New guidance from the IRS (Notice 2024-48) updates the criteria for taxpayers to determine whether they qualify for bonus energy community credits created for Sections 45, 45Y, 48, and 48E. The June 7 updated criteria follows an April expansion of communities eligible for the 10% bonus credit.
Under the Inflation Reduction Act, projects located in energy communities are generally eligible for an additional 10% investment tax credit (ITC) under Section 48 and 48E or a 10% increase in the rate for the production tax credit (PTC) under Section 45 and 45Y. There are three separate categories of qualifying energy communities:
- “Brownfield” sites, which involve prior pollution or contaminants
- "Statistical areas” meeting energy activity thresholds with unemployment above national averages
- Census tracts (and adjoining census tracts) where a coal mine or coal-fired electrical plant has closed
New Notice 2024-48 updates the eligibility criteria for metropolitan statistical areas and non-metropolitan statistical areas that meet the fossil fuel employment threshold and have an unemployment rate at or above the national average in calendar year 2023. There are no new communities that meet the threshold in Appendix 1, though the IRS will update that eligibility list when calendar year 2024 unemployment data becomes available.
The notice also updated Appendix 2, with tracts where a coal mine or coal-fired electrical plant closure took place, adding more to those eligible for the bonus credit. According to the IRS, Appendix 2 should be combined with Appendix C to Notice 2023-29 and Appendix 3 to Notice 2023-47 to provide the full list of coal closure census tracts.
For more information on the energy community bonus credit, see our prior story.
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