In 2022, Congress passed the Inflation Reduction Act (IRA) establishing new tax credits designed to support the transition to clean and renewable energy. Critically, Congress recognized the importance of the US manufacturing industry to spearhead this transition and created or modified two significant tax credits designed to support domestic manufacturing.
Since then, the advanced manufacturing production tax credit (§45X) and the expansion of the advanced energy project investment tax credit (§48C) have spearheaded billions of dollars in investments supporting domestic manufacturing, creating thousands of jobs and fostering innovation and progress in the energy sector. In 2024 alone, Clean Investment Monitor reports that $272 billion was invested in the manufacturing and deployment of clean energy products and technology.
Both the §45X and §48C credits are transferable, meaning they can be purchased for cash by a third party with qualifying tax liabilities. Crux has found that these credits are enormously popular with corporate tax credit buyers — the 2024 Transferable Tax Credit Market Intelligence Report found that §45X advanced manufacturing credits made up 26.9% of the 2024 tax credit market.
In this guide, we’ll explore how these credits work, their unique circumstances, and why they’re so desirable.
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To understand the nuances of §48C and §45X credits, it's crucial to distinguish between investment tax credits (ITCs) and production tax credits (PTCs):
To generate §45X tax credits, a manufacturing facility must produce components or systems that are considered "advanced energy property." This includes items such as:
Producing these components generates a tax credit, calculated as a dollar value of credit multiplied by capacity/unit or as a percentage of the cost of producing the products (depending upon the product). Subsequently, credits can be sold to a third party, taken by the manufacturer generating the credit, or taken through elective pay.
Many credit buyers have found value in the unique qualities of §45X credits:
Manufacturers can effortlessly leverage this demand by posting their credits on Crux, automatically accessing the largest network of buyers and buyer advisors.
Projects seeking §48C credits must apply under one of three categories:
This targeted approach encourages diverse projects contributing to multiple components of building a domestic clean energy supply chain.
Unlike most other clean energy tax credits (including §45X), the total allocation under §48C is capped at $10 billion. The government has disbursed all $10 billion of these funds as of January 2025.
Applications for the first $4 billion of §48C credits were awarded in March 2024, and the remaining $6 billion in funds were allocated in January 2025. As of now, there are no announced plans for additional application rounds.
Because the funding was limited, interested parties had to apply via a rigorous process. Only those projects that the US Department of Energy judged to most strongly address the critical supply chain gaps and other policy priorities articulated in the guidance were awarded credit (as opposed to simply meeting the eligibility criteria for most other credits).
To qualify for the §45X PTC, US manufacturers must meet a few criteria:
E-book: Download the Ultimate Guide to Advanced Manufacturing Tax Credits
Although §48C disbursements have reached their cap, it’s helpful to understand the requirements in the event that Congress allocates more funds. Many clean energy technologies can leverage either ITCs or PTCs, including advanced manufacturing facilities. However, there are some important distinctions for these credits:
In an example cited by the Internal Revenue Service (IRS) in its additional guidance for qualifying advanced energy projects, a single entity owns a manufacturing business with two production lines. One production line manufactures photovoltaic wafers and the other photovoltaic cells. The two lines are arranged serially but function independently — the second line utilizes the wafers produced in the first line. In this example, the manufacturer received a §48C credit for the first production line and placed it into service in the taxable year 2024, rendering the first line ineligible for §45X.
However, the IRS notes in its guidance that because the second line is “tangible property that comprises an independently functioning production unit that produces eligible components,” it can be eligible to generate tax credits under §45X.
While §45X and §48C credits are unique in their objectives, the process of transferring them follows the standard framework of any other transferable credit. This standardization simplifies the transaction process, making these credits accessible to more investors.
For some projects (especially those aligned with §48C and similar ITCs), the credits provide more than just financial incentives. Because they’re investments in larger projects or facilities, they catalyze high-paying domestic jobs and promote investment in historic energy communities. This dual impact contributes to economic growth.
Investors eyeing PTCs, especially under the §45X framework, benefit from a high degree of visibility into credit generation. The unique characteristics of §45X credits, including contracted production and shorter tranches, create a low-risk profile for investors seeking to navigate the complex landscape of renewable energy tax credits.
Before selling advanced manufacturing tax credits, manufacturers should keep these best practices in mind:
Crux has helped many manufacturing companies with advanced manufacturing tax credits list their credits for sale, solicit bids, and navigate a transaction — securing the best price with low transaction fees.
The Crux platform offers credit sellers, buyers, and advisors a convenient and centralized location to exchange information and manage the due diligence process with §45X-specific, market-standard checklists and documentation.
If your firm is interested in leveraging this exciting and flourishing market by buying or selling §45X tax credits, get in touch with us.
