Program provides a 10 or 20-percentage point tax credit boost for solar and wind projects in low-income or Tribal communities
WASHINGTON —Today, the U.S. Department of the Treasury, U.S. Department of Energy, and Internal Revenue Service (IRS) announced that applications for the Low-Income Communities Bonus Credit program under Section 48(e) of the Internal Revenue Code will open at 9am ET on October 19, 2023. To provide information about the application process ahead of this date, Treasury and the Department of Energy will be launching the program help desk and hosting a webinar about the application process on September 29; potential applicants can register for the webinar here. The webinar recording will be made available online after the event for those who cannot attend. Additional materials to help applicants prepare their submissions will be made available on the Department of Energy landing page in the coming weeks.
This groundbreaking program through President Biden’s Inflation Reduction Act — the largest climate investment in history — provides a 10 or 20-percentage point boost to the Investment Tax Credit for qualified solar or wind facilities in low-income communities. The goals of the program are to increase access to clean energy in low-income communities, encourage new market participants, and benefit individuals and communities that have experienced adverse health or environmental effects or lacked economic opportunities. This program will advance President Biden’s Investing in America Agenda — a key pillar of Bidenomics — by lowering energy costs and providing breathing room for hard-working families, creating good-paying clean energy jobs in low-income and Tribal communities, and supporting small businesses.
“One of the goals of President Biden’s Investing in America Agenda is to ensure all Americans benefit from the growth of the clean energy economy,” said Deputy Secretary of the Treasury Wally Adeyemo. “This new bonus incentive through the Inflation Reduction Act will drive investment to underserved communities to ensure they benefit from lower energy costs and reduced pollution and health hazards. Treasury, in partnership with the Department of Energy, looks forward to opening applications for the program on October 19 and starting to make allocations by the end of the year.”
As provided in previous guidance, the Low-Income Communities Bonus Credit Program will allocate 1.8 gigawatts of capacity available through competitive application for the 2023 program across four categories of qualified solar or wind facilities with maximum output of less than five megawatts. The IRS intends to allocate up to: 700 megawatts to facilities located in low-income communities; 200 megawatts to facilities located on Indian land; 200 megawatts to facilities that are part of federally-subsidized residential buildings, including housing supported by the Low-Income Housing Tax Credit and Section 8 of the Housing Act; and 700 megawatts to facilities where at least 50 percent of the financial benefits of the electricity produced go to households with incomes below 200 percent of the poverty line or below 80 percent of area median gross income.
Depending on the availability of capacity, applications for the 2023 program are expected to be accepted through early next year. The Treasury Department and IRS may choose to reallocate capacity between categories in the event of oversubscription in any category, and unclaimed capacity will roll over into the 2024 program year, when another base 1.8 gigawatts of capacity will be available via application.
For a full list of the Treasury Department’s work to implement the Inflation Reduction Act, see below:
May 31, 2023: U.S. Departments of Treasury and Energy Release Additional Guidance on Inflation Reduction Act Programs to Incentivize Manufacturing and Clean Energy Investments in Hard-Hit Coal Communities