Treasury Issues Initial Guidance to Turbocharge Solar, Wind Investments in Low-Income Communities
Today, the Department of the Treasury (Treasury) and Internal Revenue Services (IRS), in partnership with the Department of Energy (DOE), released initial guidance on the Low-Income Communities Bonus Credit Program, the most significant tax incentive in U.S. history to promote investment in solar and wind facilities in low-income communities, on Indian Land, and as part of affordable housing. By creating an additional bonus of up to 20 percentage points on top of the existing 30% investment tax credit for qualified wind or solar energy property, this new program, introduced by the Inflation Reduction Act, will turbocharge investments in renewable energy that create good-paying jobs and lower energy costs for families in low-income communities.
The Low-Income Communities Bonus Credit Program further advances President Biden’s ambitious economic revitalization and environmental justice agenda. The Biden-Harris Administration’s policies demonstrate that combatting climate change is about more than reducing greenhouse gas emissions – it is about creating jobs and opportunity in places that have historically been overlooked and left behind. By directing additional tax incentives for investments in low-income communities and households, the Low-Income Communities Bonus Credit Program will help ensure that under-resourced communities benefit from our transition to a clean energy future.
Today’s initial guidance takes the first step in launching the new allocated credit program by specifying megawatt allocations for the 1.8 gigawatts of direct current capacity available in 2023 and providing insights on the design of the application process. Specifically, the guidance notes that for 2023, 700 megawatts of allocation will be available for facilities in low-income communities, including residential rooftop solar; 200 megawatts will be available for projects on Tribal lands; 200 megawatts will be available for facilities that are a part of qualified low-income residential buildings; and 700 megawatts will be available for facilities that are a part of qualified low-income economic benefit project, including community solar projects that help lower families’ energy bills.
The Biden-Harris Administration stands by its commitment to fair housing principles and will ensure that investments in renewable power in low-income communities do not come at the expense of maintaining safe, quality, accessible, and affordable housing for American families. The Administration is also committed to preventing predatory schemes that bring economic harm to low-income households and is engaging with the Consumer Financial Protection Bureau to promote best practices for consumer protection in relation with the program.
Today’s initial guidance was informed by hundreds of written comments from and conversations with businesses, individuals, and communities across the country. Treasury and DOE will continue to consult with communities and businesses across America as the program heads towards application launch. As detailed in the initial guidance, Treasury will release additional guidance on the program that includes detailed application instructions in the second half of 2023.
The Biden-Harris Administration will remain committed to delivering on its promise that the clean energy economy will work for working families. We encourage you to learn more about all of the ways that the Inflation Reduction Act’s clean energy tax incentives can help to lower your energy costs in 2023 and beyond.