On November 17, 2023, the Department of the Treasury released proposed regulations on the Investment Tax Credit that would amend the regulations for the investment tax credit (ITC) under IRC Section 48 including types of eligible property. The proposed regulations were published in the Federal Register on November 22, 2023, and written or electronic comments must be submitted by January 22, 2024.
The proposed regulations, which have not been amended since 1987, notably update the types of energy property eligible for the ITC under Section 48, among other updates, clarify recapture in the case of transferred credits for failure to meet prevailing wage and apprenticeship, provide additional requirements regarding functionally interdependent components, the 80/20 rule, dual use property among many other requirements and rules. To reflect technological advances in the energy industry, the proposed regulations offer definitions for certain energy property added as part of the Inflation Reduction Act (IRA) as well as updates to definitions for energy property already contained in the regulations before the enactment of the IRA.
The proposed regulations include revised definitions to the following energy properties:
- Solar Energy Property
- Fiber-optic Solar Energy Property and Electrochromic Glass Property
- Geothermal Energy Property
- Qualified Fuel Cell Property
- Qualified Microturbine Property
- Combined Heat and Power System Property
- Qualified Small Wind Energy Property
- Geothermal Heat Pump Equipment
- Waste Energy Recovery Property (WERP)
- Energy Storage Technology
- Qualified Biogas Property
- Microgrid Controllers
- Other Property Included in Section 48