Originally created under the Energy Policy Act of 1992, the PTC is a ten-year, inflation adjusted US federal income tax credit for each kilowatt hour (kWh) of electricity generated by certain types of renewable or zero carbon emission projects, provided certain conditions are met. The PTC has been revised multiple times since 1992, most recently in August 2022 under the Inflation Reduction Act (P.L. 117-169, 136 Stat. 1818 (2022) which made several changes to the PTC available under the Internal Revenue Code (I.R.C. or Code).

As revised, a PTC is available for:

The total PTC available to certain eligible projects may be higher than the base amount if the project meets certain conditions. For example, in the case of the PTC available under Section 45 of the Code, the credit may be increased from a base rate of 0.5 cents per kWh to 2.5 cents if the project meets certain wage and apprenticeship requirements. The credit can be further increased if the project:

For more information on these credits, see Legal Updates, Inflation Reduction Act: Key Energy Provisions and IRS Issues Guidance on Domestic Content Requirements for Credits Under Sections 45, 45Y, 48, and 48E of the Tax Code and Practice Notes, Transferability and Direct Pay Provisions for Clean Energy Projects Under the Inflation Reduction Act and Biden Administration Energy and Climate Change Policies and Regulations: 2023 Tracker: IRS.

For more information on the PTC and renewable energy generally, see Practice Notes: