| Small business taxpayer exemption – gross receipts test under IRC Sec. 448(c) |
For purposes of applying the gross receipts test under Sec. 448, taxpayers must apply the aggregation rules under Secs. 52(a), 52(b) and 414(m). In particular, Sec. 52(b) requires taxpayers to aggregate gross receipts for trades or businesses under common control. However, Sec. 52(b) presently does not clarify what constitutes a “trade or business” for aggregation purposes. |
No proposal. |
No proposal. |
The proposal would amend Sec. 52(b) to include any activity treated as a trade or business under paragraph (5) or (6) of Sec. 469(c) – i.e., any activity involving research or experimentation under Sec. 174 as well as any activity for which expenses are allowable as a deduction under Sec. 212.
The proposal would be effective for taxable years beginning after December 31, 2021 (8). |
Same as September 15, 2021, House Ways & Means Committee proposal (8). |
Renewable Electricity Production Tax Credit
(PTC) |
The current PTC for qualified renewable production facilities is 60% of the base PTC rate for facilities that begin construction before January 1, 2022. There is no PTC for facilities that begin construction after 2021. |
The proposal would increase the credit to 100% of the PTC rate for qualified facilities that begin
construction after December 31, 2021 and before January 1, 2027.
Starting in 2027, the credit rate would begin to phase down to zero over a five-year period.
The taxpayer would be able to elect a cash payment in lieu of the tax credit. |
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The proposal would extend the PTC for qualified facilities that begin construction before January 1, 2034.
The credit would be 100% of the PTC rate through December 31, 2031 if the prevailing wage and apprenticeship requirements are met, with phase-downs thereafter.
The proposal would provide for an increased credit rate of 10% of the credit amount for projects that meet domestic content requirements.
The taxpayer would be able to elect a cash payment in lieu of the tax credit. |
The proposal would extend the PTC for qualified facilities that begin construction before January 1, 2027.
The credit would be 100% of the PTC rate for wind and solar facilities if the prevailing wage and apprenticeship requirements are met and would apply to facilities placed in service after December 31, 2021.
The proposal would provide for an increased credit rate of 10% of the credit amount for projects that meet domestic content requirements.
The taxpayer would be able to elect a cash payment in lieu of the tax credit. |
| Renewable Energy Investment Tax Credit (ITC) |
Qualified energy facilities that begin construction before January 1, 2023 are eligible for a 26% ITC. The credit is 22% for projects that begin construction after December 31, 2022 and before January 1, 2024 and placed in service before 2026; thereafter, the credit is 10%. |
The proposal would increase the ITC to 30% for solar and geothermal electric energy property and other qualified facilities that begin construction after December 31, 2021 and before January 1, 2027. Starting in 2027, the credit rate would begin to phase down to zero over a five-year period.
The proposal would expand the ITC to include stand-alone energy storage facilities with a capacity of at least 5 kWh.
The taxpayer would be able to elect a cash payment in lieu of the tax credit. |
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The proposal would extend the ITC for wind and solar projects that begin construction before January 1, 2034.
For projects that begin construction after December 31, 2021 and before January 1, 2032, the ITC rate for wind and solar projects would increase to 30%, subject to the prevailing wage and apprenticeship requirements, with a phase-down thereafter.
The proposal would provide for an increased credit rate of 10% of the credit amount for projects that meet domestic content requirements.
The proposal would expand the ITC to stand-alone energy storage projects.
The taxpayer would be able to elect a cash payment in lieu of the tax credit. |
The proposal would extend the ITC for projects that begin construction before January 1, 2027.
The ITC rate for wind and solar projects would increase to 30%, subject to the prevailing wage and apprenticeship requirements (would apply to facilities placed in service after December 31, 2021).
The proposal would provide for an increased credit rate of 10% of the credit amount for projects that meet domestic content requirements.
The proposal would expand the ITC to energy storage technology, linear generators, microgrid controllers, dynamic glass and biogas property.
The ITC rate would be reduced to 0% for qualified fuel cell property, qualified small wind property, waste energy property, waste energy property and certain solar property, the construction of which begins before January 1, 2027 and that is not placed in service before January 1, 2029.
The taxpayer would be able to elect a cash payment in lieu of the tax credit. |
| Increased ITC for solar and wind facilities connected to low-income housing communities |
N/A |
N/A |
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The proposal would create an additional 10% ITC for projects located in qualified low-income communities or an additional 20% credit if the project is a qualifying low-income residential building project or a low-income economic benefit project.
The taxpayer would be able to elect a cash payment in lieu of the tax credit. |
The proposal would create an additional 10% ITC for projects located in qualified low-income communities or on Indian land or an additional 20% credit if the project is a qualifying low-income residential building project or a low-income economic benefit project.
The taxpayer would be able to elect a cash payment in lieu of the tax credit. |
| New Transmission Credits |
N/A |
The proposal would introduce a new ITC equal to 30% of a taxpayer’s investment in qualifying electric power transmission property placed in service after December 31, 2021 and before January 1, 2032.
The taxpayer would be able to elect a cash payment in lieu of the tax credit. |
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The proposal would create a new 30% ITC for qualified electric transmission property subject to the prevailing wage and apprenticeship requirements.
Qualified property would have to be placed in service before January 1, 2032.
The taxpayer would be able to elect a cash payment in lieu of the tax credit. |
The proposal would create a new 30% ITC for qualified electric transmission property subject to the prevailing wage and apprenticeship requirements.
Qualified property would have to be placed in service before January 1, 2032.
The taxpayer would be able to elect a cash payment in lieu of the tax credit. |
| Expand and enhance the carbon oxide sequestration credit |
A tax credit is available for the capture and sequestration of qualified carbon oxide using carbon capture equipment that is placed in service at a qualified facility on or after February 9, 2018.
Qualified facilities must begin construction by January 1, 2016 and can claim credits for a 12-year period after the facility is placed in service. |
The proposal would provide an enhanced credit for certain sectors and extend the commence construction date by five years to January 31, 2031.
The taxpayer would be able to elect a cash payment in lieu of the tax credit. |
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The proposal would increase the IRC Sec. 45Q carbon capture tax credit for “direct air capture facilities” and extend the credit to facilities that begin construction before December 31, 2031.
To qualify, direct air capture facilities would have to capture no less than 1,000 metric tons of carbon oxide per year and electricity generating facilities would have to capture no less than 18,750 tons and not less than 75% of the carbon oxide emissions. Other facilities would need to capture no less than 12,500 metric tons, and not less than 50% of the carbon oxide emissions.
The prevailing wage and apprenticeship requirements would need to be met to claim the credit at the bonus rate.
The taxpayer would be able to elect a cash payment in lieu of the tax credit. |
The proposal would extend the credit to facilities that began construction before December 31, 2031.
To qualify, direct air capture facilities would have to capture no less than 1,000 metric tons of carbon oxide per year and electricity generating facilities would have to capture no less than 18,750 metric tons and no less than 75% of the total carbon emissions. Other facilities would need to capture no less than 12,500 metric tons of carbon oxide.
The proposal would provide a base credit rate of $17 or a bonus credit rate of $85 per metric ton of carbon oxide captured for geological storage and a base credit rate of $12 or a bonus credit rate of $60 per metric ton of carbon captured and utilized for an allowable use.
The prevailing wage and apprenticeship requirements would need to be met to claim the credit at the bonus rate.
The taxpayer would be able to elect a cash payment in lieu of the tax credit. |
| Credit for electricity generation from existing nuclear power facilities |
N/A |
The proposal would create an allocated production credit for electricity generation from eligible
existing nuclear power facilities that bid for the credits.
The first bid window would commence on January 1, 2022 and the last window would commence on January 1, 2030.
The taxpayer would be able to elect a cash payment in lieu of the tax credit. |
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The proposal would add IRC Sec. 45W that would provide a credit for the production of electricity from a qualified nuclear power facility of 1.5 cents per kw hour if the prevailing wage and apprenticeship requirements are met.
The taxpayer would be able to elect a cash payment in lieu of the tax credit. |
The proposal would add IRC Sec. 45W that would provide a credit for the production of electricity from a qualified nuclear power facility of 1.5 cents per kw hour if the prevailing wage and apprenticeship requirements are met.
The taxpayer would be able to elect a cash payment in lieu of the tax credit. |
| Tax credits for qualifying advanced energy manufacturing |
IRC Sec. 48C authorized the Department of the Treasury to
award $2.3 billion in tax credits to promote investment and job creation in
clean energy manufacturing. The tax credit is equal to 30% of the eligible investment in
qualifying advanced energy projects.
The entire $2.3 billion has been awarded and Congress has not authorized additional funding. |
The proposal would modify and expand IRC Sec. 48C. The proposal would authorize another $10 billion of Sec. 48C credits for investments in eligible property.
The proposal would be effective after December 31, 2021.
The taxpayer would be able to elect a cash payment in lieu of the tax credit. |
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The proposal would revive the IRC Sec. 48C 30% qualified advanced energy property credit.
The prevailing wage and apprenticeship requirements would have to be met to qualify for the credit.
The taxpayer would be able to elect a cash payment in lieu of the tax credit. |
The proposal would revive the IRC Sec. 48C qualified advanced energy property credit.
Projects would receive a base credit rate of 6% or a bonus rate of 30%. In order to qualify for the 30% bonus rate, the prevailing wage and apprenticeship requirements would have to be met.
The taxpayer would be able to elect a cash payment in lieu of the tax credit. |
| Advanced Manufacturing Investment Credit |
N/A |
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The proposal would add new IRC Sec. 48E that would provide an ITC up to 25% for advanced manufacturing facilities.
The credit would be available for qualified property that begins construction before January 1, 2027.
The prevailing wage and apprenticeship requirements would have to be met to qualify for the credit rate of 25%.
The taxpayer would be able to elect a cash payment in lieu of the tax credit. |
| Advanced Manufacturing Production Credit |
N/A |
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The provision would add new IRC Sec. 45AA that provides a production credit for each eligible component that is produced and sold.
Eligible components would include solar polysilicon, wafers, cells and modules, and wind blades, nacelles, towers and offshore foundations.
The credit generally would be provided on a mass or watt capacity basis.
The credit allowed for eligible components would be increased by 10% if the final assembly of the components is at a facility in the U.S. that operates under a union-negotiated collective bargaining agreement.
The credit would be provided for eligible components produced and sold before January 1, 2027. For components sold after that date, the credit would be reduced by 25% annually and would be unavailable for components sold in 2030 and thereafter.
The taxpayer would be able to elect a cash payment in lieu of the tax credit. |
| Establish tax credits for heavy and medium-duty zero emission vehicles |
A nonrefundable tax credit is available for vehicles and light trucks weighing less than 14,000 pounds that are propelled by an electric motor. |
The proposal would provide a business tax credit for new medium- and heavy-duty zero emission vehicles.
The credit would be based on the vehicle class and be reduced over time based on the purchase date.
The taxpayer would be able to elect a cash payment in lieu of the tax credit. |
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The proposal would provide: (1) a refundable new qualified plug-in electric drive vehicle credit for individuals; (2) a credit for previously-owned qualified plug-in electric drive motor vehicles; (3) a credit for qualified commercial vehicles; and (4) a credit for qualified fuel cell motor vehicles. |
The proposal would provide: (1) a refundable new qualified plug-in electric drive vehicle credit for individuals; (2) a credit for previously-owned qualified plug-in electric drive motor vehicles; (3) a credit for qualified commercial vehicles; and (4) a credit for qualified fuel cell motor vehicles.
For the refundable new qualified plug-in vehicle credit, the taxpayer would be able to elect to transfer the credit to the vehicle dealer if the dealer meets certain requirements. |
| Extend and enhance the Electric Vehicle Charging Station Credit |
An investment tax credit equal to 30% of the cost of alternative fuel vehicle refueling property is available. It is capped at $1,000 for refueling property installed at a taxpayer’s residence and at $30,000 for refueling property installed for commercial use. The credit is set to expire on December 31, 2021. |
The proposal would allow taxpayers to claim the tax credit on a per-device basis, increase the tax credit limit on individual devices to $200,000 and extend the tax credit for five years through December 31, 2026.
The $1,000 tax credit for refueling property installed at a taxpayer’s residence
would not increase but would be extended for five years.
Taxpayers would have the option to elect a cash payment in lieu of the general business
tax credit (i.e., a direct pay option). |
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The proposal would extend the existing IRC Sec. 30C credit for alternative fuel refueling property through December 31, 2031. |
The proposal would extend the alternative fuel vehicle refueling property credit to December 31, 2031.
The credit for zero-emissions charging and refueling would provide a base credit of 6% for expenses up to $100,000 and 4% for allowable expenses in excess of $100,000. It also would provide an alternative bonus credit level of 30% for expenses up to $100,000 and 20% thereafter if the prevailing wage and apprenticeship requirements are met.
The taxpayer would be able to elect a cash payment in lieu of the tax credit. |
| Sustainable Aviation Fuel Credit |
N/A |
The proposal would introduce a production tax credit of $1.50 per gallon for sustainable aviation.
fuel that achieves at least a 50% reduction in emissions relative to conventional jet fuel.
The credit would be offered for fuel produced after December 31, 2021 and before January 1, 2028. |
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The proposal would add IRC Sec. 40B, establishing a refundable blenders tax credit for each gallon of sustainable aviation fuel sold as part of a qualified fuel mixture.
The credit would be determined on a sliding scale from $1.25 to $1.75 per gallon, depending on the reduction in the lifecycle emissions of the fuel.
The taxpayer would be able to elect to claim this credit against its excise tax liability under IRC Sec. 4041.
The credit would apply to fuel sold or used after December 31, 2022 and before January 1, 2032.
The proposal would extend the existing IRC Sec. 30C credit for alternative fuel refueling property through December 31, 2031. |
The proposal would extend the alternative fuel vehicle refueling property credit to December 31, 2031.
The credit for zero-emissions charging and refueling would provide a base credit of 6% for expenses up to $100,000 and 4% for allowable expenses in excess of $100,000. It also would provide an alternative bonus credit level of 30% for expenses up to $100,000 and 20% thereafter if the prevailing wage and apprenticeship requirements are met.
The taxpayer would be able to elect a cash payment in lieu of the tax credit. |
| Extension of incentives for biodiesel, renewable diesel and alternative fuels |
The credit for biodiesel and renewable diesel under IRC Sec. 40(A) is scheduled to expire on December 31, 2022. |
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The proposal would extend the income and excise tax credits for biodiesel and biodiesel mixtures at $1 per gallon to December 31, 2031.
The proposal would extend the $.10 per gallon small agri-biodiesel producer credit to December 31, 2031.
It also would extend the $.50 per gallon excise tax credit for alternative fuels and alternative fuel mixtures to December 31, 2031. |
The proposal would extend the income and excise tax credits for biodiesel and biodiesel mixtures at $1 per gallon to December 31, 2026.
The proposal would extend the $.10 per gallon small agri-biodiesel producer credit to December 31, 2031.
It also would extend the $.50 per gallon excise tax credit for alternative fuels and alternative fuel mixtures to December 31, 2026. |
Clean Hydrogen
Credit |
N/A |
The proposal would introduce a low-carbon hydrogen production credit.
The credit would be indexed annually for inflation measured after the facility is placed into service, based on the initial amount of $3 per kilogram of hydrogen between 2022 and 2024 and $2 per kilogram between 2025 and 2027.
The taxpayer would be able to elect a cash payment in lieu of the tax credit. |
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The proposal would add IRC Sec. 45X, which would provide a credit for the production of clean hydrogen at a qualified facility.
The credit would be available beginning in 2022 for a 10-year period starting on the date the facility was placed in service. This credit does not apply to any facility the construction of which begins after December 31, 2028.
The amount of the credit would depend on the reduction in the lifecycle greenhouse gas emissions as compared with hydrogen produced by steam-methane reforming, with the credit per kilogram of clean hydrogen equal to $3 multiplied by an applicable percentage.
The prevailing wage and apprenticeship requirements would have to be met to qualify for the credit. |
The proposal would create new IRC Sec. 45X, which would provide a tax credit for the production of clean hydrogen produced at a qualified facility.
The credit would be available beginning in 2022 for a 10-year period starting on the date the facility was placed in service.
The credit would be equal to the applicable percentage of $.60 or the bonus rate of $3 multiplied by the volume (in kilograms) of clean hydrogen produced.
The applicable percentage would range from 8.4% to 100% of the rates referenced above, depending on emission specifications.
The taxpayer would be able to elect to claim the 30% ITC in lieu of the hydrogen production credit if the prevailing wage and apprenticeship requirements are met.
The taxpayer would be able to elect a cash payment in lieu of the tax credit. |
| Extension, increase and modifications of Nonbusiness Energy Property Credit |
Taxpayers can claim deductions and tax credits for investments in energy efficiency property and improvements for their homes and businesses. |
The proposal would extend the IRC Sec. 25C tax credit for five years and increase the lifetime limit to $1,200 for property placed in service after December 31, 2021 and before January 1, 2027.
The credit rate would be increased to 15% for qualified energy efficiency improvements, and the credit amounts for certain types of residential energy property expenditure would be increased. |
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The proposal would extend the energy property credit for nonbusiness energy property under IRC Sec. 25C to property placed in service before January 1, 2032. Other changes to the credit would apply as from January 1, 2022, including: (1) limiting the overall credit to $1,200 annually; (2) increasing the percentage of the credit for installing qualified energy efficiency improvements to 30% of the cost; and (3) expanding the credit to cover the costs of home energy audits, allowing a 30% credit of such costs up to $150. |
The proposal would extend the nonbusiness energy property credit to property placed in service before January 1, 2032. The provision would modify and expand the credit by: (1) increasing the credit for installing qualified energy efficiency improvements from 10% of cost to 30%; (2) replacing the lifetime cap on credits with a $1,200 annual credit limitation (excluding expenditure for geothermal and air source heat pumps and biomass stoves); (3) updating various standards; (4) requiring manufacturers and taxpayers to comply with reporting requirements; and (5) expanding the credit to cover the costs of home energy audits, allowing a credit of 30% of such costs up to a maximum credit of $150. |
| Residential energy-efficient property |
The credit for residential energy-efficient property does not apply to property placed in service after December 31, 2023. |
The proposal would grant a full 30% credit for property placed in service after 2021 and before 2027, phasing down over a five-year period. |
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The proposal would extend the full 30% credit for the cost of qualified residential energy-efficient property expenditure through December 31, 2031. The provision would phase down to 26% in 2032 and to 22% in 2033. |
The proposal would extend the full 30% credit for the cost of qualified residential energy efficiency property expenditure to December 31, 2031.
The credit would phase down to 26% in 2032 and 22% in 2033 and would expire on December 31, 2033.
The provision also would expand the definition of eligible property to include battery storage technology and make the credit refundable starting on January 1, 2023. |
| Extension, increase and modification of new energy- efficient home credit |
IRC Sec. 45L provides a tax credit for the construction of new energy-efficient homes
that are purchased on or before December 31, 2021. IRC Sec. 45L expires on December 31, 2021. |
The proposal would extend IRC Sec. 45L for five years to December 31, 2026 and increase the credit from $2,000 to $2,500. |
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The proposal would extend the IRC Sec. 45L new energy-efficient home credit through December 31, 2031. |
The proposal would extend current law to December 31, 2031 and enhance the provisions. |
| Green energy publicly traded partnerships |
Publicly traded partnerships are treated as corporations and taxed as such unless at least 90% of their gross income consists of qualifying income, which includes certain passive income and income and gains from the exploration, development, mining, production, processing, refining or transportation and marketing of any mineral or natural resource. |
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The proposal would expand the definition of qualified income for publicly traded partnerships to include income derived from green and renewable energy, including certain activities relating to energy production eligible for the PTC, property eligible for the ITC, renewable fuels and energy and fuel from carbon sequestration projects eligible for credits under IRC Sec. 45Q. |
The proposal would expand the definition of qualified income for publicly traded partnerships to include income derived from green and renewable energy, including certain activities relating to energy production eligible for the PTC, property eligible for the ITC, renewable fuels and energy and fuel from carbon sequestration projects eligible for credits under IRC Sec. 45Q. |
| Clean electricity production and investment credits |
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The proposal would add IRC Sec. 48E, which would provide a 30% ITC for qualified “zero emissions facilities.”
The credit would be subject to an annual credit limitation of $250 million for each of calendar years 2022 through 2031 and would expire thereafter.
The Secretary of the Treasury, in consultation with the Secretary of Energy and the Administrator of the Environmental Protection Agency, would select which facilities are allocated these credits based on certain criteria.
Unused credit amounts would be available for carryover until the credit expires after December 31, 2031.
No credit would be allocated if the prevailing wage and apprenticeship requirements are not met. |
The proposal would create an emissions-based incentive that would be neutral and flexible between clean electricity technologies.
The taxpayer would be able to choose between a PTC under IRC Sec. 45BB or an ITC under Sec. 48F, which would be based on the carbon emissions of the electricity generated, measured as grams of carbon dioxide equivalents (CO2e) emitted per KWh generated. Any power facility of any technology would qualify for the credits, provided the facility’s carbon emissions are at or below zero.
The prevailing wage and apprenticeship requirements would have to be met to qualify for the credit.
The taxpayer would be able to elect a cash payment in lieu of the tax credit. |