Clean Electricity Production Tax Credit

45 for projects placed in service before 2025 or 45Y for projects placed in service in 2025 or thereafter

What qualifies

A tax credit for producing clean electricity at a facility that sells it. The credit is good for 10 years after the equipment is placed in service. To be eligible, the clean electricity facility must be:

  • Located in the United States or U.S. territories
  • Using equipment that is new or being used for the first time
  • Not leased to a tax-exempt entity (e.g., a school), though tax exempt entities are eligible to receive the Investment Tax Credit themselves in the form of a direct payment

For projects beginning before January 1, 2025, eligible facilities are limited to facilities generating electricity from wind, biomass, geothermal, solar, small irrigation, landfill and trash, hydropower, and marine and hydrokinetic renewable energy.

For projects beginning after January 1, 2025, the tax credit is technology-neutral, and eligible facilities are defined as those with zero emissions electricity generation.

Incentive value

For projects beginning before January 1, 2025

  • Base credit amount of 0.3 cents/kWh, adjusted for inflation.
  • Credit is increased by 5 times for projects meeting prevailing wage and registered apprenticeship requirements.
  • Credit is increased by 10% if the project meets certain domestic content requirements for steel, iron, and manufactured products.
  • Credit is increased by 10% if located in an energy community. See if your location is eligible here.

For projects beginning after January 1, 2025

  • The base credit amount is 0.3 cents/kWh and can be adjusted for inflation up to 1.5 cents/kWh.
  • Credit is increased by 5 times for projects meeting prevailing wage and registered apprenticeship requirements.
  • Credit is increased by 10% for projects meeting certain domestic content requirements for steel, iron, and manufactured products.
  • Credit is increased by 10% if located in an energy community. See if your location is eligible here.
  • You may not combine the Clean Electricity Investment Tax Credit 48E and Clean Electricity Production Tax Credit 45Y for the same facility.

For both credits, you may transfer the credit by selling all or a portion of the tax credit to an unrelated taxpayer. Credits from a single property can be sold to multiple buyers in the same tax year. Direct pay is available for tax-exempt organizations.

Who is eligible

Producers of clean electricity, including tax-exempt organizations.

When the credit is available

For projects placed in service after December 31, 2024 through 2032 or when U.S. greenhouse gas emissions from electricity are 25% of 2022 emissions or lower.

How to claim the credit

Eligible electricity producers must fill out form 8835 to claim the credit when filing their taxes. Additional guidance may come on applying for 2025 tax credits.

Tax-exempt entities must follow the instructions for direct pay. Preregister with the IRS and submit annual tax paperwork, typically a Form 990-T for most entities that don’t normally file a tax return.

Organizations that wish to transfer their tax credits must pre-register with the IRS before the tax return is due and receive a registration number.

See more information on this tax credit here.

Disclaimer: None of the information presented on this website should be considered official legal or financial advice. Please contact a licensed tax professional for additional information.