Treasury, IRS issue guidance on the tax credit for the production of clean hydrogen

IR-2023-248, Dec. 22, 2023

WASHINGTON — The Treasury Department and Internal Revenue Service today issued proposed regulations for the tax credit for the production of clean hydrogen.

The Inflation Reduction Act (IRA) of 2022 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 regulations provide definitions and procedures for administering and claiming this credit, including guidance for determining the lifecycle greenhouse gas emissions rate resulting from the hydrogen production process.

The guidance also provides 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.