Source Advisors Main Logo
Contact Us
Search
Source Advisors Main Logo
Contact Us
Search

Investment Tax Credit &
Production Tax Credit FAQs

Your ITC & PTC questions, answered.

What is the Investment Tax Credit (ITC)?

The Investment Tax Credit (ITC) is a federal renewable energy incentive that allows businesses and homeowners to deduct a percentage of the cost of installing eligible clean energy systems—such as solar panels, wind turbines, fuel cells, and battery storage—from their federal taxes. The ITC helps lower the upfront cost of renewable energy projects, accelerating the transition to clean power.

What is the Production Tax Credit (PTC)?

The Production Tax Credit (PTC) is a performance-based federal clean energy credit that provides a per-kilowatt-hour (kWh) tax credit for electricity generated by qualified renewable energy sources like wind power, geothermal, biomass, and hydropower. It rewards ongoing renewable electricity production over a set period, typically 10 years.

What is the difference between ITC and PTC?

The ITC is based on the total installed cost of a renewable energy project, while the PTC is based on how much renewable electricity the project produces over time. The ITC offers immediate tax savings at installation, whereas the PTC provides long-term financial benefits tied to ongoing clean power generation.

Which is better: ITC or PTC?

Choosing between the Investment Tax Credit and the Production Tax Credit depends on the project’s technology type, cost, location, and energy output. Solar power projects often benefit more from the ITC, while large-scale wind farms may find the PTC more lucrative. A renewable energy tax credit analysis can determine which yields the greatest return.

Who qualifies for the ITC and PTC?

Eligibility for the ITC and PTC depends on the type of renewable energy project, construction start date, and compliance with IRS renewable energy guidelines. Both credits are available to businesses, utilities, and in some cases, homeowners. Inflation Reduction Act bonus credits may also be available if labor, domestic content, or location requirements are met.

How do you claim the ITC or PTC?

To claim the Investment Tax Credit, taxpayers typically use IRS Form 3468. For the Production Tax Credit, IRS Form 8835 is used. In both cases, you’ll need documentation of project costs, placed-in-service dates, and proof of compliance with federal clean energy tax rules.

Are the ITC and PTC still available in 2025?

Yes — both the ITC and PTC remain available in 2025 due to extensions in the Inflation Reduction Act (IRA). However, phase-down schedules apply, and certain percentages decrease over time. Projects can also qualify for bonus renewable energy credits if they meet prevailing wage and domestic manufacturing standards.

Can you combine the ITC and PTC for the same project?

In most cases, you must choose between the Investment Tax Credit and the Production Tax Credit for the same project. However, certain hybrid renewable energy systems—such as solar-plus-storage or co-located wind and solar farms—may qualify for both under IRS renewable energy credit rules.

What are bonus credits for ITC and PTC?

Bonus tax credits can increase the ITC or PTC value if a project meets certain energy community, domestic content, or labor requirements. Under the Inflation Reduction Act, bonus rates can significantly boost the base credit percentage, making renewable energy projects more financially attractive.

How will the One Big Beautiful Bill (OBBB) affect ITC and PTC?

The One Big Beautiful Bill (OBBB) updates renewable energy tax credit rules by adjusting qualification timelines, bonus credit structures, and phase-out schedules. It also impacts placed-in-service deadlines, making early project planning critical for maximizing ITC and PTC benefits.

Can't find what you're looking for?

We would love to chat with you.

Speak with a Specialist

Related Articles

R&D Activities
Multi-State Business
Inventory Management
Asset Mgmt & Fintech
Real Estate Tax Incentives
  • Fixed Asset Consulting
CPA Tailored Services

Service Line Collateral

Webinars & Events

Real Estate Tax Incentives

CPE Course Catalog

Tax News

Webinars & Events

Tax Guides

Case Studies

Tax News

Blogs

Industries

Meet Our Team

Careers

Pay it Forward

Company News

Contact Us

Client Portals | Login