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The Inflation Reduction Act (IRA) has invested billions of dollars in new clean energy projects across the United States, with a focus on the communities that need it most. The IRA includes several provisions to promote environmental justice, economic justice, and equity; including the low-income communities bonus credit.
This credit is a financial incentive for companies to build clean energy projects in low-income communities. This will help to ensure that these communities benefit from the economic and environmental benefits of clean energy, such as job creation, reduced pollution, and lower energy costs.
However, these applications are complicated and many will require assistance. Here’s what you need to know:
Why apply for the bonus credit?
For eligible solar and wind energy facilities with a maximum net output of less than five megawatts, the bonus credit raises the investment tax credit by 10 or 20 percent. This can make a big difference in the financial viability of renewable energy projects.
Who is eligible for the bonus credit?
To be eligible for the bonus credit, a renewable energy project must:
- Be located in a low-income community or on Indian land
- Be part of an affordable housing development
- Benefit low-income households
How to apply for the bonus credit
To apply for the bonus credit, companies must submit an application to the U.S. Department of Energy. The application process will be competitive, so it is important to submit a strong application.
Timeline:
Applications will begin to be accepted on Oct. 19, 2023, and the deadline to apply is early 2024.
How can CohnReznick help?
CohnReznick can help companies with every step of the application process:
- Support in the application process
- Creation of an application checklist
- Creation of a dashboard to track the application process
- Assistance with designing a compliance strategy
- General support to the development of the most appropriate business strategy for your organization
If you are a company that needs help with the bonus credit application process, please contact us. We would be happy to answer your questions and help you get started.
Contact
Anton Cohen, CPA, Partner, Renewable Energy Industry and Project Finance and Consulting Practice Leader
301.280.1822
Stephanie Caragher, CPA, Partner, Project Finance & Consulting
704.837.7252
Anton Cohen
CPA, Partner, Renewable Energy Industry and Project Finance and Consulting Practice Leader
Stephanie Caragher
CPA, Partner, Project Finance & Consulting
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The Inflation Reduction Act
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This has been prepared for information purposes and general guidance only and does not constitute legal or professional advice. You should not act upon the information contained in this publication without obtaining specific professional advice. No representation or warranty (express or implied) is made as to the accuracy or completeness of the information contained in this publication, and CohnReznick LLP, its partners, employees and agents accept no liability, and disclaim all responsibility, for the consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this publication or for any decision based on it.