Inflation Reduction Act Construction Provisions: Tax Credits, Wage Requirements, and Domestic Content
Inflation Reduction Act (IRA, 2022) provides substantial construction industry incentives for clean energy, energy efficiency, and domestic manufacturing. Tax credits substantial — Investment Tax Credit (ITC) and Production Tax Credit (PTC) for renewable energy with substantial bonus credits for prevailing wage, apprenticeship, domestic content, and energy communities. Prevailing wage and apprenticeship requirements affect projects accepting credits. Understanding IRA helps construction firms benefit from substantial incentives.
This post covers Inflation Reduction Act construction provisions.
ITC substantial:
Investment Tax Credit
- 30% base credit (with prevailing wage/apprenticeship)
- 6% base without bonus
- 10% bonus for domestic content
- 10% bonus for energy community
- Up to 50%+ total possible
- Specific to project type
- Solar, wind, storage, others eligible
Investment Tax Credit substantial under IRA. 30% base credit (with prevailing wage and apprenticeship requirements met). 6% base without bonus requirements (substantial penalty for noncompliance). 10% bonus for domestic content (specific percentage of components US-manufactured). 10% bonus for energy community (specific qualifying communities). Up to 50%+ total possible with all bonuses. Specific to project type. Solar, wind, storage, other clean energy eligible.
PTC alternative for some:
Production Tax Credit
- Per kWh produced (10 years)
- Alternative to ITC
- Better for higher-capacity factor
- Same bonus structure
- Specific to project economics
- Election once
Production Tax Credit alternative to ITC for some projects. Per kWh produced over 10 years (vs upfront ITC). Better for higher-capacity factor projects (wind, some solar). Same bonus structure for prevailing wage, domestic content, energy community. Specific to project economics — modeling determines best choice. Election once — cannot switch later.
Prevailing wage substantial:
Prevailing wage requirement
- Davis-Bacon prevailing wage rates
- Throughout construction
- Documented compliance required
- Substantial impact on cost
- Specific to project location
- Alters project economics substantially
Prevailing wage requirement substantial. Davis-Bacon prevailing wage rates apply to construction workers. Throughout construction (start to finish). Documented compliance required — certified payroll typical. Substantial impact on cost — prevailing wages often higher than market in many areas. Specific to project location with specific wage determinations. Alters project economics substantially — budget for prevailing wage if seeking bonus.
Apprenticeship requirement specific:
Apprenticeship requirement
- Specific apprenticeship hours required
- Registered apprenticeship programs
- Specific percentage of total hours (12.5%-15%)
- Specific to construction phase
- Documentation substantial
- Specific to size
Apprenticeship requirement specific. Specific apprenticeship hours required — percentage of total construction hours. Registered apprenticeship programs only count. Specific percentage of total hours 12.5% (2023 starts) growing to 15% (2024+ starts). Specific to construction phase — ongoing apprenticeship. Documentation substantial. Specific to project size and apprenticeship availability in market.
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Domestic content substantial:
Domestic content bonus
- Specific domestic content thresholds
- Steel and iron 100% domestic
- Manufactured products specific percentages
- Phased increases
- 10% bonus for compliance
- Specific to product
- Substantial market impact
Domestic content bonus substantial. Specific domestic content thresholds for materials. Steel and iron 100% domestic content. Manufactured products specific percentages (40%+ initially, increasing). Phased increases over time pushing more domestic. 10% bonus for compliance. Specific to product type and source. Substantial market impact — driving domestic manufacturing investment.
Energy community bonus:
Energy community bonus
- Specific qualifying communities
- Brownfields, fossil fuel communities
- Defined geographically
- 10% bonus for siting
- Substantial value
- Specific to location
Energy community bonus 10% additional. Specific qualifying communities defined. Brownfields, communities with substantial fossil fuel employment, statistical metropolitan areas with substantial coal employment. Defined geographically through specific maps. 10% bonus for siting in qualifying community. Substantial value adding to other bonuses. Specific to location — site selection affects.
IRA construction implications substantial — substantial market opportunity from clean energy investment but compliance requirements substantial. Quality compliance with prevailing wage, apprenticeship, domestic content critical for full credits. Quality CPA and tax counsel involvement essential for IRA-eligible projects. Substantial market opportunity for firms with prevailing wage capability and registered apprenticeship programs.
Other IRA provisions:
Other IRA provisions
- 179D commercial buildings deduction expansion
- 45L new homes credit
- Buy Clean for federal procurement
- Manufacturing tax credits
- Specific to firm activities
- Substantial provisions throughout
Other IRA provisions affect construction. 179D commercial buildings deduction expanded for energy-efficient buildings (substantial federal contractor benefit). 45L new homes credit for energy-efficient new homes. Buy Clean for federal procurement requiring low-carbon materials. Manufacturing tax credits (45X) for domestic manufacturing of components. Specific to firm activities. Substantial provisions throughout IRA affecting construction.
Inflation Reduction Act provides substantial construction industry incentives for clean energy and energy efficiency. ITC and PTC substantial credits for renewable energy with bonus structure. Prevailing wage requirement throughout construction. Apprenticeship requirement specific percentages. Domestic content bonus substantial. Energy community bonus for qualifying locations. Other provisions including 179D, 45L, manufacturing credits. For construction firms, IRA substantial market opportunity but compliance complexity. Quality compliance with bonus requirements essential. Substantial benefit for firms with prevailing wage capability and apprenticeship participation. Worth substantial attention given market scale.
Written by
Jordan Patel
Compliance & Legal
Former corporate counsel specializing in construction contracts and tax compliance. Writes about the documentation layer — COIs, W-8/W-9, certified payroll, notice-to-owner deadlines — and the legal backbone behind audit-ready AP.
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