IRS releases updates to Inflation Reduction Act Energy Community Tax Credit Bonus Map, for Commercial Solar Projects

In June 2023, the Internal Revenue Service (IRS) released a clarification to the Energy Community Tax Credit Bonus map, which helps determine eligibility for the solar tax credit “Energy Community Tax Credit Bonus” made available in the Inflation Reduction Act (IRA).

In August of 2022, through the IRA, the Solar Investment Tax Credit (ITC) was increased to the original 30% and extended for a decade. The Energy Communities Tax Credit Bonus is an additional 10% adder and applies to businesses, organizations, and non-profits that otherwise qualify for the tax credit.

The clarification that was published pertains to what locations qualify as “Energy Communities,” which are areas that have been affected by the changing national energy landscape – coal closures, decreased labor force, and other economic impacts as the nation has seen a decline in fossil fuel use.

Highlighted communities are eligible for a 10% bonus on top of the standard 30% Federal ITC for solar.

The US Department of Energy’s Energy Communities Map is now updated to reflect eligible areas.

Legend

• Coal Closure Energy Communities – the areas in green are areas with coal closures or an adjoining coal closure and are eligible to take the Energy Community Tax Credit bonus for the remainder of the ITC (until 2032).
• Metropolitan statistical areas (MSAs) and non-metropolitan statistical areas (non-MSAs) – are shown in pink. These are eligible for the Energy Community Tax Credit Bonus in 2024. This eligibility is tied to past and present labor force related to energy production. Year to year, eligible areas will change.
• Brownfields are not shown on this map.

Please get in touch to find out about eligibility, additional information about project timelines, and taking advantage of these incentives – especially if your business or organization is in an area where the Energy Community Tax Credit Bonus eligibility will shift year-to-year as employment data is updated. Because this annual data can change a project can be “safe-harbored” by commencing construction, locking in a 10% bonus before the employment data may change.

Residential solar installation projects are not eligible for the 10% adder.