Ever.green’s Tax Credit Map Updated to Reflect IRS’s 2024 Energy Communities

The Internal Revenue Service (IRS) today published its 2024 update on which urban and rural areas will be eligible for the energy community bonus tax credit for the next 12 months. Ever.green IRA Tax Credit Map has already been updated to reflect these changes.

The update added 190 counties (in green) and removed 132 counties (in red) in which projects can qualify as in an energy community compared to the first 18 months of the Inflation Reduction Act.

Why this matters:

“Energy communities” are areas in which renewable energy projects receive additional investment tax credits and production tax credits.

A project that begins construction while its location has energy community status receives an additional 10% of the project’s value as an investment tax credit or a 10% increase in the value for any production tax credit.1

These bonuses are available without any application process or cap on the total amount received by taxpayers each year. As such, the “energy community” is one of the most potent sources of new funding introduced by the Inflation Reduction Act, and is already playing an important role in the siting and financing of projects.

Does this impact my projects?

Developers who use the Ever.green IRA Tax Credit Map will be informed if their projects now qualify, or no longer qualify, for the bonus tax credit.

For those curious to see the effects of the new guidance, we have already updated the Ever.green IRA Tax Credit Map to reflect the new 2024 energy communities, while also still including the previous 2023 energy communities. In addition, the map now supports showing and hiding various layers.

A few items of note in today’s update:

• Today’s update relates to the second prong of the definition of “energy community,” and includes metropolitan statistical areas and non-metropolitan statistical areas (as defined by the Bureau of Labor Statistics) which have (i) at any time since December 31, 2009, had over 0.17 percent of its workforce employed in businesses related to fossil fuels (“FFE areas”) and (ii) during 2023 , an unemployment rate higher than the national average. FFE areas listed in Appendix 1 of this update, or “2024 FFE areas,” will be energy communities from June 7 of this year until at least the next annual update based on 2024 unemployment data, which is expected in May 2025.

• The update includes an Appendix 2 listing new coal closure energy communities not included in the original list provided by the IRS. “Coal closure” energy communities include census tracts in which, or border another census tract in which, a coal power plant or coal mine has closed since the year 2010 or 2000, respectively, and are one of the other two prongs of the energy community status (the final prong being areas that have been designated a “brownfield” by federal, state or local authorities). These categories are not surprisingly more stable and can only grow over time; it is important to note that today’s coal closure list is therefore not comprehensive, but is only additional to the list already provided of these communities.2

• Earlier this year, the IRS updated and broadened the list of FFE areas by adding several NAICS job codes to the list of codes considered to be related to fossil fuels; today’s update made it clear that the list of FFE areas provided in that update remains current, as the Census Bureau has not yet released relevant data to add to it any areas which had, for the first time in 2023, exceeded 0.17 percent in fossil fuel employment.

The Department of Energy has already updated its map to reflect the new data as well. For more information, please see the IRS’s FAQ on energy communities.

1. And, if the site of a project gains energy community status after it begins construction, it may still receive the investment tax credit bonus if it is placed in service while the site is in an energy community; it can also receive the production tax credit bonus for power produced in a tax year where the site was in an energy community for any part of that tax year.
2. The advanced manufacturing credit has its own list of coal closure energy communities that should be cited with respect to that credit.