IRS Section 45X
Advanced Manufacturing Transferable Production Tax Credit

Summary:

The Advanced Manufacturing Tax Credit is a business tax credit created to incentivize the production of clean energy technology components that are produced in the United States. The credit is specific to certain manufacturing items related to solar energy components, wind energy components, inverters, qualifying battery components, and critical minerals. Special rules apply that require sales of the components only to eligible third parties (IRS Section 52(b)), production in the United States (certain territories included, and allocations of credits tied to income basis in certain situations. More information can be found directly in IRS Notice 2022-47.

List of eligible manufacturing items:

Solar-Grade Polysilicon

Photovoltaic (PV) Wafer

Photovoltaic (PV) Cell

Polymeric Backsheet

Photovoltaic (PV) Module

Central Inverter

Utility Inverter

Commercial Inverter

Residential Inverter

Micro Inverter

Torque Tube

Structural Fasteners

Electrode Active Materials

Battery Cells

Battery Module

Critical Minerals

Date in Effect:

For Critical Minerals there is no expiration and no phase out.

For all other production components:

January 1, 2023 – December 31, 2029 = 100% of the credit

January 1, 2030 – December 31, 2030 = 75% of the credit

January 1, 2031 – December 31, 2031 = 50% of the credit

January 1, 2032 – December 31, 2032 = 25% of the credit

Phases out completely post 2032, except for critical minerals.        

Calculation Details:

The calculations are unique for each of the various components.

Solar-Grade Polysilicon Transferable Tax Credit is $3/kg (kilogram) of silicon produced

=[(Total kg produced * $3) * Phase out limitations subject to year]

Photovoltaic (PV) Wafer Transferable Tax Credit is $12/m2 (square meter) of semiconductor produced

= [(Total m2 produced * $12) * Phase out limitations subject to year]

Photovoltaic (PV) Cell Transferable Tax Credit is $0.04/Wdc (watt-direct current) of semiconductor components for solar produced

=[(Total Wdc produced * $0.04) * Phase out limitations subject to year]

Polymeric Backsheet Transferable Tax Credit is $0.40/m2 (square meter) of sheets for the back of a solar module produced

=[(Total m2 produced * $0.40) * Phase out limitations subject to year]

Photovoltaic (PV) Module Transferable Tax Credit is $0.07/Wdc (watt-direct current) of laminated photovoltaic cells produced

=[(Total Wdc produced * $0.07) * Phase out limitations subject to year]

Central Inverter Transferable Tax Credit is $0.25/Wac (watt-altering current) of large scale inverters produced

=[(Total Wac produced * $0.25) * Phase out limitations subject to year]

Utility Inverter Transferable Tax Credit is $0.015/Wac (watt-altering current) of commercial or utility scale inverters produced

= [(Total Wac produced * $0.015) * Phase out limitations subject to year]

Commercial Inverter Transferable Tax Credit is $0.02/Wac (watt-altering current) of commercial scale inverters produced

=[(Total Wac produced * $0.02) * Phase out limitations subject to year]

Residential Inverter Transferable Tax Credit is $0.65/Wac (watt-altering current) of residential scale inverters produced

=[(Total Wac produced * $0.065) * Phase out limitations subject to year]

Micro Inverter Transferable Tax Credit is $0.11/Wac (watt-altering current) of solar module inverters produced

=[(Total Wac produced * $0.11) * Phase out limitations subject to year]

Torque Tube Transferable Tax Credit is $0.87/kg (kilogram) of structural steel support element produced

=[(Total kg produced * $0.87) * Phase out limitations subject to year]

Structural Fastener Transferable Tax Credit is $2.28/kg (kilogram) of mechanical and drive components produced

=[(Total kg produced * $2.28) * Phase out limitations subject to year]

Electrode Active Material Transferable Tax Credit is 10% of the costs incurred due to productions of materials

=[(Total cost related to material production * 10%) * Phase out limitations subject to year]

Battery Cell Transferable Tax Credits is $35/kWh (kilowatt-hour) of electrochemical cell produced

=[(Total kWh produced * $35) * Phase out limitations subject to year]

Battery Module Transferable Tax Credits is $10.00/kWh (kilowatt) or $45.00/kWh (kilowatt) depending on the battery module and cell of batteries produced

=[IF(Battery module = Production with no battery cells, THEN(Total kWh produced * $45.00 * Phase out limitations subject to year), ELSEIF(Battery module = Production with battery cells, THEN(Total kWh produced * $10.00 * Phase out limitations subject to year), ELSE = $0.00)]

Critical Mineral Transferable Tax Credit is 10% of the costs incurred due to production of materials

=[Total cost related to material production * 10%]

Filing Requirements:

Register and obtain unique identifier number from the Internal Revenue Service

File tax return for self, or if transferring the credit for cash, then reflect the sale of both buyer and seller’s tax return

Keep detailed records of method of calculation

Direct Pay:

Direct Pay is an election that allows the taxpayer to sell directly to the Internal Revenue Service.

IRS Section 45X transferable tax credits allow the following entities to make this election:

  • All individuals and entities – but restrictions apply and should consult a tax professional

  • Tax-exempt organizations

  • States

  • Political subdivisions

  • The Tennessee Valley Authority

  • Indian Tribal governments

  • Alaska Native Corporations

  • Rural electricity co-ops.

Miscellaneous:

Taxpayer may not claim section IRS Section 45X tax credit for property produced at facilities that received the IRS Section 48C tax credit.