Investment Tax Credit & Clean ELECTRICITY Investment Credit
Incentivizing Renewable Energy Systems
Solar Panels are Just the Beginning
Over $1 Billion
in Tax Savings
Up to 70% Decrease
in Tax Liability
Multidisciplinary
Team
(Attorneys, Tax Professionals, Engineers)
PRECISE | RESPONSIVE | TRUSTWORTHY
01
What are the Investment Tax Credit (ITC) and the Clean Electricity Investment Credit (CEIC)?
-
Federal incentive supporting the growth of renewable energy properties
-
Dollar-for-dollar Credit that directly reduces tax liability by up to 30%
-
Eligible costs include equipment and installation of multiple energy systems, such as solar, geothermal, small wind, and more
-
Projects placed-in-service after 1.1.2025 will be eligible for a modified version known as the Clean Electricity Investment Credit
02
Who can Claim the ITC and the CEIC?
-
Generally claimed by the taxpayer that constructs, develops, and/or finances the energy system
-
Tax-exempt organizations may benefit from the Credit via direct pay or transfer
03
Why Consider the Investment Tax Credit and the Clean Electricity Investment Credit?
-
Excellent way to offset the cost of installing renewable energy systems
-
Base rate of 6%, with a 5x increase if Prevailing Wage and Apprenticeship Requirements are met
-
There are several add-ons that boost Credit value – tax liability may be reduced up to 70%
Two Versions of The Credit, Depending on When Construction Commenced
What Could Your ITC or CEIC Look Like?
ITC Case Studies
Major Warehouse Renovation
$10M
investment in solar panels
Project Capacity
>1MW and PWA Requirements satisfied
$3M ITC/CEIC Credit
in addition to accelerated and bonus depreciation yielded by contemporaneous cost segregation study
Existing Facility
$1M
New Solar Project
Project Capacity
<1MW, so exempted from PWA Requirements
Bonus
Qualified for Domestic Content Bonus
$400K ITC/CEIC Credit
in addition to accelerated and bonus depreciation yielded by contemporaneous cost segregation study
Investment Tax Credit and Clean Electricity Investment Credit FAQs
What is the Base Credit Amount of the ITC/CEIC?
The base Credit amount is 6% of amount invested into the renewable energy system. That rate will quintuple to 30% if the Prevailing Wage and Apprenticeship (PWA) Requirements are met.
What Exactly are the Prevailing Wage and Apprenticeship (PWA) Requirements?
The “Prevailing Wage Requirements” state that contractors must pay mechanics and laborers no less than the prevailing wages required for federal work. The exact wage will vary by location and job description. www.sam.gov lists prevailing wages for most locations and job descriptions and Notice 2022-61 states that taxpayers can rely on wages listed there.
The PW requirements apply to facilities for which construction begins on/after 1/30/2023. If construction began prior to this date, the project may be “grandfathered” in, and able to claim higher benefit rates without needing to meet PW requirements.
How Do I Know Which Version of the Credit Applies in My Situation?
The date on which construction commenced will determine whether you are eligible for the Legacy Sec. 48 Investment Tax Credit or the Sec. 48E Clean Energy Investment Credit.
The crucial date is 1.1.2025:
- If construction began before 1.1.2025 – Legacy Sec. 48 Investment Tax Credit
- If construction began after 1.1.2025 – 48E Clean Electricity Investment Credit
The key difference is that the 48E Credit is “tech-neutral,” meaning that qualifying technologies must have a net greenhouse gas emissions rate of no greater than zero. This will exclude some systems from eligibility moving forward.
What Are the Credit “Add-Ons?”
In certain circumstances you may be eligible for additional benefits:
- Domestic Content Bonus: 10% add-on if all steel, iron, and manufactured components are produced in the US
- Energy Community Bonus: 10% add-on if your project is located in a brownfield site, census tract, etc.
- Low-Income Communities Bonus: 10-20% add-on if your project is located in a low-income community or on Indian land
How Can I Claim the ITC/CEIC?
To claim the Credit, a cost segregation study must be performed, quantifying and assigning costs to all energy system components. It’s important to make sure that your study provider has experience assessing clean energy technology.
If you’re placing a new energy system into service, you may already be considering a cost segregation study. By performing an ITC/CEIC study in conjunction with a cost segregation study, you can significantly lower the overall costs of adopting renewable energy.
How will the new tax law (One Big, Beautiful Bill Act) affect the ITC and CEIC?
The One Big, Beautiful Bill Act (OB3) did establish a sunset date that applies to solar and wind projects. In order to claim the Credit, the solar or wind system must be placed-in-service by 12/31/2027. This is currently a hard and fast date, as the new tax law eliminated the phase-out period established by the Inflation Reduction Act.
However, there is ample runway for benefit — projects currently under construction and projects breaking ground soon will likely be able to claim the incentives in full. Additionally, energy incentives have been historically labile — they phase-out frequently and are renewed piecemeal. We anticipate that Credits for solar and wind will be revisited in the near future.
Do I Qualify for the Investment Tax Credit or the Clean Electricity Investment Credit?
If you’re considering incorporating renewable energy systems into your property, you may be eligible to claim the ITC/CEIC. Let’s talk about your situation — we’re here to help.
Additional Information
Back
Clean Energy Investment Credit: Maximizing Incentives for Renewable Projects
The Clean Energy Investment Credit (CEIC) — sometimes referred to as the Clean Electricity Investment Credit — and the Investment Tax Credit (ITC) are powerful tools designed to support businesses investing in solar, wind, geothermal, and other renewable technologies. These credits help offset the upfront cost of clean energy projects while accelerating the transition to sustainable operations. The energy investment tax credit is a lucrative opportunity for developers and owners.
LEARN MORE
Clean Energy Investment Credit: Maximizing Incentives for Renewable Projects
The Clean Energy Investment Credit (CEIC) — sometimes referred to as the Clean Electricity Investment Credit — and the Investment Tax Credit (ITC) are powerful tools designed to support businesses investing in solar, wind, geothermal, and other renewable technologies. These credits help offset the upfront cost of clean energy projects while accelerating the transition to sustainable operations. The energy investment tax credit is a lucrative opportunity for developers and owners.
Eligible Projects for Investment and Clean Energy Credits
A variety of clean energy initiatives qualify for a version of the investment tax credit renewable energy projects can claim, including:
- Solar photovoltaic (PV) systems
- Wind turbines and related infrastructure
- Geothermal systems for heating and cooling
- Battery storage installations
- Electric vehicle (EV) charging stations
- Microgrid and grid interconnection equipment
Eligibility is based on project type, project start date, placed-in-service timelines, prevailing wage compliance, and domestic content requirements. Enhanced credit rates may apply for projects located in energy communities or low-income areas.
Maximizing Benefits from Clean Energy Tax Credits
To get the most from the Clean Electricity Investment Credit – also referred to as the clean energy investment credit — businesses should:
- Carefully plan construction timing
- Structure ownership and financing to preserve eligibility
- Allocate costs correctly between qualifying and non-qualifying components
- Evaluate stacking options with other federal or state incentives
Optimizing the Investment Tax Credit involves strategic coordination between tax, finance, engineering, and legal teams to ensure full compliance and maximum return.
Claiming and Documentation Process for Energy Investment Credits
Successfully claiming the energy investment tax credit requires careful attention to detail and is best performed with a qualified partner.
A cost segregation study is the ideal way to quantify and assign costs to all energy system components. It’s important to make sure that your study provider has experience assessing clean energy technology.
Detailed records are essential.
Financial Impact of Investment and Clean Energy Tax Credits
The financial impact of the Investment Tax Credit is substantial:
- Reduces upfront capital expenditures by up to 30% or more
- Enhances project ROI and accelerates break-even timelines
- Improves investor confidence and attractiveness of clean energy portfolios
- Offers long-term savings through reduced utility costs and grid independence
With the Clean Electricity Investment Credit – aka the Clean Energy Investment Credit — developers and property owners gain both immediate tax relief and sustained operational benefits.
Partnering with Experts for Investment Tax Credit Services
Navigating the evolving landscape of clean energy incentives demands technical and tax expertise. Partnering with Capstan Tax Strategies ensures:
- Accurate identification of eligible project costs
- Strategic credit optimization and stacking
- Thoroughly documented claims that meet and exceed IRS-guidance
Capstan helps businesses leverage the full value of the investment tax credit renewable energy projects can access, with guidance and support every step of the way.