The Inflation Reduction Act (IRA), signed into law August 16, 2022, introduced a series of tax credits that can significantly benefit taxpayers in the manufacturing industry.
Central to these incentives is the provision for investment in green energy and advanced manufacturing technologies. Companies can receive substantial credits for adopting renewable energy solutions, including solar and wind power, thereby reducing their operational carbon footprint. The IRA also offers credits for energy-efficient upgrades to industrial equipment and facilities, facilitating the transition to more sustainable manufacturing practices. These credits not only help offset the initial cost of implementing such technologies but also promote long-term savings through reduced energy consumption and operational expenses.
Specific IRA credits relevant to the manufacturing industry include the Production Tax Credit (PTC) and the Investment Tax Credit (ITC). The PTC offers a per-kilowatt-hour tax credit for electricity generated by renewable energy sources like wind, solar and geothermal. The credit can significantly lower the cost of producing clean energy, making it an attractive option for manufacturers. The ITC, on the other hand, provides a tax credit for a percentage of the cost of installing renewable energy systems, such as solar panels, on manufacturing facilities.
The IRA also includes incentives for the development of advanced manufacturing projects through the Advanced Manufacturing Tax Credit (AMTC), which supports investments in semiconductor technologies and semiconductor manufacturing equipment. These credits collectively enable manufacturers to adopt sustainable practices, innovate in green technology and maintain competitiveness in a rapidly evolving industry.
About Schneider Downs Manufacturing Services
Schneider Downs understands the manufacturing industry from a regional, national and international perspective. Our experience in engineering-based cost segregation studies, state and local tax services, including nexus studies, as well as research and development tax credits, provides manufacturers the expertise needed to run their businesses more effectively.
To learn more, visit our Manufacturing Industry Group page.
