The Treasury Department announced a timeline Monday for offering more information on some of the main tax provisions of the Inflation Reduction Act.
Starting on Jan. 1, 2023, individual and businesses taxpayers will be able to access a number of tax benefits from the recently passed law's climate provisions, and the Treasury hopes to provide more clarity about them before the end of the year. The department said it would provide the following information on tax provisions of the IRA by the end of the month:
- FAQs for consumers on the tax credit for energy efficient home improvement projects and residential energy property;
- Initial guidance on the Corporate Alternative Minimum Tax; and,
- Initial guidance on the excise tax on stock buybacks.
Before the end of the year, the Treasury also intends to release information on the anticipated direction of the critical mineral and battery component requirements that vehicles will need to meet to qualify for tax incentives in the Inflation Reduction Act. The information will help manufacturers prepare to be able to identify vehicles eligible for the tax credit when the new requirements go into effect.
The Treasury will issue a notice of proposed rulemaking in March containing proposed guidance on the critical minerals and battery components requirements. By statute, the critical mineral and battery component requirements will take effect only after the Treasury issues that proposed rule. More guidance on clean vehicles for consumers and manufacturers will be forthcoming.
Since the Inflation Reduction Act was signed into law in August, the Treasury noted that it has been working to write the rules needed to make good on the promises in the legislation. Within a few days after the act was signed into law, the Treasury issued guidance on the electric vehicle tax credit and worked with the Transportation Department and the Education Department so consumers could easily find a list of eligible vehicles online.
In the fall, the Treasury held a series of stakeholder discussions with Treasury Secretary Janet Yellen and Deputy Secretary Wally Adeyemo to solicit input from key groups representing millions of workers, thousands of companies, and trillions of dollars in investment assets, as well as climate and environmental justice advocates, community-based organizations, and other key actors that are critical to the success of the act. The Treasury also hosted three formal consultations with tribal governments and Alaska native corporations to hear from tribal leaders about provisions in the law that directly affect them.
In addition, the Treasury said it has solicited and is reviewing thousands of public comments from trade associations, carmakers, labor groups, state and municipal leaders, consumers, foreign governments, utility companies, climate advocacy organizations, think tanks, and more.
Last month, the Treasury released
On Monday, the Treasury and the IRS also issued guidance on a new sustainable aviation fuel credit, a new credit that applies to a qualified fuel mixture containing sustainable aviation fuel for certain sales or uses in calendar years 2023 and 2024.
The SAF credit is $1.25 for each gallon of sustainable aviation fuel in a qualified mixture. To qualify, the sustainable aviation fuel must have a minimum reduction of 50% in lifecycle greenhouse gas emissions. In addition, there's a supplemental credit of one cent for each percent that the reduction exceeds 50%. The notice offers a safe harbor for figuring the lifecycle greenhouse gas emissions reduction percentage.
The credit can be claimed two ways: The first is through the excise tax system, and the second is a general business credit that is nonrefundable and must be included in income. Notice 2023-06 also clarifies what constitutes sustainable aviation fuel and a qualified mixture.
