How much is the Section 45 production tax credit (PTC)?

Who qualifies

• Must own a qualifying renewable energy facility placed in service in the United States
• Eligible energy resources: wind, closed-loop biomass, open-loop biomass, geothermal energy, solar energy, small irrigation power, municipal solid waste (landfill gas), qualified hydropower, marine and hydrokinetic renewable energy
• Must produce electricity from the qualifying facility and sell it to an unrelated person — electricity consumed by the owner does not qualify
• 10-year credit window begins on the date the facility is originally placed in service
• Full ~3.0¢/kWh rate requires prevailing wage and apprenticeship compliance throughout construction, alteration, and repair (facilities under 1 MW, and those whose construction began before the rules took effect in early 2023, get the full rate without it). Apprenticeship requirement: not less than 10–15% of total labor hours by qualified apprentices (% depends on construction commencement date). Non-compliant facilities receive the base rate (0.6¢/kWh, 1/5 of full rate)
• Cannot claim both §45 PTC and §48 ITC on the same facility — election must be made between the two (solar and geothermal in particular must choose)
• Tax-exempt entities, states, tribes, and rural cooperatives may elect direct pay under §6417
• For-profit taxpayers may transfer (sell) the credit to unrelated third-party buyers under §6418
• For-profit owners cannot elect direct pay for §45: outside tax-exempt and government entities, elective pay is limited to the §45Q, §45V and §45X credits. If an electing entity’s facility began construction in 2024, is 1 MW or larger and misses domestic content rules, its payment is cut to 90% unless an exception applies

What people ask next

Who can claim the Section 45 production tax credit?

The owner of a qualifying renewable power facility that sells its electricity to an unrelated buyer, if construction began before 2025. Eligible sources are wind, closed-loop and open-loop biomass, geothermal, solar, landfill gas, trash, hydropower, and marine and hydrokinetic energy. Power you use yourself does not count. The owner files IRS Form 8835 each year of the 10-year credit period; partners and S corporation shareholders usually report their share directly on Form 3800. Businesses, cooperatives, tribes, cities and nonprofits can all own a qualifying facility.

Can a new wind or solar project still get a production tax credit?

Only through Section 45Y, and only if the project is placed in service before 2028 or began construction within the One Big Beautiful Bill Act's 12-month window. That window has passed, so a wind or solar project starting construction now has to be in service before 2028. Section 45 itself takes no new projects: it covers facilities whose construction began before 2025. Section 45Y pays the same per-kWh rates for facilities placed in service after 2024. For most wind and solar projects, only physical work of a significant nature counts as starting construction. Rules for 45Y are on the Section 45Y page.

Is the production tax credit or the ITC worth more?

It depends on how much power the project makes per dollar it costs: high-output projects such as wind usually do better with the PTC, expensive low-output ones with the ITC. The PTC pays about 3¢ per kWh sold for 10 years. The ITC is a one-time credit on the project’s cost: under Section 48E, 6% base, or up to 30% with prevailing wage and apprenticeship. You claim one or the other on the same property, never both. A 10 MW wind farm selling 35,000 MWh a year earns about $10.5M in PTC over 10 years; compare that with 30% of its build cost. The ITC calculator runs the other side.

Can you sell the production tax credit?

Yes: under Section 6418 an owner can transfer all or part of the credit to an unrelated buyer for cash, at a price the two negotiate. Tax-exempt organizations, states, cities, tribes and rural electric cooperatives can instead take it as a direct payment under Section 6417, for facilities placed in service after 2022. For-profit owners cannot take direct pay for Section 45; for them, elective pay is limited to the 45Q, 45V and 45X credits. Either route needs an IRS pre-filing registration for each facility before the return is filed.

How long does the credit last?

10 years from the date the facility is placed in service, claimed each year for the electricity sold that year. The credit follows production, not construction cost, so a facility that runs less earns less. The IRS resets the rate each year for inflation in the Federal Register; for facilities placed in service after 2021 it was 3.0¢/kWh with prevailing wage in both 2025 and 2026. The credit shrinks only if market power prices rise above an inflation-adjusted 8¢ threshold, and the IRS found they did not for 2026.

What it covers

How to apply

1. 1

   Select PTC vs ITC (§45 vs §48) and facility structure

   Determine whether §45 PTC or §48 ITC maximizes value for your project. PTC favors high-capacity-factor facilities with long operating lives (wind, geothermal); ITC favors higher-capital-cost, lower-output facilities (solar, storage). Cannot claim both on the same facility. Model cash flows across the 10-year window for each option.

   ~8 hrs

2. 2

   Confirm construction start, placed-in-service date and statute (§45 vs §45Y)

   Verify when construction began and when the facility was placed in service. §45 covers facilities whose construction began before 2025; facilities placed in service after 2024 can claim §45Y instead, at the same per-kWh rates. For wind and solar, §45Y requires the project to be placed in service before 2028 unless construction began within 12 months of the One Big Beautiful Bill Act. For older wind projects (placed in service before 2022), check whether the construction start date triggers a phase-down.

   ~3 hrs

3. 3

   Implement prevailing wage and apprenticeship compliance

   Obtain Davis-Bacon prevailing wage determinations for the project county from the Department of Labor. Require certified payroll from all construction contractors and subcontractors. Monitor apprenticeship ratios throughout construction. Without compliance, the credit drops to approximately 1/5 of the full rate.

   ~15 hrs

4. 4

   Elect direct pay or plan credit transfer structure

   Tax-exempt entities and government bodies file elective pay election. For-profit project owners assess whether to retain credits, transfer them, or use a tax equity partnership structure (the traditional pre-IRA approach for developers lacking tax appetite). Credit transfers under §6418 provide immediate liquidity at approximately 90–96 cents on the dollar.

   ~10 hrs

5. 5

   Track production, file Form 8835 annually for 10 years

   Metered electricity production records are required for each tax year throughout the 10-year window. Complete IRS Form 8835 (Renewable Electricity Production Credit) annually. Credit is earned in the year the electricity is produced and sold — not when the facility is built.

   ~6 hrs

Industry & certifications

NAICS codes: 221114, 221115, 221116, 221117, 221118

Deadline & timing

§45 and §45Y use the same per-kWh rates and credit mechanics. The distinction matters for compliance and for which projects still qualify: §45 needs construction to have begun before 2025, and §45Y now requires wind and solar projects to be placed in service before 2028 unless construction began within 12 months of the One Big Beautiful Bill Act. Wind facilities placed in service before 2022 may face phase-down reductions (20–60%) depending on when construction started. Biomass facilities have a 5-year credit window instead of 10 years for certain configurations.

Programs that stack well

• Advanced Manufacturing Production Tax Credit (Section 45X)
• USDA Rural Energy for America Program (REAP)

Related programs

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