In the News | Trellis
The IRA is turning 2, and businesses prepare for the next phase of clean energy subsidies
IRA businesses prepare next phase clean energy subsidies
The Inflation Reduction Act (IRA) includes the largest clean energy incentive effort in U.S. history, leading to more than $361 billion in investments since it was signed into law two years ago. In an article with Trellis, Baker Tilly’s Joel Laubenstein shares considerations for what organizations can do now to take full advantage of these clean energy tax credits, including how they can effectively position their projects to meet the domestic content bonus.
Explore the key takeaways from the article.
- Impact of the IRA: Since its passage on Aug. 16, 2022, the IRA has driven a major surge in clean energy development, resulting in over $361 billion in investments and the creation of more than 312,000 jobs across 585 new projects.
- Transition to tech neutral credits: Beginning Jan. 1, 2025, the Investment Tax Credit (ITC) and Production Tax Credit (PTC) will shift to “tech neutral” credits. This means businesses can receive tax credits for various renewable energy sources, such as solar, wind, nuclear, geothermal, hydropower and stored energy, without needing to specify the technology used. Learn more about the new tax credit regime.
- Introduction of elective pay: The IRA introduced a system called “elective pay,” which allows entities to receive direct cash payments equivalent to the value of the applicable tax credit for constructing clean energy projects. This is especially advantageous for non-profit organizations like municipalities, universities and healthcare institutions.
- Domestic content bonus: Projects that incorporate a certain percentage of domestically manufactured components can receive a 10% increase in the value of their IRA tax credits. Non-profits must meet this requirement by 2026 to continue qualifying for direct pay.
- Future opportunities: The private sector has ample opportunities to prepare for the next phase of IRA tax credits in 2025. Regardless of the outcome of the upcoming presidential election, the clean energy boom initiated by the IRA is expected to be a lasting legacy of Joe Biden’s presidency.
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Principal
Joel is a principal and leader of Baker Tilly’s Tribal services practice. He specializes in helping organizations navigate the tax credits available under the IRA. Joel guides clients through the steps to secure the maximum eligible credits, leveraging his expertise in energy and tribal matters.