New credit amounts for the Production Tax Credit for 2022

Executive Summary: For the calendar year 2022, the IRS has announced new credit rate amounts for renewable electricity production under section 45 of the Internal Revenue Code.

New credit amounts for the Production Tax Credit for 2022

On Nov. 10, 2022, the IRS announced new credit amounts for the calendar year 2022 for the production tax credit under section 45 of the Internal Revenue Code for any qualified facility placed in service after Dec. 31, 2021.

The announcement provides that:

• Under the calculations required by section 45(b)(2) and section 45(b)(6)(A), the section 45 credit for the calendar year 2022 under section 45(a) is now $2.75 per kilowatt hour on the sale of electricity produced in any qualified facility placed in service after Dec. 31, 2021, specifically from the energy resources of wind, closed-loop biomass, geothermal energy, and solar energy. This rate per kilowatt hour of electricity is the increased rate for qualified facilities. The rate for electricity produced and sold at a facility that does not satisfy the requirements of section 45(b)(6) shall be $0.55 per kilowatt hour. The requirements imposed by section 45(b)(6) include the prevailing wage and apprenticeship requirements with two exceptions for satisfying such requirements.
• Under the calculations required by sections 45(b)(2), 45(b)(4)(A), and 45(b)(6)(A), section 45 credit for renewable electricity production for the calendar year 2022 is now $1.25 per kilowatt hour on the sale of electricity produced in any qualified facility that is an open-loop biomass facility, a landfill gas facility, a trash facility, a qualified hydropower facility, or a marine and hydrokinetic renewable energy facility placed in service after Dec. 31, 2021. This rate per kilowatt hour of electricity is the increased rate for qualified facilities. The rate for electricity produced and sold at a facility that does not satisfy the requirements of section 45(b)(6) shall be $0.25 per kilowatt hour. The requirements imposed by section 45(b)(6) include the prevailing wage and apprenticeship requirements with two exceptions for satisfying such requirements.

Notably, in the case of any qualified facility placed in service before Jan. 1, 2022, the section 45 credit amounts published in Notice 2022-20 remain unchanged. RSM previously covered the rates published in Notice 2022-20.

For more information, please consult with your tax advisor.