Low-Income Communities Bonus Credit Program Opens Soon

On October 19, 2023, the Department of Energy (DOE) will begin accepting applications across all four categories of the Low-Income Communities Bonus Credit Program.

The four categories in the program include the following:

1. Facilities located in a low-income community,
2. Facilities located on Indian land,
3. Qualified low-income residential building projects, and
4. Qualified low-income economic benefit projects.

The Low-Income Communities Bonus Credit was established under Internal Revenue Code Section 48(e), which was created by the Inflation Reduction Act to promote renewable energy investments in low-income communities, on Indian land, as part of affordable housing developments, and benefitting low-income households.

The priorities of the program are the following:

• Increased adoption of, and access to, renewable energy facilities in underserved and environmental justice communities.
• Encouraging new market participants.
• Providing substantial benefits to underserved communities and individuals who have been historically marginalized from economic opportunities and overburdened by environmental impacts.

The bonus credit provides a 10 or 20-percentage point increase to the investment tax credit for qualified solar and wind energy facilities with a maximum net output of less than five megawatts. The DOE will review applications and make recommendations to the Internal Revenue Service, which will allocate up to 1.8 gigawatts of eligible solar and wind capacity per year.

A 10-percentage point increase is available to eligible solar and wind facilities that are installed in low-income communities or on Indian land, and a 20-percentage point credit increase is available to eligible solar and wind facilities that are part of a qualified low-income residential building or a qualified low-income economic benefit project.

Please contact a Ryan tax professional today for information on applying for the benefits of this program.

TECHNICAL INFORMATION CONTACT:

Ian Boccaccio
Principal
Ryan
469.399.4545
ian.boccaccio@ryan.com  

The material presented in this communication is intended to provide general information only and should solely be seen as broad guidance and not directed to the particular facts or circumstances of any individual who may read this publication. No liability is accepted for acts or omissions taken in reliance upon the content of this piece. Before taking (or not taking) any action, readers should seek professional advice specific to their situation from Ryan, LLC or other tax professionals. For additional information about this topic, please contact us at info@ryan.com.