2011 Tax Credit Amounts
The IRS recently released the inflation adjustment factor and reference prices for the 2011 calendar year, which are necessary for calculating the Section 45 production tax credits. Based the 2011 inflation factor of 1.4459, there are no changes from 2010 in the tax credit amounts for electricity generated from renewable sources; however, there is a small increase in the tax credit amount for refined coal. The 2011 tax credit amounts for renewable energy production, refined coal production, and Indian coal production are set forth below.
Renewable energy source of
coal production activity |
2011 credit amount (cents
per kilowatt-hour; dollars per ton) |
Deadline for facility being
placed in service |
Wind |
2.2 |
12/31/12 |
Closed-loop biomass |
2.2 |
12/31/13 |
Open-loop biomass |
1.1 |
12/31/13 |
Geothermal energy |
2.2 |
12/31/13 |
Solar energy (pre-2006 facilities only) |
2.2 |
12/31/06 |
Small irrigation power |
1.1 |
10/02/08 |
Municipal solid waste (includes landfill gas and trash combustion facilities) |
1.1 |
12/31/13 |
Qualified hydropwer |
1.1 |
12/31/13 |
Marine & Hydrokinetic |
1.1 |
12/31/13 |
Refined Coal |
$6.33/ton |
12/31/11 |
Indian coal production |
$2.20/ton |
12/31/08 |
2011 Reference Prices; No Tax Credit Phase-out
If the reference price for a particular energy source (as
published by the IRS) exceeds a certain designated level, then the
Section 45 production tax credit will be reduced or completely
phased out. Based on the 2011 reference prices, there will be no
phase-out for any of the renewable energy sources or coal
production activities for the 2011 calendar year.
The 2011 reference price for wind is 4.68 cents/kilowatt hour.
Since this reference price does not exceed 11.5 cents/kilowatt
(i.e., 8 cents multiplied by the 1.4459 inflation factor for 2011),
there will be no phase-out during 2011 of tax credits realized from
the sale of electricity produced from wind energy. Similarly, the
2011 reference price for refined coal is $54.74/ton. Since this
reference price does not exceed $78.41/ton (i.e., $31.90 multiplied
by 1.4459 inflation factor and 1.7), there will be no phase-out
during 2011 for fax credits realized from the sale of refined
coal.
The IRS still has not determined reference prices for electricity
produced from closed-loop biomass, open-loop biomass, geothermal,
solar, small irrigation power, municipal solid waste, hydropower
and marine & hydrokinetic energy. Accordingly, there will be no
phase-out during 2011 for tax credits realized from these renewable
sources.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.