The second notice establishes a Low-Income Communities Bonus Credit program under Section 48(e) of the Internal Revenue Code. This program in the Inflation Reduction Act provides a boost of up to 20 percentage points to the investment tax credit for solar and wind energy projects in low-income communities. The notice outlines the program goals, including increasing clean energy facilities in low-income communities, encouraging new market participants, and benefitting individuals and communities that have experienced adverse environmental impacts or lacked economic opportunities.  

The Low-Income Communities Bonus Credit program will allocate 1.8 GW of capacity available in 2023 across four categories for solar and wind projects with a maximum output of less than 5 MW. The notice announces allocations for 2023: 700 MW for facilities located in low-income communities; 200 MW for facilities located on Tribal land; 200 MW for facilities serving federally-subsidized residential buildings, including housing supported by the Low-Income Housing Tax Credit and Section 8 of the Housing Act; and 700 MW for facilities where at least 50% of the financial benefits of the electricity produced go to households with incomes below 200% of the poverty line or below 80% of area median gross income.

The application process for the Low-Income Communities Bonus Credit program will open in 2023 in two phases. Applications for facilities that are part of low-income residential buildings and those that benefit low-income households will be accepted first, with applications for other projects to follow. The guidance maintains Treasury and IRS discretion to reallocate excess capacity to oversubscribed categories, and any unallocated 2023 capacity will roll over to the following calendar year. Future guidance will provide additional information about the application process and eligibility.