An Overview – 48C Tax Credit

The Qualifying Advanced Energy Project Tax Credit, also known as 48C, was expanded by USD 10 billion under the Inflation Reduction Act. 48C is a unique credit, in that it is an allocated credit – USD 10 billion is available through a competitive process which is run through the Department of Energy (DOE), in which the DOE will decide how to prioritize and divide up the available amount. In late March, the Internal Revenue Service (IRS) released the first round of allocations which totalled to USD 4 billion. This includes more than 100 projects across 35 different states. The Treasury has noted that it will issue a notice for the second round of allocations in upcoming months.

48C is a project that…

  1. Re-equips, expands, or establishes an industrial or manufacturing facility for the production or recycling of a range of clean energy equipment and vehicles;
  2. Re-equips an industrial or manufacturing facility with equipment designed to reduce greenhouse gas emissions by at least 20%; and
  3. Re-equips, expands, or establishes an industrial facility for the processing, refining, or recycling of critical materials.

Credit Amount:6% of a taxpayer's qualifying investment. Businesses can claim a 30% credit for projects meeting prevailing wage and apprenticeship requirements.

Allocations for Round One

  • USD 2.7 billion in tax credits: Clean energy manufacturing and recyclingÌý
  • USD 800 million in tax credits: Critical materials recycling, processing, and refiningÌý
  • USD 500 million in tax credits: Industrial decarbonization