New IRS Guidelines Offer Major Tax Breaks for Green Energy Manufacturers
Written by: Mark Stapleton
The IRS announced today the issuing of the final regulations for the Section 45X Advanced Manufacturing Production Credit tax credit. The 45X tax credit was established with the goal of helping to secure the domestic supply chain of materials and components used in the manufacture of green energy equipment. This includes solar energy, wind energy, inverters, battery storage, and the processing of 50 different critical minerals used in green energy technology systems.
The tax savings provided by the 45X tax credit can be quite substantial ranging from 10% of the production costs of eligible components to various dollar amounts per kilogram or square meter of the manufactured components.
In general, the final regulations serve to define qualifying production activities, define eligible components, calculation of the credit and eligible costs, special rules for certain scenarios as well as specific recordkeeping and reporting requirements.
Eligible Components and Complexity of the 45X Credit
This tax credit applies to over twenty-four specific components that are part of green energy-producing equipment. This is in addition to activities relating to the processing of 50 different critical minerals used in the manufacture of these components.
The 45X credit is fairly complex in terms of identifying eligible components, qualifying activities, and calculation. If you believe the activities of your business may fall under the umbrella of this credit, it is important that you consult with a tax professional experienced in this area. You can find more detailed information regarding the 45X tax credit in our 45X FAQ.
If you are not a manufacturer of eligible components but have or are planning to construct various green energy-producing equipment to generate electricity, the Section 48 Investment Tax Credit or the “Energy Credit” can provide significant tax savings. The Section 48 Energy Credit can provide tax savings upwards of 30% of the cost of the qualified energy property. You can also find more detailed information regarding the Section 48 Energy Credit in our 48 Energy Credit FAQ, which includes the different categories of equipment that may be eligible for this credit.
For more information on how the Section 45X tax credit could benefit your business or to explore other tax-saving opportunities, contact Mark Stapleton at Mark.stapleton@abgi-usa.com for expert guidance.
About ABGi USA
ABGi USA is a leading tax consulting and business solutions provider specializing in 179D Tax Deductions, 45L Tax Credits, R&D Tax Credits, Cost Segregation, Executive Recruitment, Fractional HR & HR Consulting, and Recruitment Process Outsourcing (RPO). With a proven track record of driving results for CPA firms and clients across industries, ABGi USA leverages its expertise to help clients optimize financial strategies and achieve business goals. Founded in 1985, ABGi operates in 10 countries, including the UK, France, Canada, and Brazil, and is committed to delivering innovative, customer-focused solutions that empower businesses to thrive.
