On February 13, 2023, the Treasury Department and the IRS released Notice 2023-17 to establish the Low-Income Communities Bonus Credit Program (“Program”). As described below, the Program provides a 20% adder to the investment tax credit for solar and wind energy projects in low-income communities.  

The final regulations (T.D. 9979) released today provide guidance on the phased application process opening this fall. The Treasury Department and the IRS also provided procedural and clarifying guidance applicable to the Program in Revenue Procedure 2023-27 which was issued simultaneously with the final regulations.

Under the Inflation Reduction Act, Congress enacted § 48(e) to increase the amount of the energy investment credit for the cost of solar and wind energy property. The new provisions provide up to a 70% investment tax credit consisting of the following components:

• 30% base credit if the facility meets certain prevailing wage and apprentice requirements (waived for solar installations under 1 megawatt of energy)
• 20% low-income bonus for a Qualified Low-Income Residential Building Project or a Qualified Low-Income Economic Benefit Project
• 10% domestic content bonus if the manufactured products (e.g., solar panels) are components of a qualified facility produced in the U.S.
• 10% for brownfield areas.