Discover the Types of Clean Energy Tax Credits Available in the U.S. for 2025

Key Takeaways

The Inflation Reduction Act allows for the transferability of clean energy tax credits to investors.
New legislation, including the One Big Beautiful Bill Act, has modified credit eligibility and introduced specific disqualifications related to foreign entities.
There are 11 types of transferable clean energy tax credits in the U.S., incentivizing various renewable energy projects.

Overview of Clean Energy Tax Credits

The Inflation Reduction Act (IRA), enacted in 2022, has significantly boosted clean energy investments in the U.S. by introducing and extending various tax credits. A notable feature is the transferability of these tax credits, which allows project developers to sell them to eligible investors, allowing for cash flow to offset tax liabilities.

The One Big Beautiful Bill Act (OBBBA), implemented in 2025, made further adjustments, including extending eligibility for battery storage credits and adjusting deadlines for wind and solar credits. OBBBA also established “Foreign Entity of Concern” rules that restrict certain projects and components tied to specific countries.

Despite regulatory shifts, clean energy tax credits remain crucial for attracting investment in renewable energy. Their flexibility and financial advantages are instrumental in addressing the rising energy demand and helping businesses manage their tax responsibilities effectively.

The U.S. offers 11 types of transferable clean energy tax credits. The Production Tax Credits (PTCs) reward renewable energy facilities based on the amount of clean electricity generated. Two key types of PTCs include:

– Renewable Electricity Production Credit (Section 45): applicable to projects initiated before 2025.
– Technology-Neutral Clean Electricity Production Credit (Section 45Y): focused on projects starting in 2025 or later that produce electricity with minimal greenhouse gas emissions.

Investment Tax Credits (ITCs) also provide upfront percentage-based credits for renewable energy projects and are foundational to U.S. federal tax incentives. Important ITCs include:

– Energy Investment Credit (Section 48): for projects initiated before 2025.
– Technology-Neutral Clean Electricity Investment Credit (Section 48E): for projects placed in service after 2025.

Enhancements, or “adders,” are available to increase base credits based on criteria such as domestic content or location in low-income areas.

The IRA broadened the scope of tax credits to cover several new technologies, including:

– Zero-Emission Nuclear Power Production Credit (Section 45U)
– Clean Hydrogen Production Credit (Section 45V)
– Clean Fuel Production Credit (Section 45Z)
– Advanced Manufacturing Production Credit (Section 45X)
– And others that aim to boost various renewable energy sectors.

To capitalize on these evolving financial opportunities, project developers and investors must have strategic partnerships. Experienced firms like Marex provide essential support in navigating the renewable energy tax credit landscape, facilitating the management of tax credit transfers, and ensuring developers and investors can maximize financial efficiency.

For those seeking guidance in the renewable energy tax credit market, resources and dedicated teams are available to assist in tailored solutions for specific organizational goals.

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