The U.S. Department of the Treasury and IRS on Oct. 24, 2024, released Final Regulations regarding the Section 45X Advanced Manufacturing Production Credit of the Internal Revenue Code. The Final Regulations are effective 60 days after publication in the Federal Register.
Section 45X, which was enacted in 2022 as part of the Inflation Reduction Act (IRA), provides a production tax credit for domestic manufacturing of components for solar and wind energy, inverters, battery components and critical minerals. Generally, the credit phases down beginning in 2030 and fully phases out by 2032, with an exception for critical minerals. The amount of the credit varies depending on the component produced and sold.
The Final Regulations provide guidance regarding:
- clarification of the definition of production costs incurred for purposes of calculating the credit for certain components
- timing for the production and sale of eligible components
- clarification regarding the related person sale election
- revisions to the rules regarding the interaction between Section 45X and Section 48C
The Holland & Knight Energy Tax Team is reviewing the Final Regulations and will provide additional analysis.
