Inflation Reduction Act (IRA) Energy Credits for Affordable Housing

February 7th, 2025 | BY Christopher Young | Tax | Tax Credits | Affordable Housing
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The Inflation Reduction Act (IRA) opened opportunities for businesses and entities to use tax credits to subsidize the purchase and implementation of renewable energy property. The affordable housing sector received opportunities to carve out multiple “credit boosters” beyond the basic 30% credit.    However, even if these credits seem enticing, the “credit booster” application process can seem arduous and confusing. We’ve detailed the basics of what is available for affordable housing organizations and what the application process to use these credits entails.

Potential Credit Thresholds  

The IRA energy property most affordable housing organizations can use is geothermal solar panels. Your organization may have other energy properties that can be used to apply for “credit boosters”. Speaking with a professional can help determine which properties are eligible for the application. The baseline energy credit for certain energy properties can reach 30% if certain wage requirements or energy output thresholds are met. The energy “credit boosters” that are available can take the credit amount from 30% all the way up to a potential 70%. However, getting a full 70% credit is rare. The number of benchmarks required to meet the standard is high, so being aware of the realistic limitations for your organization is crucial.   

“Credit Boosters” for Affordable Housing Organizations  

Once a year, there is an application process where an affordable housing entity can apply for an additional 10 or 20% credit enhancement.    However, many organizations encounter issues when trying to apply for enhanced credit. The application process is short and varies from year to year. The process opens at a different time each year, giving applicants a brief 30-day window for preferential treatment. 

The Most Relevant “Credit Boosters”  

The two “credit boosters” within the Inflation Reduction Act that are most relevant for the affordable housing sector are:  
  • 20% affordable housing credit booster  
  • 10% low-income community credit booster  
When the 30-day application window opens, applicants must decide which option to use, as you can only choose one. After the preferential 30-day window is closed, organizations can still apply for the credit for an extended period. In this instance, the credit amounts awarded after the 30 days are limited and on a case-by-case basis.   

Upcoming Deadlines 

The IRS has published a schedule for the 30-day application windows from 2025 to 2032. You can view the schedule and other program details here on the IRS website. 

How to Apply for IRA Energy Credits  

To make the most of this year’s 30-day preferential window, you need to know the steps of applying for your “credit booster” options.   
  1. Create a login on the login.gov website  
  2. Apply on the Department of Energy website for a “credit booster”  
  3. Fill out the application, including detailed information on the location, energy output, and specifications of your geothermal solar panel or other IRA energy property  
  4. Submit your application and wait for the U.S, Department of Energy to review your form and the IRS to make the final determination to approve your entity for a “credit booster”  

Notice About Potential Changes to the IRA 

As the new administration works on reconciliation legislation and changes to tax laws, there is the potential that IRA energy credits may be eliminated for tax years 2026 and beyond. If Congress decides to use the money from the IRA energy credit program to pay for other items, the affordable housing sector should be aware that it may no longer be able to apply for these credits.   

Work with Trusted Professionals for Maximum Tax Credit Opportunities  

For the 2025 tax year, the preferential 30-day application process is open from January 16 to February 14, 2025. After this 30-day window closes, affordable housing organizations can still apply for the remaining “credit boosters” until August 1, 2025.  As the preferential deadline approaches, affordable housing entities might worry about submitting their application in time, especially if you are confused by the process or requirements. Maner Costerisan has the experience and resources to help if the application process seems arduous.   Contact our affordable housing experts at maner@manercpa.com or call us at 517.323.7500 for help with your IRA energy credit application.