Treasury, IRS Release Section 45X Advanced Manufacturing Production Credit Proposed Regulations | Holland & Knight LLP

The U.S. Department of the Treasury and IRS on Dec. 14, 2023, released proposed regulations regarding the Section 45X Advanced Manufacturing Production Credit of the Internal Revenue Code (Proposed Regulations). Comments to the Proposed Regulations are requested within 60 days of the date the rules are published in the Federal Register (expected by Dec. 15, 2023).

The Inflation Reduction Act enacted Section 45X, which provides a production tax credit for domestic manufacturing of components for solar and wind energy, inverters, battery components and critical minerals. The credit generally phases down beginning in 2030 and fully phases out by 2032. The amount of the credit varies depending on the component produced and sold.

The Proposed Regulations provide guidance regarding:

  • definition of production costs incurred for purposes of calculating the credit for certain components
  • critical mineral and battery component definitional clarifications
  • a special rule for applying the definition of “produced by the taxpayer” for solar-grade polysilicon, electrode active materials and applicable critical minerals
  • the proper claim where contract manufacturing arrangements are in place
  • interaction between Section 45X and Section 48C

The Holland & Knight Energy Tax Team is reviewing the Proposed Regulations and will provide additional analysis.

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