This week, as part of the Biden-Harris Administration’s Investing in America agenda, the Treasury Department and the Internal Revenue Service (“IRS”), in consultation and collaboration with the Department of Labor, released proposed rules and FAQs on key provisions in the Inflation Reduction Act to drive the creation of a robust, diverse pipeline of workers for America’s clean energy workforce.
The Inflation Reduction Act introduced historic clean energy prevailing wage and registered apprenticeship provisions that enable taxpayers to claim up to five times the value of base credits or deductions. In order to take increased tax benefits, taxpayers must comply with these requirements across several sectors, including:
- Section 30C alternative fuel vehicle refueling property credit
- Section 45 renewable electricity production credit
- Section 45L new energy efficient home credit (apprenticeship requirements do not apply)
- Section 45Q credit for carbon oxide sequestration
- Section 45U zero-emission nuclear power production credit (apprenticeship requirements do not apply)
- Section 45V credit for production of clean hydrogen
- Section 45Y clean electricity production credit
- Section 45Z clean fuel production credit
- Section 48 energy credit
- Section 48C qualifying advanced energy project credit
- Section 48E clean electricity investment credit
- Section 179D energy efficient commercial buildings deduction
The Inflation Reduction Act’s prevailing wage and apprenticeship provisions went into effect on January 29 of this year – sixty days after Treasury and the IRS released initial guidance related to the provisions. Today’s Notice of Proposed Rulemaking (NPRM) provides taxpayers, contractors, and workers with clarity on proposed IRS guardrails that would incentivize taxpayers to adopt worker-centric practices and ensure compliance is streamlined. Additionally, the proposed rules would waive penalties for taxpayers using qualifying Project Labor Agreements, enabling this well-established tool to be used more extensively in the clean energy industry.
Alongside today’s proposed rules released by Treasury and the IRS, the Department of Labor has also developed several resources, including:
- The Department of Labor’s Inflation Reduction Act Tax Credit landing page
- Prevailing Wage and the Inflation Reduction Act
- Inflation Reduction Act Apprenticeship Resources
Under Bidenomics, the Biden-Harris Administration is committed to ensuring that investments driven by the Investing in America agenda create good-paying and union jobs to support hard-working Americans and their families. To learn more about all of the ways that the Administration is driving historic levels of investment in America’s workers, visit invest.gov.