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- Tax Credit
IRA Statuatory Location:
13104
Tax Code Location:
26 U.S. Code § 45Q
New or Modified Provision:
Extended and modified, tying the credit amounts to meetingprevailing wage and registered apprenticeship requirements, providing an enhanced credit fordirect air capture (DAC), and lowering the carbon capture threshold requirements at facilities.
Eligible Recipients:
CO2 emitting facilities
Tribal Eligibility:
Yes
Bureau/Office
Funded by:
U.S. Department of Treasury
Description
Provides a credit for carbon dioxide sequestration coupled with permitted end uses within the United States. U.S. facilities within minimum volumes: 1,000 metric tons of CO2 per yearfor DAC facilities; 18,750 metric tons for electricity generating facilities (with carbon capturecapacity of 75% of baseline CO2 production); 12,500 metric tons for other facilities.
Direct Pay Eligibility:
Yes, for tax-exempt organizations, states, political subdivisions, the Tennessee Valley Authority, Indian Tribal governments, Alaska Native Corporations, and rural electricity co-ops (applicable entities). Entities other than applicable entities are eligible for up to 5 years of direct pay (which expires at the end of 2032) if they make an election.
Transferability:
Yes
Stackability:
Credit reduced for tax-exempt bonds with similar rules as section 45(b)(3).
Energy Community Bonus:
No
Relevant Announcements
- https://www.irs.gov/instructions/i8933
- https://www.irs.gov/pub/irs-drop/n-22-57.pdf
- https://www.federalregister.gov/documents/2022/11/30/2022-26108/prevailing-wage-and-apprenticeship-initial-guidance-under-section-45b6bii-and-other-substantially
- https://www.dol.gov/agencies/whd/IRA
- https://www.apprenticeship.gov/inflation-reduction-act-apprenticeship-resources
Related Resources
Additional information is available on the Resources page.Key Details
Period of Availability
Credit can be claimed for 12 years after a facility is placed in service.Facilities must be placed in service before 1/1/33.
Tax Mechanism:
Production tax credit
Base Credit Amount:
$17/metric ton of carbon dioxide captured and sequestered; $12/metricton for carbon dioxide that is injected for enhanced oil recovery or utilized. Those amounts are$36 and $26, respectively, for direct air capture facilities
Bonus Credit Amount:
5 times the base amounts if the facility meets prevailing wage and apprenticeship requirements