President Biden signed the Inflation Reduction Act into law on August 15, 2022. The Act is intended to offset rising costs across multiple industries, and addresses priority concerns for most Americans. Primarily, the Act makes provisions for wage equity, revitalized manufacturing efforts, affordable healthcare, and clean energy enhancements.

Inflation Reduction and Tax Advantages

By partnering with the Internal Revenue Service (IRS), the Inflation Reduction Act will create new resources toward tax revenue collection. A major transformation within the department will focus on providing technological and human resources that can be utilized by individual taxpayers to ensure the maximum tax advantages are received.

Further efforts within the IRS will provide heightened activity toward corporations and business owners who owe back taxes. A new fifteen percent minimum corporate tax will attempt to ensure equity among the largest corporate entities while still providing tax credits and incentives that support clean energy.

Inflation Reduction and Manufacturing

A renewed focus on American manufacturing is evident in provisions of the Inflation Reduction Act. Under the stipulations of the Act, domestically sourced materials and efforts will be rewarded through tax incentives and bonus credits where applicable. The purpose of this effort is to encourage the creation of new employment opportunities, including union jobs, among skilled trade industries.

Boosting a skilled workforce stimulates the economy in several ways and fits well into the Inflation Reduction Act by providing stability among the manufacturing workforce and creating new jobs for individuals who were previously unable to find gainful employment. Bonus tax credits are aimed toward newly formed organizations that meet specific criteria and industries that bring renewable energy solutions to locations that historically depended on unsustainable energy sources such as coal and oil.

Inflation Reduction and Renewable Energy

Another major impact of the Act is the design to extend, renew, or replace prior tax incentives aimed toward clean energy initiatives. The Internal Revenue Code (IRC) outlines hefty financial motivation to corporations and homeowners who choose to make building upgrades in alignment with clean energy goals. Under the Act, more than three hundred billion dollars is directed toward clean energy and climate stabilization programs. An unusual provision of the Inflation Reduction Act even benefits corporations that are ineligible for the standard incentives available to manufacturers of clean energy sources.

Under the Act, entities that produce or refine clean hydrogen production or offer storage for clean energy resources are also eligible for substantial tax incentives and bonuses. As with the special tax credits associated with manufacturing efforts, these incentives are specifically geared toward corporations who meet the apprenticeship and prevailing wage requirements.

Establishing the Inflation Reduction Act will significantly impact the clean energy initiatives that have been crawling along for several years. The renewable energy industry is expected to grow exponentially over the next decade, and could eventually eliminate the dependence on nonrenewable sources of fuel and energy within the United States.

Valuation of Renewable Energy

Corporations and private investors have shown increased interest in clean energy production and storage efforts. Understanding the valuation nuances within the renewable energy sector requires extensive industry knowledge. Our firm offers more than three decades of demonstrated experience working with some of the largest utilities and power producers in the world.