The Internal Revenue Service today issued Notice 2023-29PDF that describes certain rules that the IRS intends to include in forthcoming proposed regulations for determining what constitutes an energy community for the production and investment tax credits.
The Inflation Reduction Act allows for increased credit amounts if certain requirements pertaining to energy communities are satisfied. There are three categories of energy communities: brownfield sites, certain metropolitan statistical areas based on unemployment rates (MSA/non-MSA), and brownfield sites.
The increased credit amount available for meeting the requirements of the energy community provisions is generally 10% for the production tax credit and 2% for meeting the requirements for the investment tax credit (10% if prevailing wage and apprenticeship requirements or certain other requirements are also met).