Wind and Solar Construction Commencement for Tax Credits

planned

The U.S. Department of the Treasury released new guidance altering the criteria for wind and solar projects to show they commenced construction to qualify for the 45Y and 48E tax credits. Instead of proving that 5% of project costs have been paid, projects must now show that physical work of a significant nature has begun, with no fixed minimum amount of work required. Solar facilities with net output less than 1.5 MW still qualify under the 5% cost threshold test. The guidance applies to projects starting construction on or after September 2, 2025, with a deadline to commence construction by July 5, 2026, to qualify for tax credits before phaseout in 2027.