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- Tax Credit
IRA Statuatory Location:
13204
Tax Code Location:
26 U.S. Code § 45V
New or Modified Provision:
New. The existing excise tax credit for liquified hydrogen terminates after 12/31/22.
Eligible Recipients:
Producers of hydrogen in the United States.
Tribal Eligibility:
Yes
Bureau/Office
Funded by:
U.S. Department of Treasury
Description
Provides a tax credit for the production of clean hydrogen at a qualified clean hydrogen production facility
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. 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:
Taxpayers can make an irrevocable election to choose the section 48 ITC in lieu of the 45Vcredit as long as they have not claimed the 45Q credit for carbon sequestration. Credit reduced for tax-exempt bonds with rules similar to those provided in section 45.
Energy Community Bonus:
No
Relevant Announcements
-
- Federal Register :: Public Inspection: Credit for Production of Clean Hydrogen and Energy Credit
- U.S. Department of the Treasury Releases Final Rules for Clean Hydrogen Production Tax Credit | U.S. Department of the Treasury
- https://www.irs.gov/pub/irs-drop/n-22-58.pdf
- Federal Register: Prevailing Wage and Apprenticeship Initial Guidance Under Section 45(b)(6)(B)(ii) and Other Substantially Similar Provisions
- Prevailing Wage and the Inflation Reduction Act | U.S. Department of Labor (dol.gov)
- 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 is for hydrogen produced after 12/31/22. Credit is available for facilities placed in service before 1/1/33 for their first 10 years in service.
Tax Mechanism:
Production tax credit for the production of clean hydrogen.
Base Credit Amount:
: $0.60/kg multiplied by the applicable percentage. The applicable percentage ranges from 20% to 100% depending on lifecycle greenhouse gas emissions. The $0.60/kg is adjusted for inflation.
Bonus Credit Amount:
5 times the base credit if the facility meets prevailing wage and registered apprenticeship requirements. Initial guidance on the labor provisions is available: https://www.federalregister.gov/documents/2022/11/30/2022-26108/prevailing-wage-and-apprenticeship-initial-guidance-under-section-45b6bii-and-other-substantially