On June 1, 2023, the IRS and the US Department of Treasury published a proposed rule concerning the low-income communities energy investment credit program, which was established pursuant to section 13103 of the IRA. Under the program, applicants investing in green energy generation facilities located in low-income communities may apply to increase the amount of IRC section 48 energy investment credits for the taxable year by up to 20%. The proposed rule describes the proposed definitions and requirements that would be applicable for the program and informs guidance for future program years.
The Treasury Department and IRS propose to reserve a portion of the total annual wind and solar capacity limitation, which is 1.8 gigawatts of direct current for each of calendar years 2023 and 2024, for four different facility categories. To qualify for the increased credit, the owner of a qualified solar or wind facility must apply for and receive an allocation of capacity limitation. The four different categories are facilities (1) located in a low-income community (700 megawatts reserved); (2) located on Indian Land (200 megawatts reserved); (3) qualified low -income residential building project (200 megawatts reserved); and (4) qualified low-income economic benefit project (700 megawatts reserved). Comments on the proposed rule will be accepted through June 30, 2023.