Program objective

The baseline tax system would not allow credits for particular activities, investments, or industries. Instead, it generally would seek to tax uniformly all returns from investment-like activities. However, the Tax Code provides credits for investments in solar and geothermal energy property, qualified fuel cell property, stationary microturbine property, geothermal heat pumps, waste energy recovery property, small wind property, offshore wind, energy storage technology, qualified biogas property, microgrid controllers, and combined heat and power property. The credit is 30 percent for projects that begin construction before 2020 and 26 percent for projects that begin construction in 2020-2022. The credit returns to 30 percent for projects that begin construction after 2022, but the full credit rate is dependent on meeting prevailing wage and apprenticeship requirements. Additional bonus credits of up to 10 percent of the investment basis are available for projects that meet domestic content requirements and projects located in energy communities. The credit could begin to phase out as early as 2034 depending on annual greenhouse gas emissions from the production of electricity in the United States. Owners of renewable power facilities that qualify for the energy production credit may instead elect to take an energy investment credit at a rate specified by law.