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ARTICLE · 10 JULY 2018

Solar Start Of Constructive Guidance, A Comprehensive Analysis

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New Internal Revenue Service (IRS) guidance on what it takes to start construction of a solar project raises practical questions, but it is very helpful in keeping the industry humming along.

United StatesEnergy and Natural Resources
Akin Gump Strauss Hauer & Feld LLP
Akin Gump Strauss Hauer & Feld LLP
Ramin Mohammad
Ramin Mohammad
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New Internal Revenue Service (IRS) guidance on what it takes to start construction of a solar project raises practical questions, but it is very helpful in keeping the industry humming along.

Solar projects that are under construction by the end of 2019 qualify for the 30 percent investment tax credit. The credit dips to 26 percent for projects starting construction in 2020 and to 22 percent for projects starting construction in 2021. Projects meeting these deadlines must still be placed in service by the end of 2023 to qualify for a credit above 10 percent.

The credit drops to a permanent 10 percent level for projects that begin construction in 2022 or later. Projects that begin construction before 2022, but are not placed in service until 2024 or later, are also limited to the 10 percent credit.

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