Clean Electricity Production Tax Credit 45/45Y

A federal tax credit for producing clean electricity.

Facilities that produce clean electricity. 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 US territories.
• Using equipment that is new or being used for the first time.
• 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. This tax credit is called the Production Tax Credit for Electricity from Renewables 45.
• 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. The tax credit name changes to the Clean Electricity Production Tax Credit 45Y.

For projects beginning before January 1, 2025:

• Base credit amount of 0.3 cents/kWh, adjusted for inflation.
• Credit is increased by five 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.
• You may not combine the Renewable Electricity Production Credit 45 and Clean Electricity Production Tax Credit 45Y for the same facility.

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 five 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.
• The credit name changes to the Clean Electricity Production Credit 45Y.
• You may not combine the Clean Electricity Investment Tax Credit 48E and Clean Electricity Production Tax Credit 45Y for the same facility.

Direct pay is available for tax-exempt organizations. For entities not eligible for direct pay, the credit may be transferred 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.

Producers of clean electricity, including tax-exempt organizations.

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

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.