KPMG observations and analysis of the final regulations
The U.S. Treasury Department and IRS on October 24, 2024, released final regulations governing the advanced manufacturing tax credit under section 45X.
The section 45X credit was established by the “Inflation Reduction Act of 2022” and is designed to incentivize taxpayers to produce eligible solar, wind, and battery components in the United States. The credit is a manufacturing production tax credit (MPTC) and is based on the number of “eligible components” produced and sold by a given taxpayer to a related or unrelated person as a part of the taxpayer’s trade or business.
The final regulations provide clarifying changes to credit eligibility that are generally taxpayer favorable.
One of the most significant changes from the proposed regulations is that the final regulations allow certain direct and indirect material costs to be included in the section 45X credit computation for the production of electrode active materials and critical minerals.
Read a November 2024 report prepared by KPMG LLP that provides observations and analysis of the final regulations