The 45L Tax Credit is a federal income tax credit codified under Internal Revenue Code §45L that incentivizes the construction of energy-efficient residential buildings by offering a per-unit credit to eligible developers and builders. The credit was recently enhanced by the Inflation Reduction Act of 2022, significantly increasing the potential dollar value available.
The value of the credit scales based on the energy efficiency level achieved and whether prevailing wage and apprenticeship requirements are met. For units meeting Energy Star standards, the credit is $2,500 per unit with prevailing wage compliance (or $500 without). Achieving the higher Department of Energy's Zero Energy Ready Home (ZERH) Program standard can yield up to $5,000 per unit. Engineered Tax Services (ETS) provides the necessary services, including energy modeling and site visits, to certify that your property meets the required energy benchmarks to qualify for this substantial credit.
45L Credit: Key Facts & Credit Tiers
- Purpose: A federal income tax credit to incentivize energy-efficient residential buildings.
- Baseline (Energy Star): Yields $2,500 per unit with prevailing wage compliance (or $500 without).
- High Tier (ZERH): Qualifying under the Zero Energy Ready Home Program earns up to $5,000 per unit with prevailing wage compliance (or $1,000 without).
- Applicability: Applies to properties placed in service after 2022.
- ETS Role: Engineered Tax Services offers design review, energy modeling, and the required testing and site visits to certify each property.
