Editor: Mo Bell-Jacobs, J.D.
Federal income tax credits have been used to incentivize investment in clean–energy projects for decades. The Sec. 48 energy credit is a component of the Sec. 46 investment tax credit (ITC). The ITC dates back to the Revenue Act of 1962, P.L. 87–834, and provides a tax credit for investment in renewable energy property. Similarly, the production tax credit (PTC) under Sec. 45 dates back to the Energy Policy Act of 1992, P.L. 102–486, and provides a tax credit for renewable electricity generated and sold from qualified energy resources.
Sec. 48 provides the ITC for certain qualifying energy property, such as solar, small wind, fuel cell, combined heat and power (CHP), biogas, and geothermal property, among others (Sec. 48(a)(3)). The credit amount is determined based upon a percentage of the taxpayer’s basis in the eligible energy property (Sec. 48(a)(1)).
Sec. 45 provides the PTC for…
