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IRS Expands Rules for Energy Communities: What You Need to Know


The Internal Revenue Service (IRS) has just announced an expansion of rules governing energy communities for both production and investment tax credits. Notice 2024-30, issued today, outlines these expanded guidelines.


In addition to the notice, the IRS has released Appendices 1 and 2, which identify Metropolitan Statistical Areas (MSAs) and non-MSAs meeting specific employment thresholds. These areas are crucial for determining eligibility for tax credits under the Inflation Reduction Act.


Energy communities are divided into three categories:


  1. Brownfield sites

  2. Specific MSAs/non-MSAs based on unemployment rates

  3. Census tracts affected by coal mine closures or retirement of coal-fired electric generating units


Meeting the requirements of energy community provisions can lead to increased credit amounts or rates, potentially up to 10 percent for production tax credits and 2 percentage points for investment tax credits. This can even increase to 10 percentage points if certain conditions, like prevailing wage and apprenticeship requirements, are fulfilled.


Furthermore, Notice 2024-29 expands the Nameplate Capacity Attribution Rule and adds two 2017 NAICS industry codes to determine Fossil Fuel Employment rates.


The IRS has also updated its FAQ section for energy communities.


For further details, visit the Inflation Reduction Act of 2022 page on IRS.gov. Stay informed to maximize your benefits under these expanded guidelines.


 

Disclaimer: This article is for informational and educational purposes only and does not constitute legal tax advice. Advanced Tax Solutions is not liable or responsible for any damages resulting from or related to your use of this information. It is your responsibility to refer to official IRS documentation for information regarding any tax laws or tax information shown here.

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