Energy Community Tax Credit Bonus

Expanded Access to the Energy Community Tax Credit Bonus in California

TENCO SOLAR does not provide tax or accounting advice.This material has been prepared for informational purposes only and is not intended to provide, nor should it be relied on, for tax or accounting advice. You should consult your own tax, legal, and accounting advisors regarding your specific circumstances.

Per updated guidance released by the Treasury Department in Spring 2024, most commercial projects in a large portion of California counties will now qualify for the Energy Community Adder.

The Department of the Treasury and IRS have partnered with the Interagency Working Group on Energy Communities to provide a searchable mapping tool that helps identify areas that may be eligible for the energy community bonus.

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What is the Energy Community Tax Credit Bonus?

The Energy Communities Adder of the Inflation Reduction Act of 2022 stated that facilities are eligible for a 10%-point increase (30% → 40%) in the value of the Investment Tax Credit (ITC) for projects placed in service in 2023 or later. As a reminder, to qualify for the Energy Community Tax Credit Bonus, a facility must be in:

• A brownfield site
• A metropolitan or non-metropolitan statistical area, which:
  • has, or had at any time since 2010, 0.17% or more direct employment or 25% or more local tax revenues related to the extraction, processing, transport, or storage of coal, oil, or natural gas, AND
  • had an unemployment rate above the national average in the previous year.
• A census tract, or an adjoining census tract, in which a coal mine was closed after 1999 or a coal-fired electric generating unit was retired after 2009

Newly installed solar projects located in one of the eligible counties that meet prevailing wage and apprenticeship requirements during installation may be eligible for a 10%-point increase in the value of the Investment Tax Credit (ITC).

Instructions for applying for the Investment Tax Credit, the Energy Community Tax Credit, and other bonus tax credits can be found below:

• Instruction for a For-Profit Entity
• Instructions for a Non-Profit Entity

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Contact TENCO SOLAR today at 888-507-6937 to talk to our experts about the Energy Community adder and whether your project is an adder for this and other tax benefits.

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