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H R 5376 INFLATION REDUCTION ACT TAX CREDIT OVERVIEW Investment The Investment Tax Credit has been increased from 26 to 30 and may now be transferred or sold to other taxpayers The 30 applies to both business and residential projects including projects installed in 2022 and will last until the end of 2032 For larger projects there are additional considerations Prevailing wage apprenticeship For projects of more than 1 MWac and above must pay attention to employment requirements By default the tax credit is 6 To be eligible for the additional 24 laborers and mechanics installing the solar power projects must be paid prevailing wages and must be part of an electrical apprenticeship program These tax credits will begin to apply to projects in 2023 Domestic content 10 tax credit adder Solar power projects eligible for the full 30 tax credit can increase their tax credit by an additional 10 to 40 in total by purchasing domestically produced hardware Per the document 100 of steel and iron must be US manufactured in the United States For manufactured goods like solar panels inverters and electrical gear the goods must initially be 40 US manufactured though this percentage will increase in the future Historically for goods to be classified as Made in the USA they must be composed of at least 55 domestic content The bill lists some exceptions to these requirements Items that are not of satisfactory quality or are not produced in sufficient quantities may be imported Items that would increase the project cost by greater than 25 may be sourced outside the US as well These requirements and exceptions will apply to all project sizes Project siting 10 tax credit adder Projects that are located in former energy communities can earn an additional 10 tax credit Energy communities are first defined as brownfields and secondly as locations associated with fossil fuels over the last generation If there have been significant extraction jobs associated with coal oil or natural gas after December 31 1999 then the census tract and its connecting census tracts are eligible If a coal power plant or mine has closed in the same window the area and its surrounding tracts are also eligible Language describing energy communities can be found starting on page 250 Clean electricity production credit If a solar power project meets the prevailing wage requirements then it will receive a tax credit of 2 5 cents kWh for the first ten years of a project s life If a project does not meet prevailing wage standards it will earn only 0 3 cents kWh before adjustment for inflation Going forward the production credit increases as it is adjusted for inflation Language describing the production credit can be found starting on page 442