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ARTICLE · 16 FEBRUARY 2023

IRS Issues Initial Low-Income Itc Bonus Guidance

McDermott Will & Emery
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The Internal Revenue Service (IRS) has released initial guidance on the low-income adder to the investment tax credit (ITC) under Section 48(e) (Low-Income Bonus).

United StatesTax
Heather Cooper
Heather Cooper
Philip Tingle
Philip Tingle

The Internal Revenue Service (IRS) has released initial guidance on the low-income adder to the investment tax credit (ITC) under Section 48(e) (Low-Income Bonus). The guidance, released in IRS Notice 2023-17 (Notice), provides limited clarification regarding the Low-Income Bonus and leaves significant questions unanswered. Accordingly, most taxpayers will likely require further guidance on the application and approval process before transacting around the Low-Income Bonus.

The most noteworthy takeaways from the guidance include the following:

  • How the 1.8-gigawatt (GW) capacity limitation will be allocated among four subcategories
  • The IRS has not yet determined how it will allocate any one category in the event applicants exceed the allocated capacity limitation

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