Renewable energy tax credits survive in Jobs Act
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December 28, 2017
Renewable energy tax credits survive in Jobs Act

After an anxious period during which Congress proposed to write renewable energy tax credits out of the $1.5 trillion Tax Cuts and Jobs Act, lawmakers did an about-face and decided to keep them in the final version. However, the credits do not come out unscathed because of a complex provision called the Base Erosion Anti-Abuse Tax (BEAT).

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Two types of credits are preserved:

  • The federal renewable electricity production tax credit (PTC) is an inflation-adjusted per-kilowatt-hour (kWh) tax credit for electricity generated by qualified energy resources and sold by the taxpayer to an unrelated person during the taxable year.
  • An alternative to the PTC is the investment tax credit (ITC), which allows project owners or investors to be eligible for federal business energy investment tax credits for installing designated renewable energy generation equipment placed in service during the period 2006 through 2024.

Industry relieved

Both the PTC and the ITC have spurred the development of wind and solar energy and are considered essential to continued growth in the still-young renewables sector.

“We are grateful to our champions in Congress for their work to craft a pro-business tax reform bill that will continue the success story of American wind power,” said Tom Kiernan, CEO of the American Wind Energy Association (AWEA). “The bill respects the 2015 bipartisan phase-out, preserving through 2019 the Production Tax Credit and Investment Tax Credit, which the wind industry uses to access capital and invest in U.S. infrastructure. We deeply appreciate the work of Members of Congress who stood up for wind workers and rural America, and look forward to continuing our work with these Congressional champions as we deliver more factory orders, construction contracts, and jobs.”

“Today marks the second anniversary of Congress extending and reforming the solar Investment Tax Credit (ITC),” said Abigail Ross Hopper, president and CEO of Solar Energy Industries Association (SEIA). “SEIA appreciates the hard work of our solar champions in Congress to ensure that the tax reform bill maintains the ITC in its current form. In particular, the final bill preserves the current ramp down of the ITC through the end of 2021, maintains the 10 percent ITC for commercial developers beyond 2021, and allows the Treasury Department to issue guidance on commence construction eligibility criteria.”

BEAT

The BEAT was written into the bill to prevent corporations from making payments to overseas subsidiaries to reduce their tax liability. In an earlier version, the BEAT would have required renewable energy companies to surrender 100 percent of the value of the tax credit in a given year. In the final bill, companies can use credits to offset 80 percent of the BEAT.

“We recognize improvements made to the new Base Erosion Anti-Abuse Tax to enable continued investment,” said AWEA’s Kiernan.

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