The U.S. Department of the Treasury and IRS on June 18, 2024, issued final regulations regarding the prevailing wage and apprenticeship (PWA) requirements. If the construction of a facility began on or after Jan. 29, 2023, and the facility's maximum net output is greater than 1 megawatt (MW), alternating current (MWac), the PWA requirements generally must be satisfied in order for the taxpayer to receive the full credit amount under Sections 30C, 45, 45L, 45Q, 45U, 45V, 45Y, 48, 48C and 48E of the Internal Revenue Code, as well as an increased deduction under Section 179D.
Summary of Application of PWA Requirements
A summary of the application of the PWA requirements to the various credits is below:
|
Credit |
Prevailing Wage |
Apprenticeship |
|---|---|---|
|
Section 45/45Y Production Tax Credits (PTCs) |
Yes |
Yes |
|
Section 48/48E Investment Tax Credit (ITCs) |
Yes |
Yes |
|
Section 45V Clean Hydrogen PTC |
Yes |
Yes |
|
Section 45U Zero-Emission Nuclear PTC |
Yes, applicable to repair and alteration |
No |
|
Section 45Q Carbon Capture, Utilization and Storage (CCUS) |
Yes |
Yes |
|
Section 45Z Clean Fuel PTC1 |
Yes |
Yes |
|
Section 48C Qualifying Advanced Energy Project ITC |
Yes |
Yes |
|
Section 30C Alternative Fuel Vehicle Refueling Property ITC |
Yes |
Yes |
|
Section 30D/25E/45W Clean Vehicle Credits |
No |
No |
|
Section 45X Advanced Manufacturing PTC |
No |
No |
Additional Resources
The IRS also released an Inflation Reduction Act (IRA) Prevailing Wage and Apprenticeship Requirements Fact Sheet (Publication 5983), as well as updated the IRA Prevailing Wage & Registered Apprenticeship Overview (Publication 5855) and the Prevailing Wage and Apprenticeship Frequently Asked Questions.
Further, the U.S. Department of Labor (DOL) and the IRS are working on a Memorandum of Understanding (MOU) to be signed by the end of the year. The MOU will facilitate the DOL's review and comment as part of the development of PWA tax forms and formalize a process for the DOL to share with the IRS any credible tips or information that the DOL receives as to potential noncompliance with the PWA requirements.
The Holland & Knight Energy Tax Team is reviewing the final regulations and will provide additional analysis. To receive this forthcoming analysis, please subscribe to our alerts.
Footnote
1 Application of the PWA requirements differs depending on the placed-in-service date.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.