IRS guidance relaxes renewable energy tax credit

The Internal Revenue Service (IRS) lowered the threshold for renewable energy projects that qualify for federal tax credits.

The new guidance released Friday by the IRS and Treasury Department could provide a boost to developers and investors in the wind energy industry, who up until recently were uncertain how much they would be able to rely on federal credits, the Wall Street Journal reports.

{mosads}The guidelines state renewable energy projects could qualify for a pair of tax credits if they paid for at least 3 percent of the total project cost before the start of 2014. That is down from the earlier threshold of 5 percent.

The IRS also specified which construction qualified as a project of “significant nature,” which is another way developers and investor partners can be reassured they qualify for the credits.

Credits help the wind industry with most major wind-farm projects.

Last week, however, in a letter to Speaker John Boehner (R-Ohio) and Majority Leader Kevin McCarthy (R-Calif.) House Republicans pressed that the wind tax credit not be extended.