Treasury Releases Updated Guidance on Energy Community Bonus Credit

Treasury and the IRS released additional updates on eligibility for the IRA’s energy community bonus, which adds a 10% bonus to the tax credits available under IRC sections 45 and 45Y for clean electricity production, as well as sections 48 and 48E for clean electricity investments. The bonus is available to developers locating projects in communities historically dependent on fossil fuel energy jobs, including areas around closed coal mines or coal-fired power plants. It is also available to areas with significant employment or tax revenue from fossil-fuels with higher-than-average unemployment rates. The bonus is also available to developers locating projects on brownfield sites–real property, expansion, redevelopment, or reuse of which may be complicated by the potential presence of hazardous substances, pollutants, and contaminants.