It is the start of a new year, and that also means, it is the start of tax season. For many companies, tax credits are a highly sought-after way of saving money. Fortunately, a new tax credit called the Inflation Reduction Act, which was just recently passed in late 2022, is giving companies financial incentives to become more energy efficient.

The Inflation Reduction Act offers $738 billion in funding, including $270 billion for energy saving incentives.

There are two major project types that can immediately benefit from this Act:

1. Projects which help support energy infrastructure
2. Projects which upgrade facilities to make equipment or components being sold (to unrelated parties) to be used in renewable energy projects

Specifically, these credits can be utilized for renewable energy projects such as wind, solar and biogas energy, combined heat and power (CHP), biomass and trash facilities, biodiesel production and carbon capture technology projects. 

Another benefit of the Inflation Reduction Act is its ability to support manufacturing facility construction or improvements (including qualifying biogas units), energy efficiency initiatives such as solar or battery storage systems or clean transportation fuel infrastructure. Furthermore, these credits may even extend to electric vehicles or sustainable aviation fuel production.

Now that you know about this Act and how it can impact your company’s bottom line, the next step is to implement procedures and new equipment to qualify for this tax credit.  This process takes knowledge, time and effort. McMahon has extensive experience and can help develop waste-to-energy and sustainability projects, and our financial consultant Baker Tilly has the expertise to understands the value of tax credits and the potential savings they can bring for a business. Together, our teams can help your company navigate these new tax credits, specifically:

1. Planning to meet safe harbor
2. Preserving the tax credit with vendors to meet begun construction
3. Determining domestic content for a company’s energy equipment or components
4. Developing advisory to help manage or site a project
5. Maximizing the tax credit earned – pre & post construction with a cost segregation
6. Generating workpaper files to support investment tax credit claim
7. Providing support management under audit of credit

Baker Tilly is a leading advisory, tax and assurance firm to help chart your path through the IRA journey. Baker Tilly’s energy, tax and industry professionals understand the complexities and how to effectively position your project to maximize the IRA energy tax credits. 

If you would like to learn more about the Inflation Reduction Act and how your company can benefit, contact McMahon at (920) 751-4200.