Today, the Treasury Department and the Internal Revenue Service (“IRS”) released final rules and procedural guidance for the Low-Income Communities Bonus Credit program, a new incentive introduced by the Biden-Harris Administration’s Investing in America agenda to drive new clean energy investments to our country’s historically underserved communities.
President Biden’s economic platform – Bidenomics – is committed to growing the economy from the middle out and bottom up. Introduced by the Inflation Reduction Act, the Low-Income Communities Bonus Credit Program provides up to a 20-percentage point boost on top of the Investment Tax Credit to small solar and wind facilities in low-income and Tribal communities, or that serve federally-subsidized housing or provide economic benefits to low-income households. The additional incentive provided to eligible applicants will help lower energy costs for low-income families and expand access to clean energy solutions for low-income communities across America.
The Low-Income Communities Bonus Credit program will allocate a total of 1.8 gigawatts (GW) of capacity available for the 2023 program across four categories of solar or wind facilities with maximum output of less than five megawatts. For the 2023 program, the IRS intends to allocate up to:
- 700 megawatts to facilities located in low-income communities;
- 200 megawatts to facilities located on Indian land;
- 200 megawatts to facilities that are part of federally-subsidized residential buildings, including housing supported by the Low-Income Housing Tax Credit and Section 8 of the Housing Act; and
- 700 megawatts to facilities where at least 50 percent of the financial benefits of the electricity produced go to households with incomes below 200 percent of the poverty line or below 80 percent of area median gross income.
Entrepreneurs, small businesses, and organizations looking to invest in solar and wind energy facilities in low-income communities across these four categories can rely on today’s final rule to provide clarity and certainty in advance of the roll-out of the application for the 2023 program. The Department of Energy, a key implementing partner to Treasury and the IRS, has launched a landing page. Additional information on the application opening date and detailed instructions for the online application portal will be provided in the coming weeks.
The application window for all four categories in the Low-Income Communities Bonus Credit program will open in the fall, and awards for the 2023 program will begin to be made by the end of the year. Depending on the availability of capacity, applications for the 2023 program are expected to be accepted through early next year.
To learn more about how Bidenomics is driving historic investments to build a clean energy future that works for all of America’s families, visit www.invest.gov.