Preface: The way we look at manufacturing is this: The US’s strategy should be to skate where the puck is going, not where it is – Tim Cook
2022 Inflation Act: Advanced Manufacturing Production Credit
The Inflation Reduction Act of 2022 (2022 Inflation Act) provides for investment in clean energy and promotes reductions in carbon emissions. A large share of those incentive provisions are in the form of tax credits for green energy. In some cases, the credits are extensions and expansions of current credits, such as those for electric vehicles or residential energy property. Additionally, the 2022 Inflation Act includes new credits, such as those for the production of clean electricity.
The 2022 Inflation Act also adds a new general business credit for various components of advanced energy production and storage devices produced and sold after December 31, 2022. The amount of the credit varies depending on the component and begins to phase out after 2029.
The amount of the advanced manufacturing production credit is the sum of all credit amounts determined for each type of eligible component (including any incorporated eligible components) produced and sold to an unrelated person during the tax year, even where the sale to an unrelated person is made by a person related to the taxpayer.
Eligible Components. The amount of the advanced manufacturing production credit is determined by the particular component produced, and is available for the production of the following items, subject to specified requirements applicable to each particular component:
• thin film photovoltaic cells or crystalline photovoltaic cells;
• photovoltaic wafers;
• solar grade polysilicon;
• solar modules;
• wind energy components;
• torque tubes;
• longitudinal purlins;
• structural fasteners; and
Credit. The amount of the credit is phased out for eligible components sold after 2028. The credit is 75% of the otherwise eligible amount for components sold during the 2029 tax year, 50% for components sold during the 2030 tax year, 25% for components sold during the 2031 tax year, and zero percent thereafter.
Taxpayers eligible for the advanced manufacturing production credit can elect to receive direct advance payment from the Treasury Department instead of a credit against taxes.