The IRA includes separate provisions for clean fuel tax credits for consumers and businesses. Although the consumer credits include specifications around vehicle components, businesses are not subject to this provision.  That means businesses can claim the credit on a wider array of models than consumers can. 

For qualified commercial clean vehicles, the credit equals the lesser of:

• 15% of the entity’s tax basis in the vehicle (30% if the vehicle is not powered by gas or diesel); or
• The incremental cost of the vehicle. Incremental cost is the excess of the purchase price of a qualified commercial clean vehicle over the price of a comprable vehicle

The maximum credit is $7,500 for qualified vehicles with gross vehicle weight ratings (GVWRs) of under 14,000 pounds and $40,000 for all other vehicles. The credit applies to road vehicles as well as mobile machinery, as defined in § 4053(8) of the Code. There is no limit on the number of credits your business can claim and elective pay is available for tax-exempt entities.

Vehicles That Qualify:

• Must be made by a qualified manufacturer;
• Be for use in business, not resale, and for use primarily in the United States; and
• Have not been allowed a credit under section 30D and 45W.
• The vehicle must also be either:
  • A plug-in electric vehicle that draws significant propulsion from an electric motor with a battery capacity of at least 7 kilowatt hours if the gross vehicle weight rating (GVWR) is under 14,000 pounds or 15 kilowatt hours if the GVWR is 14,000 pounds or more; or
  • A fuel cell motor vehicle that satisfies the requirements of IRC 30B(b)(3)(A) and (B), which defines a "fuel cell motor vehicle" as one that:
    • (B) which, in the case of a passenger automobile or light truck, has received on or after the date of the enactment of this section a certificate that such vehicle meets or exceeds the Bin 5 Tier II emission level established in regulations prescribed by the Administrator of the Environmental Protection Agency.
    • (A) which is propelled by power derived from 1 or more cells which convert chemical energy directly into electricity by combining oxygen with hydrogen fuel which is stored on board the vehicle in any form and may or may not require reformation prior to use,
    • (B) which, in the case of a passenger automobile or light truck, has received on or after the date of the enactment of this section a certificate that such vehicle meets or exceeds the Bin 5 Tier II emission level established in regulations prescribed by the Administrator of the Environmental Protection Agency.

See also FAQs for the Commercial Clean Vehicle Credit

Vehicle Charging

Businesses that install EV chargers and station equipment at their eligible property can qualify for a tax credit of up to 6% of the cost of charging equipment (or 30% if prevailing wage and apprenticeship requirements are met), up to a maximum credit of $100,000 per unit. Projects completed before December 31, 2022 are subject to the prior $30,000 cap.

Qualifying for Vehicle Charging Credits

To qualify, the equipment must be placed in a low-income community or a non-urban area. The US Treasury issued guidance details which areas are eligible; use this Department of Energy map to determine your individual eligibility.

Review the IRS guidelines for more specifics.

With the Investment Tax Credit entities can receive a 30% credit for geothermal, biogas, and other renewables energy installations. If the project is less than 1MW(ac) in size:

• The incentive is a 30% tax credit for a for-profit business that files tax returns as well as for tax-exempt entities that utilize Elective Pay.
• Projects can earn additional credit if:
  • Domestic content minimums (10%) 
  • Located in an energy community (see DOE map) or in a brownfield (no map available) (10%)
• In general, the eligible project amount is not affected by tax-exempt grants or incentives from entities like Focus on Energy; consult your tax professional and see the US Department of Energy guidance for more information

Geothermal or biogas projects over 1 MW(ac) qualify for a 6% tax credit unless the project meets prevailing wage and apprenticeship requirements.

In situations where a facility is adding both solar and geothermal, the two systems might be considered parts of one whole (in which case the combined system must be under 1 MW(ac) or meet the prevailing wage requirements to receive the 30% credit) or be considered two separate clean energy projects (in which case the 1 MW(ac) maximum applies to each project). The consideration will depend on how the project is scoped and contracted. 

Refer to IRS guidance for more information for more details. 

Learn more about how to stack your your credits and deductions.

Hundreds of businesses across Dane County have installed solar to reduce their operating costs. Typical rooftop solar installations for commercial use can vary from 20kW to 300kW, which is less than the 1MW(ac) where tax credit requirements become more stingent.

Entities can claim tax credits for larger solar arrays through the a) the Investment Tax Credit (which applies to systems under 1 MW) or b) the Production Tax Credit, in which the payment is based on energy generated. Refer to Department of Energy summary for more information or the IRS guidance.

More about transitioning your organization to renewable energy is here.

Projects less than 1 MW(ac)
The IRA will provide 30% funding for solar installations of less than 1 MW(ac) on commercial facilities, with no maximum allowance. The 30% credit also applies to battery storage and interconnection charges. 

The incentive applies a 30% tax credit for a for-profit business that files tax returns.

1 MW(ac) or Larger Projects

Solar and wind projects over 1 MW(ac) qualify for a 6% credit that increases up to 30% if prevailing wage and apprenticeship requirements are met.

Entities can claim tax credits for larger solar arrays by a) the Investment Tax Credit (which applies to systems under 1MW) or b) the Production Tax Credit, in which the payment is based on energy generated. Refer to Department of Energy summary for more information or the IRS guidance.

Refer to IRS guidance for more information on both the Production Tax Credit and the Investment Tax Credit for large renewable energy projects.

Credit Stacking

Projects can earn additional tax credits for:

• Domestic content minimums (10%) 
• Located in an energy community (see DOE map) or in a brownfield (no map available) (10%)
• Low Income Community (10 - 20%) This is a separate provision and will require a separate application, subject to annual maximum of 1.8GWac/year and other provisions. Projects must apply for and receive notice of bonus allocation before the project is complete.

Learn more about how to stack your your credits and deductions.

Builders of new, energy-efficient residential housing may be eligible for the New Energy Efficient Homes Credit (45L). 

For single-family homes, builders are eligible for:

• $2,500 per home that meets the EPA’s ENERGY STAR Single-Family New Homes program; or
• $5,000 for a home that meets the US Department of Energy’s Net Zero Energy Ready Homes program requirements

For multi-family homes, builder/developers are eligible for:

• $500 per unit that meets the EPA’s ENERGY STAR Multifamily New Construction program
  • Increased to $2,500 per unit that also meets prevailing wage requirements; or
• $1,000 for a home that meets the US Department of Energy’s Net Zero Energy Ready Homes program requirements
  • Increased to $5,000 per unit that also meets prevailing wage requirements

Contractors and homes must meet requirements in IRC Section 45L before they claim credit. Also, see the Energy Efficient Commercial Buildings deduction (first tab, above) for potential additional project savings if you are constructing a commercial building.

Additional Resources

• Guidance from both the EPA for Energy Star Homes tax credits and the DOE for the Net Zero Energy Ready Homes credits. 
• Guidance document from the US Treasury.