IRS releases Section 45 filing tax credit amounts for 2022 | Eversheds Sutherland (USA) LLP

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The Internal Revenue Service (IRS) recently issued a notice providing inflation adjustment factors and benchmark prices to be used in calculating renewable energy generation tax credits under the Section 45 of the Internal Revenue Code (IRC) for 2022. This guidance provides the following:

  • The production tax credit for electricity generated from wind, closed-loop biomass and geothermal energy has been reduced from 2.5 cents (for 2021) to 2.7 cents per year. kilowatt hour (kWh) for 2022.
  • The production tax credit for electricity generated from open-circuit biomass, landfill gas, waste facilities, qualified hydroelectric facilities and marine and hydrokinetic facilities increased from 1.3 cents (for 2021) to 1.4 cents per kWh for 2022.
  • The refined coal production tax credit has expired.

Background

Section 45 of the IRC statutorily authorizes a renewable energy generation credit for any tax year of 1.5 cents per kWh produced by a taxpayer from wind energy, closed loop biomass or geothermal energy and sold to an unrelated person during the 10-year period beginning on the date the facility is first placed in service. The credit amount is halved for electricity generated from open-loop biomass, landfill gas, waste, qualified hydroelectricity, and marine and hydrokinetic resources.

Section 45 of the IRC provides that the 1.5 cent amount is to be adjusted annually for inflation.

Impact of IRS Guidelines

This guidance from the IRS provides the inflation-adjusted amounts of generation credits available for electricity sales in 2022. For 2022, the 1.5 cent statutory credit for electricity generation has increased to 2, 7 cents (and 1.4 cents for technologies eligible for half the credit amount). ).

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