Clean Electricity Investment Tax Credits for Businesses

What is the current status of this program?

The IRA made these credits available through 2033, but the budget reconciliation bill signed July 4 ends them sooner for solar and wind projects. The IRA credits stay in place for storage, geothermal, biomass, and hydroelectric projects, which must start construction by the end of 2033 to claim the full credit (credits phase out gradually in 2034 and 2035).

To receive the credits described below, solar and wind projects must be placed in service by the end of 2027 or begin construction by July 4, 2026 (in which case, the project must be placed in service within 4 years of the beginning of construction). Beginning in 2026, projects are subject to new “foreign entity of concern” (FEOC) rules that deny credits to projects with too much Chinese equipment or Chinese involvement (more info here). A July 7 Executive Order gave the Treasury Department 45 days to issue guidance on FEOC rules and on what constitutes beginning construction. Traditionally, a project was deemed to have begun construction if it had incurred at least 5% of total project cost or had performed “physical work of a significant nature.” FEOC guidance has yet to be issued, but Treasury issued beginning-of-construction guidance on August 15. Rules are unchanged for projects less than 1.5 MW, but larger projects can no longer use the 5% rule. See details in the guidance and in articles from Lawyers for Good Government, Utility Dive and Canary Media.

Note: some links to Federal websites below (the ones with “web.archive.org” or “bidenwhitehouse.archives.gov” in the URL) are archived versions no longer being updated.

What does this funding get me?

If you install clean energy technology such as solar, wind, geothermal power, or battery storage on property belonging to your business, you can get 30-70% of the price back as a tax credit.

Note: the rules are different for tax-exempt entities (learn more here)

Am I eligible?

The credit is available to business taxpayers who install qualified energy and/or storage technology.

For-profit entities are eligible for a 30% investment tax credit (ITC). 

Additional credits of up to 40% depend on whether your project is located in an “energy community” or low-income community, and on the percentage of domestic content in the materials used in the project.  

If your project is over 1 megawatt, there are additional wage and apprenticeship requirements. 

You can only use the credit up to the amount of tax you owe, but unused credits can be sold to another for-profit entity.

See below for more detail on these provisions.

How can I access the money?

The IRA restored the 30% tax credit for clean energy, extended it through 2033, added several additional “bonus credits,” and added a provision allowing for-profit businesses to sell any unused part of the credit to another for-profit business (“transferability”).

Depending on your project, you will receive 30-70% of the cost of the project as a tax credit. The credits and bonus credits are: 

• 30% base credit for projects under 1 megawatt (above 1 megawatt must satisfy prevailing wage and apprenticeship requirements or else they get only 6% credit)
• 10% bonus for projects located in an “energy community” (2% if project is > 1 MW and does not satisfy wage/apprenticeship requirements; see more info on energy communities, map for identifying them, and updated 2025 guidance on eligibility) 
• 10% bonus for projects with minimum domestic content (2% if project is > 1 MW and does not satisfy wage/apprenticeship requirements) (domestic content rules are explained in this IRS notice, this updated notice, and this July 2024 webinar)
• Low-income credits: 10% bonus for projects < 5 MW located in a low-income community or on Tribal land OR 20% bonus for projects < 5 MW that are part of a qualified low-income residential project or otherwise provide financial benefit to low-income people. 

More on the low-income bonus credit

The 10% or 20% low-income credits are not guaranteed, because quantity is limited to 1.8 gigawatts per year through 2033. Therefore, unlike all the other credits, you must apply for them before putting the project in service. After being approved, you have 4 years to install the project.

The 2025 application period for the low-income bonus credit ran from January 16 to August 1, 2025. Applications received by February 14 will be reviewed first, after which remaining capacity will be awarded on a rolling basis to applications received after February 14. Detailed procedures and updates can be found on Department of Energy and IRS web pages.

Once DOE starts reviewing applications each year, you can check this dashboard to see how much of the available capacity remains available in each category. Certain amounts are set aside for projects that meet additional ownership or geographic criteria (generally, projects owned by tax-exempt entities or located in disadvantaged communities). More info can be found in the IRS guidance and final regulation.

Although any business or nonprofit installing a project in a low-income area can apply for this bonus credit, it is low-wealth entities who most benefit since they might not otherwise have the funds to complete their projects.

More on transferability

If you want to sell (transfer) part or all of your credit to another taxpayer (for example, if the credit you earn will exceed the amount of tax you owe), you must pre-register with the IRS.  More details in this FAQ and in an April 2024 IRS notice of final rules on transferability. 

If you plan to transfer all or part of your credit, you must register with the IRS to notify them you will be doing so. You will be given a registration number that you and your transferee will use when you file your IRS returns for the year in which you installed the equipment. Register here and learn more about the registration process in this IRS user guide. If you have trouble registering, you can request help by sending an email to: irs.elective.payment.or.transfer.of.credit@irs.gov (note this is only for technical questions regarding the preregistration tool, not for tax questions).

After you install the project, claim the credits when you file your Federal tax return for the year in which you installed the equipment.

Note that your credit may be reduced if the total of tax credits, grants, and forgivable loans that you receive for the project exceeds the project cost. For details on this “excess benefit” rule, see Question 41 in this IRS FAQ.

What is the timeline?

See “What is the current status of this program?” at the top of this page. 

What other incentives could I use to help me accomplish my goals?

• If you are a rural business, you may be eligible for a REAP grant that will pay part of the cost not covered by the tax credit. 
• Most businesses installing renewable energy systems for their own use will elect to take this investment tax credit (ITC), but another option is the production tax credit (PTC) that pays a credit over 10 years based not on the cost of the system but on the kilowatt-hour output. Learn more here but note that this credit is also subject to the changes described in the italic paragraph at the top of this page.
• Check the Database of State Incentives for Renewables & Efficiency (DSIRE) for additional incentives that may be offered by your state, local government, or utility, as well as important federal, state, and local policies. For questions regarding DSIRE, contact Justin Lindemann (NC Clean Energy Technology Center) at jplindem@ncsu.edu.
• Check out our (non-exhaustive) list of non-federal funding from other sources that may fit your energy and cost-saving goals.

Where can I get more information?

• Lawyers for Good Government has compiled a resource page on IRA tax incentives. Although it is designed for tax-exempt entities, much of the information also applies to for-profits.
• IRS web page for low-income bonus credits
• Department of Energy web page on Federal Solar Tax Credits for Businesses (no longer being updated)
• Treasury Department resources on IRA, including tax guidance (no longer being updated)
• Your tax preparer
• The company installing your clean energy equipment (Need to find one? Start your journey by getting quotes from one or more of the companies listed on the NC Sustainable Energy Association’s Solar Business Code of Conduct, the Amicus Cooperative membership list, or the NABCEP certification list. All these companies have made a commitment to good business practices. Use caution if responding to online or door-to-door solar sales pitches, some of which have been found to use fraudulent practices.)
• Randy Lucas (licensed CPA specializing in energy incentives), website, randy@lucastaxandenergy.com, 704-412-1522
• IRS FAQ page on transferability
• Department of Energy web page for low-income bonus credits (no longer being updated)
• For specific questions or more assistance, contact Sally Robertson at info@energyfundsforall.org. Please note this contact is not a certified tax professional.

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