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IRS Issues Guidance on Solar and Wind Powered Energy Facilities under the Inflation Reduction Act

The Internal Revenue Service (IRS) issued Revenue Procedure 2024-19 to provide guidance for owners of certain solar or wind facilities built in connection with low-income communities. The Inflation Reduction Act added section 48(e) to the federal tax code to provide for an increase in the energy investment credit for solar and wind facilities that apply for and receive an allocation of environmental justice solar and wind capacity limitation. Taxpayers that receive an allocation and properly place the facility in service may then claim the increased energy investment credit in the year that the facility is placed in service.

Per the IRS, the guidance includes important clarifying changes to the application and documentation requirements for the 2024 program year. In addition, this revenue procedure provides how the Capacity Limitation for the 2024 program year will be divided across facility categories as follows: (1) Category 1: Located in a Low-Income Community; (2) Category 2: Located on Indian Land; (3) Category 3: Qualified Low-Income Residential Building Project; and (4) Category 4: Qualified Low-Income Economic Benefit Project.

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