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Unlike other tax credit bonuses (such as domestic content), the low-income communities bonus tax credit is limited and requires an allocation from the Department of Energy. Therefore, those who want to take advantage of the bonus need to put their best foot forward with their application. You can read more about the low-income communities bonus tax credit in general in Atheva’s prior post.
Guidance issued on the 2024 application process in the Revenue Procedure 2024-19 notes that the capacity limitation for 2024 is 1.8 gigawatts. Of the 1.8 gigawatts available to be allocated, the government plans to allocate benefits of 800 megawatts to qualified low-income benefit projects, 600 megawatts to projects located in low-income communities, 200 megawatts to qualified low-income residential building projects, and 200 megawatts to projects located on Tribal land.
Applicants need to submit an application for one of the categories above. Even if the project satisfies more than one category above, an application for a project can’t be submitted to receive an allocation from more than one category.
One key step to improve their chances at an allocation is to submit an application early: in particular, during the initial 30-day window. Projects in that window will all be evaluated together. Applications after that window will be reviewed on a rolling basis. If there are no allocations left when an application is made, there won’t be an allocation (even if it was a project that might have otherwise gotten an allocation).
So, now is the time to get applications in for the low-income communities bonus tax credit for 2024, which opend on May 28, 2024. The initial 30-day application window ends on June 27, 2024. Ideally developers would submit their applications on or before June 27th.
To apply for an allocation, developers will need to submit an application to the Department of Energy through their application portal. Before beginning the application process, applicants must register in the DOE portal. Before registering in the DOE portal, applicants must first create a login.gov account.
If you are eligible, the low-income communities bonus tax credit is a great way to boost your tax credit by up to 20%. Not sure if you are eligible? Ready more about the eligibility criteria here. Still have questions? Feel free to contact us. We’ve been helping our clients navigate the application process, either directly or by referring them to advisors who can help.
