Section 48C tax credit: the qualifying advanced energy project credit explained

Introduction

The Section 48C tax credit, formally the qualifying advanced energy project credit, is an investment tax credit for investments in facilities that manufacture or recycle clean energy  products, cut industrial emissions, or process critical materials. It is one of the transferable tax credits that can be sold for cash under IRC §6418. Unlike the §48 and §48E investment tax credits, §48C is an allocated credit, subject to a $10 billion cap, of which at least $4 billion is reserved for projects in certain coal closure communities (see the energy communities set-aside section below). This guide covers what the 48C tax credit is, who qualifies, how the rate works, how the credit interacts with §45X, and how an allocated §48C credit can be sold.

What is the 48C tax credit?

Section 48C provides an investment tax credit for advanced energy projects in three categories: clean energy manufacturing and recycling, industrial decarbonization, and critical materials processing, refining, and recycling (see eligible 48C project categories below).

The 48C tax credit cannot be combined with several other credits, including §45X at the same facility (see 48C vs 45X vs §48/§48E section below).

The credit dates to the American Recovery and Reinvestment Act of 2009, which provided $2.3 billion in credits for domestic clean energy manufacturing. In January 2010 those credits went to 183 projects in 43 states, and in 2013 the IRS made about $150 million of Phase I credits available for reallocation in a second phase. The IRA (Pub. L. 117-169, §13501) added a $10 billion allocation program, which DOE and Treasury awarded over two rounds to about 250 projects (see round 1 and round 2 results below). 48C tax credits were not transferable until the IRA: they can be sold under §6418 only for tax years beginning after December 31, 2022. The One Big Beautiful Bill Act (OBBBA) left §48C in place with one change: previously allocated credits that are later forfeited cannot be reissued.

48C credit rate: 6% base vs 30% with prevailing wage and apprenticeship

The base rate is 6% of the project's qualified investment, which is the basis of eligible property placed in service as part of the project. Eligible property means the equipment and other depreciable property the facility needs, not buildings. The rate with prevailing wage and apprenticeship requirements (PWA) met is 30%, five times the base rate.

PWA requirements for the 48C tax credit apply while re-equipping, expanding, or establishing the facility. Projects that began construction before January 29, 2023 are generally exempt from PWA rules, but that exemption does not apply to §48C.

Why 48C tax credits matter: decarbonization, energy communities, and jobs

DOE describes the 48C tax credit as a tool to build domestic clean energy supply chains, expand clean energy manufacturing and recycling, and cut greenhouse gas emissions at industrial facilities, particularly in energy-intensive sectors such as cement, steel, aluminum, and chemicals. In announcing the IRA program, DOE said the credit was meant to create high-quality jobs, reduce industrial emissions, and increase domestic production of clean energy products and materials.

DOE has said the program's carve-out for communities with closed coal plants and mines directs investment to places where the existing infrastructure and workforce are well suited to new clean energy manufacturing. Treasury has described the program as a way to reinvest in coal country and strengthen the economies of communities that have seen underinvestment.

Eligible 48C project categories

§48C(c)(1) defines three categories of advanced energy project, described below.

Clean energy manufacturing and recycling

A project that re-equips, expands, or establishes an industrial or manufacturing facility to produce or recycle any of the following:

• Property that produces energy from the sun, water, wind, geothermal deposits, or other renewable resources
• Fuel cells, microturbines, or energy storage systems and components
• Electric grid modernization equipment or components
• Property that captures, removes, uses, or sequesters carbon oxide emissions
• Equipment that refines, electrolyzes, or blends renewable, or low-carbon and low-emission, fuels, chemicals, or products
• Energy conservation technologies for residential, commercial, and industrial use
• Light-, medium-, or heavy-duty electric or fuel cell vehicles, their technologies, components, or materials, and associated charging or refueling infrastructure
• Hybrid vehicles with a gross vehicle weight rating of at least 14,000 pounds, and their technologies, components, or materials
• Other advanced energy property designed to reduce greenhouse gas emissions, as Treasury determines

Equipment for refining or blending non-renewable transportation fuels does not qualify.

Industrial decarbonization

A project that re-equips an industrial or manufacturing facility with equipment designed to reduce greenhouse gas emissions by at least 20 percent. The statute lists four qualifying installations: low- or zero-carbon process heat systems; carbon capture, transport, utilization and storage systems; energy efficiency and waste reduction in industrial processes; and other industrial technology that Treasury determines reduces greenhouse gas emissions.

Critical materials processing, refining, and recycling

A project that re-equips, expands, or establishes an industrial facility for the processing, refining, or recycling of critical materials. The statute defines critical materials by reference to section 7002(a) of the Energy Act of 2020 (30 U.S.C. §1606(a)).

48C energy communities set-aside

At least $4 billion of the $10 billion allocation is reserved for projects in energy communities. For the 48C tax credit, these are coal closure census tracts (where a coal mine closed after 1999 or a coal-fired generating unit was retired after 2009, plus adjoining tracts) that had no project certified under the original 2009 program.

How to apply: the 48C allocation process

The IRA directed Treasury to set up a program to consider and award certifications for qualified investments to advanced energy project sponsors. The IRS has issued three notices governing the allocation program: Notice 2023-18, initial guidance establishing the program; Notice 2023-44, additional guidance; and Notice 2024-36, guidance for the 2024 allocation round.

Concept paper to DOE

Applicants started by submitting a concept paper through DOE's 48C Portal, along with a workforce and community engagement plan and a data sheet. DOE responded with an encourage or discourage decision, and the applicant could begin a full credit application only after receiving that decision.

Full application and DOE scoring

The full credit application built on the concept paper and required an application narrative, a workforce and community engagement narrative, a business entity certification, and a data sheet.

DOE scored applications that passed threshold eligibility against four criteria: commercial viability; greenhouse gas emissions impacts; strengthening U.S. supply chains and domestic manufacturing; and workforce and community engagement. DOE described the process as extremely competitive, noting that even highly qualified projects could lose out to others with slightly higher scores.

DOE's feedback on concept papers in both rounds pointed to recurring problems: projects that build power generation facilities instead of manufacturing equipment for them, qualified investments that include building construction, timelines that miss the program's permitting and placed-in-service deadlines, and components that are not specialized for clean energy products. DOE also asked applicants to show why the credit is needed and to describe workforce plans specific to the project rather than general company commitments.

IRS allocation letter

The IRS issued allocation decisions as Allocation Decision Letters in the 48C Portal. Applicants that were not approved could request a debrief.

Before a §48C credit can be registered with the IRS for transfer, the taxpayer needs three IRS letters: an Allocation Acceptance Letter (Letter 6598), an ACN Certification Letter (Letter 6599), and a Placed in Service Letter (Letter 6601).

The 48C portal

DOE launched the 48C Portal on February 29, 2024. Applicants used it to submit concept papers and applications and to receive DOE and IRS decisions, and approved applicants use it to submit for certification.

Separately, the IRS pre-filing registration portal requires the control number issued by DOE for any §48C registration, and a missing control number cannot be replaced with other documentation. Projects must be placed in service before submitting a registration, and the IRS recommends registering at least 120 days before filing the tax return.

48C round 1 and round 2 results

Round 1 allocated $4 billion in tax credits to projects in more than 30 states in March 2024. Round 2, announced in January 2025, selected over 140 projects for the remainder of the $10 billion, bringing the total to about 250 projects across both rounds.

Is the 48C tax credit still available in 2026?

Treasury and DOE selected projects for the full $10 billion of IRC 48C tax credits across the two rounds. Since the OBBBA, a revoked certification does not increase the $10 billion limitation, so revoked amounts cannot be reallocated to other applicants.

After allocation: certification, placed-in-service, and forfeiture

Once Treasury accepts an application, the applicant has two years to provide evidence that the certification requirements have been met. After a certification is issued, the sponsor has two years to place the project in service and notify Treasury; otherwise the certification is no longer valid. A certification also lapses if the project is placed in service at a location materially different from the one in the application. The 48C tax credit is claimed for the year the property is placed in service. Once placed in service, the credit is subject to the §50(a) recapture rules.

The IRS must publicly disclose each certified applicant and its credit amount, and it publishes these lists annually. The first lists, covering certifications through September 30, 2025, named 13 Round 1 applicants with about $267 million in certified credits, led by Hemlock Semiconductor ($86.4 million) and MP Magnetics ($58.5 million), and two Round 2 applicants, Tesla ($240.3 million) and Ozinga Cement ($14.9 million). Together that is about $522 million of the $10 billion allocated.

How to claim the 48C credit on Form 3468

The 48C tax credit is claimed on Part III of Form 3468, Investment Credit. To transfer or elect elective pay, the taxpayer reports the credit on that source credit form, completes Form 3800, and attaches both to a timely filed return. A registration number from the IRS pre-filing portal is also required, and the registration number does not mean the registrant has been determined to qualify for a credit.

Can 48C credits be transferred or sold?

Yes. §48C is among the credits that can be transferred under §6418, for tax years beginning after December 31, 2022. The buyer must pay in cash; the payment is not taxable income to the seller and is not deductible by the buyer. The credit must go to an unrelated taxpayer, and all or any portion of it can be transferred, so credits from a single project can be sold to multiple buyers. The transfer election is made on a return filed by the due date, including extensions, for the year the credit is determined.

For holders that cannot use the credit and do not want to sell, elective pay for the 48C tax credit is available to applicable entities, such as tax-exempt organizations, state and local governments, tribal governments, and rural electric cooperatives. §48C credits are also among the applicable credits eligible for the three-year carryback under §39(a)(4).

Reunion has seen §48C credits trade in a similar range to other ITCs tracked in Reunion's Market Monitor, in the high $0.80s to low $0.90s per dollar of credit, depending on tranche size, indemnity, and commercial terms.

48C vs 45X vs §48/§48E

§48C vs §45X. The §45X advanced manufacturing production credit is a production tax credit for making solar and wind components, inverters, battery components, and critical minerals in the U.S. The two credits generally cannot be combined at the same facility. If any property at a facility was taken into account for a §48C credit allowed after August 16, 2022, components made at that facility do not qualify for §45X.

For example, a manufacturer that claims §48C on a battery module plant cannot also claim §45X for the modules that plant produces.

§48C vs §48 and §48E. §48 (the energy credit), §48C, and §48E (the clean electricity investment credit) are all investment tax credits under §46. §48C(f) denies the §48C credit for any qualified investment that also receives a §48 or §48E credit. §48C instead applies to the manufacturing or industrial facility itself and is capped and allocated.

Other credits that cannot be combined with §48C. §48C(f) also denies the credit for any qualified investment that receives the §48A qualifying advanced coal project credit, the §48B qualifying gasification project credit, the §45Q carbon oxide sequestration credit, or the §45V clean hydrogen production credit.

How Reunion helps 48C credit holders monetize credits

Reunion runs 48C tax credit transfers the same way as other credits. Reunion works with the seller to align buyers on price, payment timing, fee reimbursement, tax proceedings, indemnification, and tax credit insurance, and an executed term sheet starts an exclusivity period, typically 30 to 45 days. Within about 10 days, Reunion delivers a diligence memo covering counterparty, qualification, structure, recapture, PWA, bonus credits, and indemnification and insurance. Reunion regularly takes transactions from term sheet to close in under 45 days.

Diligence follows the same framework, with a few §48C-specific checks, such as confirming that any §45X credits come from a production line independent of the §48C facility. Reunion's Transferable Tax Credit Handbook covers the full diligence process.

Frequently asked questions

Is 48C an ITC or a PTC? The Section 48C tax credit is an investment tax credit under §46.

What is the 48C credit rate? 6% base, 30% with PWA compliance.

Is 48C capped? Yes. The 48C tax credit is an allocated credit with a $10 billion cap, at least $4 billion of which is reserved for projects in coal closure census tracts that had no project under the 2009 program.

Can I claim 48C and 45X on the same facility? Generally not. §45X cannot be claimed for components produced at a facility whose property was taken into account for a §48C credit allowed after August 16, 2022.

Can 48C credits be sold? Yes, under §6418, to an unrelated taxpayer for cash.

Does PWA apply to 48C? Yes. PWA compliance is required while re-equipping, expanding, or establishing the facility, and there is no exemption for projects that began construction before January 29, 2023.

What form is used? Form 3468, together with Form 3800.

Did the OBBBA change 48C? The credit was left in place, with a new restriction that forfeited allocations cannot be reissued.

What does a buyer check when the seller also has 45X credits? That the §45X assembly line operates independently of any §48C line, typically by understanding when the facility began operations, direct inquiry about sources of funds, and review of prior tax returns or publicly named §48C awards.