The U.S. Department of the Treasury and IRS on June 18, 2024, issued final regulations regarding the prevailing wage and apprenticeship (PWA) requirements. If the construction of a facility begins on or after Jan. 29, 2023, and the facility's maximum net output is greater than 1 megawatt (MW), alternating current (MWac), the PWA requirements generally must be satisfied in order for the taxpayer to receive the full credit amount under Sections 30C, 45, 45L, 45Q, 45U, 45V, 45Y, 48, 48C and 48E of the Internal Revenue Code, as well as an increased deduction under Section 179D.

Summary of Application of PWA Requirements

A summary of the application of the PWA requirements to the various credits is below:

Additional Resources

The IRS also released an Inflation Reduction Act (IRA) Prevailing Wage and Apprenticeship Requirements Fact Sheet (Publication 5983), as well as updated the IRA Prevailing Wage & Registered Apprenticeship Overview (Publication 5855) and the Prevailing Wage and Apprenticeship Frequently Asked Questions.

Further, the U.S. Department of Labor (DOL) and the IRS are working on a Memorandum of Understanding (MOU) to be signed by the end of the year. The MOU will facilitate DOL's review and comment as part of the development of PWA tax forms and formalize a process for the DOL to share with the IRS any credible tips or information that the DOL receives as to potential noncompliance with the PWA requirements.

The Holland & Knight Energy Tax Team is reviewing the final regulations and will provide additional analysis. 

Notes

¹ Application of the PWA requirements differs depending on the placed-in-service date.