Powering Strong Communities

IRS to Open Low-Income Bonus Credit Application Process on October 19

The Internal Revenue Service on Sept, 27 announced that applications for the Low-Income Communities Bonus Credit program under Section 48(e) of the Internal Revenue Code will open on October 19.

The Low-Income Communities Bonus Credit Program will allocate 1.8 gigawatts of capacity available through competitive application for the 2023 program across four categories of qualified solar or wind facilities with maximum output of less than five megawatts.

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.

Depending on the availability of capacity, applications for the 2023 program are expected to be accepted through early next year.

The Treasury Department and IRS may choose to reallocate capacity between categories in the event of oversubscription in any category, and unclaimed capacity will roll over into the 2024 program year, when another base 1.8 GW of capacity will be available via application.

To provide information about the application process ahead of this date, Treasury and the Department of Energy will be launching a program “help desk” and hosting a webinar about the application process on September 29.

Potential applicants can register for the webinar here. The webinar recording will be made available online after the event for those who cannot attend.

Additional materials to help applicants prepare their submissions will be made available on the Department of Energy landing page in the coming weeks.

For more information about this program and other energy tax provisions included in the Inflation Reduction Act, see the American Public Power Association’s “Guidance on Energy Tax Credits for Utilities” located here.

The page is intended to provide a collection of materials and guidance for public power utilities from APPA, the Internal Revenue Service, and others related to accessing energy tax credits.

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