Today, the U.S. Department of the Treasury and the IRS released final rules for the Advanced Manufacturing Production Credit (Section 45X of the Internal Revenue Code), to spur continued growth of U.S. clean energy manufacturing as part of President Biden and Vice President Harris’ Investing in America Agenda.
The final rules announced today are largely in line with proposed regulations released in December 2023. They clarify definitions and confirm credit amounts for eligible components, including solar energy components, wind energy components, inverters, qualifying battery components and applicable critical minerals; define key terms to incentivize production in the United States and clarify the circumstances under which taxpayers can claim the credit; and finalize important safeguards to prevent potential fraud, waste, or abuse — including safeguards against duplicative crediting of the same component, crediting of activities that are not value-added, or extraordinary circumstances in which components are produced but not put to productive use.
Here are the listed manufacturing tax credits as related to the solar and storage industries:
The full listed credit would be given to anything sold through Dec. 31, 2029. Beginning in 2030, the credits begin their phase-out:
- 2030: 75% of credit amount
- 2031: 50%
- 2032: 25%
- 2033: 0%
“The Biden-Harris Administration’s economic agenda is driving a manufacturing boom across the country that I’ve seen first-hand in North Carolina, Kentucky and Georgia. These investments are creating good-paying jobs, strengthening U.S. supply chains and lowering costs for American consumers and businesses,” said U.S. Secretary of the Treasury Janet L. Yellen. “The final rules announced today will help companies continue to invest and innovate in the United States as we buildout our clean energy economy.”
The Advanced Manufacturing Production Credit helps to level the playing field for U.S. companies to onshore production of critical clean energy technologies like solar and wind components, batteries and energy storage, and critical minerals. The final rules announced today will expand America’s clean energy manufacturing base, create good-paying jobs, strengthen the nation’s energy security, and build the reliable and responsible supply chains needed to meet U.S. climate goals. In particular, the final rules will accelerate the buildout of domestic critical mineral supply chains by allowing taxpayers to include materials costs and extraction costs in production costs for applicable critical minerals and electrode active materials, provided certain conditions are met. This change, based on feedback from stakeholders, will enable further investment in responsible U.S. critical minerals extraction and processing and strengthen U.S. energy security and clean energy supply chains.
“Section 45X is one of the most influential policies we have to onshore the solar supply chain, ” said Abigail Ross Hopper, president and CEO of the Solar Energy Industries Association (SEIA), in a press statement. “Clarity is key, and these rules provide the certainty domestic solar and storage manufacturers need to move forward with their investments. Over the last year SEIA has advocated for solutions that make this credit more accessible, including realistic solutions to expand eligibility for inverter manufacturers and help storage manufacturers recoup upfront costs for accessing critical minerals.
“As a result of these rules, investments in American workers and factories are here to stay,” she continued. “Whether it’s solar panel manufacturing in Georgia, steel rolling in Pennsylvania or mineral production in Montana, the solar and storage industry is committed to making homegrown solar products. We commend Treasury and the Biden administration for their continued efforts to support domestic manufacturing and invest in our energy independence.”
Today’s final rules will give taxpayers additional clarity and certainty to drive even more investment in clean energy and critical minerals. Because the Advanced Manufacturing Production Credit is eligible for the Inflation Reduction Act’s novel monetization provisions to help ensure businesses receive the full value of the incentives — elective pay and transferability — the tax credit is particularly powerful for start-up companies that have low tax liability.
