Treasury Releases Final Rule and Guidance on ITC Low-Income Communities Bonus Credit

On August 10, 2023, Treasury released a final rule and guidance on the Low-Income Communities Bonus Credit under IRC section 48(e) created by IRA section 13103. The bonus credit boosts the Investment Tax Credit (ITC) by up to 20-percentage points for qualified solar or wind facilities built in low-income communities, with the goal of attracting new market participants and benefitting communities that have experienced adverse environmental and health effects as well as lacked economic opportunities.

In 2023, 1.8 gigawatts of capacity are allocated to the program’s four categories of solar or wind facilities with a maximum output of less than five megawatts. These allocations include: 700 megawatts for facilities in low-income communities, 200 megawatts for facilities on Indian land, 200 megawatts for facilities part of federally-subsidized residential housing, and 700 megawatts for facilities where 50 percent or more of the financial benefits from the produced electricity go to households below 200 percent of the poverty line or 80 percent of area median gross income. Any unclaimed capacity allocations will roll over into 2024, when another 1.8 gigawatts of capacity will be available via the application process.

The application process will open in early fall of 2023 and awards will begin to be made by the end of 2023. Applications are expected to be accepted through early 2024, depending on the availability of remaining 2023 capacity. DOE created a landing page for the program and will provide further information about the application opening date and materials.