The IRS has published a notice that provides the 2023 inflation adjustment factor and reference price to be used in determining the amount of the Section 45 credit for renewable electricity production within 2023. Taxpayers receive this credit for the kilowatt hours of energy produced and sold to a third party during the year. Section 45 states that the “base” amount of credit available is 0.3 cents. However, this base amount is subject to inflation. Therefore, this notice provides the information necessary to calculate and claim the §45 credit on 2023 tax returns.
For qualified energy resources, the inflation adjustment factor for calendar year 2023 is 1.8909 (also subject to rounding requirements). This means that the base per kilowatt hour credit amount for 2023 is 0.55 cents.
The reference price for facilities that generate electricity from wind is 3.74 cents per kilowatt hour for calendar year 2023.
Phaseout Calculation: There are phaseout provisions included in §45. However, the published reference prices do not rise to the level where these phaseouts would apply for 2023 electricity sold.
The reference prices for facilities producing electricity from alternative sources have not been determined for calendar year 2023.
If you have questions about whether your projects would qualify for the §45 credit, or if you need help claiming the credit on your return, please reach out to a professional at FORVIS or use the Contact Us form below.