Congress created the corporate alternative minimum tax (CAMT) in the Inflation Reduction Act of 2022 (IRA). It imposes a 15% minimum tax on the adjusted financial statement income of certain large corporations for tax years beginning after December 31, 2022. Congress intended for the CAMT to address the mismatch between tax and book accounting, particularly the perception that certain large, profitable companies had effective tax rates that were too low.
The CAMT has taken on new significance for corporate taxpayers following the passage of the One Big Beautiful Bill (OBBB), which is expected to lower the federal tax liability for many corporations, in July 2025. As more companies approach the threshold to trigger the tax, tax teams are looking for ways to manage cash flows associated with a CAMT liability — including clean energy tax credits.
This article explores the tax and how corporate tax teams can leverage the IRA clean energy tax credits to minimize cash flow detriments attributable with CAMT.
To understand if they have a CAMT responsibility, corporate taxpayers must calculate their regular tax liability and tentative CAMT amount. The CAMT rate is 15% of a corporation’s adjusted financial statement income (AFSI) for the year, minus CAMT foreign tax credits — think of this as the CAMT threshold.
If a corporation’s regular corporate tax liability plus its base erosion and anti-abuse tax (BEAT) is less than the tentative CAMT amount, then it must pay a CAMT liability in the form of a “top-up.”
The CAMT is a temporary tax in the sense that a CAMT payment generates a CAMT credit that can be carried forward indefinitely to offset future regular taxes. A taxpayer can apply CAMT credits in future years after utilization of general business credits (GBCs).
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Only “applicable corporations” are subject to the CAMT. The tests are applied on an aggregated group basis, looking across consolidated groups and related parties. In practice, this means that CAMT applies to a subset of very large taxpayers:
Certain types of businesses, including S corporations, regulated investment companies, and real estate investment trusts, are expressly excluded from the CAMT.
AFSI starts with a taxpayer’s applicable financial statement, which is typically the audited Generally Accepted Accounting Principles (GAAP) or International Financial Reporting Standards (IFRS) financial statements for the group. AFSI is then adjusted for a variety of considerations, including:
Notably for sellers of transferable tax credits, cash from tax credit sales is excluded from AFSI calculations.
Recent guidance from the US Department of the Treasury and the Internal Revenue Service (IRS) in Notice 2025-27 provides safe-harbor “simplified methods” for testing CAMT status using financial statement income with fewer adjustments.
To date, only a small number of corporates have been subject to a CAMT liability. Many applicable corporations have historically paid a requisite level of regular federal tax to avoid triggering the CAMT. The companies that do have CAMT liability or may in the future have largely focused on modeling scenarios and making appropriate disclosures to investors.
This may be changing in the wake of the OBBB, however. While the OBBB did not change the overall contours of the CAMT framework, it did reduce regular tax liability for many corporations through changes such as bonus depreciation, R&E expensing, and enhanced business interest deductions. In some cases, these changes have reduced taxpayers’ regular tax liability below the CAMT threshold — though it has been reported that Treasury and the IRS plan to release guidance that would reduce the impact of these changes for the purposes of CAMT.
As many taxpayers face CAMT liability for the first time, they must think through the implications for their tax planning strategies, including whether or not they will be subject to CAMT in the future and how transferable tax credits fit into their tax strategy.
General business credits — including transferable energy and manufacturing tax credits — can generally offset up to about 75% of a corporation’s net income tax liability, inclusive of any CAMT liability.
In practice, this means that CAMT taxpayers have the opportunity to claim GBCs to reduce their liability. In essence, this converts GBCs into CAMT credits, which can be carried forward indefinitely but must be used after GBCs. Clean energy and manufacturing tax credits — including when these credits are transferred — can be carried forward 22 years and carried back 3 years.
Transferable energy and manufacturing tax credits — whether purchased through a transfer or generated as part of a tax equity partnership structure — are treated as GBCs, so there is no difference in utilizing credits from a transfer versus as a participant in a tax equity partnership or hybrid structure.
Although investments in a tax equity partnership could affect the AFSI calculation for an applicable corporation, the flexibilities provided in Notice 2025-28 allow for a variety of different treatments for partnership investments.
Whether or not a taxpayer is subject to the CAMT, purchasing energy and manufacturing tax credits up to the limit can be a good tax-management strategy. Taxpayers purchase tax credits at a discount (e.g., $0.92 per $1.00) to lower effective tax rates. These tax credits can be applied directly to reduce quarterly estimated tax payments, and there is no federal tax due on the benefit from the discount.
Taxpayers that are subject to the CAMT in one year but not in others may want to undertake a more nuanced evaluation — there may be some tradeoffs in their ability to utilize GBCs versus CAMT credits:
Taxpayers should work closely with their tax teams, legal counsel, and accounting partners to understand the nuances of their tax liability situation.
Read more: Benchmarking corporate taxpayer participation in transferable tax credits
Treasury and the IRS have signaled that the rules around the CAMT are evolving, so corporate tax teams need to monitor the situation carefully. In general, however, tax teams should determine if they are likely to be an “applicable corporation” with CAMT liability.
If yes, they should forecast the regular tax liability, CAMT, and GBCs that the company’s own operations will generate. Once those facts are established, tax teams should think through their strategies for using credits, including:
Many corporate taxpayers may find a role for purchasing transferable tax credits.
Crux helps corporate tax teams efficiently source and execute high-quality tax credit transfers that deliver meaningful savings aligned with their tax postures. Crux’s team of transaction experts manages the entire process, from sourcing transaction opportunities to diligence and closing. Learn more about our support for corporate taxpayers.
This post is for informational purposes only and should not be construed as tax, legal, or accounting advice. Crux does not provide tax or legal advice. You should consult with your own tax, legal, and accounting advisors before engaging in any transaction or strategy discussed herein.
