon dioxide) sequestration coupled with permitted end uses within the United States, for U.S. facilities with minimum volumes: 1,000 metric tons of CO2 per year for DAC facilities; 18,750 metric tons for electricity generating facilities (with carbon capture capacity of 75% of baseline CO2 production); 12,500 metric tons for any other facility.	45Q	$17/metric ton of carbon oxide captured and sequestered; $12/metric ton for carbon oxide that is injected for enhanced oil recovery or used; 
$36/metric ton and $26/metric ton, respectively, for direct air capture facilities.

5X the amounts above if wage & apprenticeship requirements are met	Construction begins before 2033

12-year credit period	
Energy Efficient Home Improvement Credit	Tax credit for energy-efficiency improvements of residential homes, available to homeowners (and tenants for certain improvements).	25C	30% of cost

Annual Limits:

$2,000 for electric and natural gas heat pump water heaters, electric and natural gas heat pumps, and biomass stoves and boilers 

$1,200 for all other qualifying property combined

$600 per energy property item (energy-efficient heating and cooling equipment)

$600 for windows & skylights

$250 per exterior door

$500 for exterior doors

$150 for home energy audits	Placed in service before 2033	
Residential Clean Energy Credit	Tax credit to homeowners and tenants for the purchase of residential clean energy equipment, including battery storage with capacity of at least 3 kWh.	25D	2023-2032: 30% of cost
2033: 26%
2034: 22% 

Fuel Cell Limit:
$500/each ½ kilowatt capacity	Placed in service before 2035	
New Energy Efficient Home Credit	Tax credit to eligible building contractors for new energy-efficient homes sold to homeowners	45L	$500 for new homes meeting Energy Star standards or $1,000 for certified zero-energy ready homes

$2,500 for new homes meeting Energy Star standards or $5,000 for certified zero-energy ready homes if wage requirements are met	Homes purchased before 2033