The Inflation Reduction Act Extends Product Tax Credit
Buried below the headlines are several key programs extended or created by the Inflation Reduction Act. Chief among them, manufacturers should note, is an extension of the Production Tax Credit. What does the PTC do for you?
What Is The Production Tax Credit?
The PTC was created in 1992 under the Energy Policy Act. The program offers a ten-year, inflation-adjusted federal income tax credit for every KWh of energy produced by renewable energy.
Since 1992, the PTC has seen numerous revisions shaped by technological developments and market forces. Today, the tax credit includes a dozen renewable facilities, including:
Wind power
Biomass
Landfill gas
Hydropower
Marine and Hydrokinetic
Zero-emission nuclear
Clean hydrogen
Solar, wind and energy storage
Production Tax Credit Labor Requirements
The PTC also includes specific labor requirements and caps payouts at 1 MW of electricity production to quality. Employers must pay prevailing wage during project construction and on-site staff for the first 10 years of operation. Developers must also meet certain domestic material minimums for steel, iron and other materials.
Changes To The PTC In The Inflation Reduction Act
Renewable energy gets an additional 2 years under the Inflation Reduction Act of 2022. The base tax credit is set at 0.3 cents per kWh, though qualifying projects could earn up to 1.5 cents per kWh if they meet new prevailing wage and apprenticeship requirements. The new PTC includes an additional 10% credit if developers meet previous domestic material requirements. Learn more about our energy consultation services to capitalize on these credits.
What Is In the Inflation Reduction Act?
The CBO released a study that estimated $739 billion in revenue from the IRA. Most of the spending – which totals roughly $433 billion – is focused primarily on tax credits and clean energy production investment. It also includes an extension of the Affordable Care Act and bumps up corporate taxes to 15% and several additional healthcare and tax code “pay-for” adjustments.
Go Deeper - Make The IRA Work For Your Business
Keen Technical Solutions can help your business identify, quality, and meet the requirements of the IRA and PTC. Invest in your business sustainably and utilize federal, state and local rebates and tax credits to go green. Contact a Keen Technical Solutions representative today.