Prop Regs: Guidance on Tax Credit for Production of Clean Hydrogen

The IRS has issued proposed reliance regs for the tax credit for the production of clean hydrogen. (Preamble to Prop Reg REG-117631-23; IR 2023-248)

Code Sec. 45V provides a production credit for each kilogram of qualified clean hydrogen produced by a taxpayer at a qualified clean hydrogen production facility.

The credit amount is dependent on the emissions intensity of the hydrogen production process and the taxpayer’s compliance with prevailing wage and apprenticeship requirements during the qualified clean hydrogen production facility’s construction, alteration, and repair.

The proposed regs provide definitions and procedures for administering and claiming the credit, including guidance for determining the lifecycle greenhouse gas emissions rate resulting from the hydrogen production process.

The proposed regs also provide procedures for petitioning the IRS for a provisional emissions rate, requirements for verifying the production and sale or use of hydrogen, and requirements for modifying an existing hydrogen production facility to obtain a new original placed in service date for purposes of the credit.

Applicability date.

The regs are proposed to apply to tax years beginning after the proposed regs are published. Taxpayers may rely on the proposed regs for tax years beginning after December 31, 2022, and before the date the final regs are published, provided the taxpayers follow the proposed regs in their entirety and in a consistent manner. (Preamble to Prop Reg REG-117631-23)

For more information regarding the clean hydrogen production credit, see Checkpoint’s Federal Tax Coordinator ¶L-18501.