The 2022 Inflation Reduction Act Creates Massive Tax Credits in the U.S.

In August 2022, President Biden signed the Inflation Reduction Act into law. This is a massive piece of legislation, authorizing $891 billion in expenditures. The act modifies and extends the clean energy Investment Tax Credit to provide up to a 30% credit for qualifying investments in wind, solar, energy storage and other renewable energy projects. However, such projects are required to meet prevailing wage standards (consequently, the act encourages the use of union labor) and employ a sufficient proportion of qualified people from registered apprenticeship programs. One of the biggest changes in the renewable energy industry comes from the Act’s emphasis on the manufacture of hydrogen as a power source. The Act also increases and extends the Renewable Energy Production Tax Credit to provide a credit of up to 2.75 cents per kilowatt-hour in 2022 dollars (adjusted for inflation annually) of electricity generated from qualified renewable energy sources.

Bonus credits are possible for investments in low-income communities. Special technologies are encouraged by specific tax credits, including:

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The 2022 Inflation Reduction Act Creates Massive Tax Credits in the U.S., Business and Industry Trends Analysis

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