Questions and answers about the Low-Income Communities Bonus Credit Amount Program

FS-2026-15, Nov. 2026

This Fact Sheet issues frequently asked questions about the Low-Income Communities Bonus Credit Amount Program.

These FAQs are being issued to provide general information to taxpayers and tax professionals as expeditiously as possible. Accordingly, these FAQs may not address any particular taxpayer’s specific facts and circumstances, and they may be updated or modified upon further review. Because these FAQs have not been published in the Internal Revenue Bulletin, they will not be relied on or used by the IRS to resolve a case. Similarly, if an FAQ turns out to be an inaccurate statement of the law as applied to a particular taxpayer’s case, the law will control the taxpayer’s tax liability. Nonetheless, a taxpayer who reasonably and in good faith relies on these FAQs will not be subject to a penalty that provides a reasonable cause standard for relief, including a negligence penalty or other accuracy-related penalty, to the extent that reliance results in an underpayment of tax. Any later updates or modifications to these FAQs will be dated to enable taxpayers to confirm the date on which any changes to the FAQs were made. Additionally, prior versions of these FAQs will be maintained on IRS.gov to ensure that taxpayers, who may have relied on a prior version, can locate that version if they later need to do so.

More information about reliance is available. These FAQs were announced in IR-2026-139. 

Background

Below are answers to some questions about the Low-Income Communities Bonus Credit Amount Program under section 48E(h). Section 13702 of Public Law 117–169, 136 Stat. 1818, 1994-1996 (August 16, 2022), added new section 48E(h) to the Code to authorize the Secretary to establish a program for calendar years 2025 and succeeding years to award allocations of capacity limitation that increase the amount of the new clean electricity investment credit determined under section 48E(h) with respect to eligible property that is part of an applicable facility. The Department of the Treasury and the IRS released final regulations under section 48E(h) on January 8, 2025. See Treasury Decision 10025. Additionally, on January 8, 2025, Rev. Proc. 2025-11, 2025-4 I.R.B. 501, was released to establish administrative and procedural requirements for the section 48E(h) program for 2025 and subsequent years.   

Q1. To be an applicable facility under section 48E(h), the statute provides that a facility must have a maximum net output of less than 5 MW (AC). Do facilities with a maximum net output of 5 MW (AC) qualify? (added Nov. 16, 2026)

A1. No. Facilities that have a maximum net output of 5 MW (AC) or greater are not applicable facilities.

Q2. My facility has an inverter or inverters with a maximum net output of 5 MW or greater as measured in alternating current (AC) based on nameplate capacity. If the inverter or inverters are power limited (prevented from producing that specified maximum net output) by the manufacturer to ensure an aggregate net output of less than 5 MW (AC), is my facility an applicable facility under IRC section 48E(h)(2)(A)(ii)? (added Nov. 16, 2026)

A2. Generally, if the facility includes an inverter or inverters with a maximum net output of 5 MW (AC) or greater based on nameplate capacity, the facility will not qualify as an applicable facility under IRC section 48E(h)(2)(A)(ii). However, for allocations beginning in 2026, a facility with a maximum net output of 5 MW (AC) or greater may qualify as an applicable facility in the limited circumstance where it is demonstrated that the settings of the facility’s inverter or inverters have been power limited by the manufacturer to ensure that the facility’s maximum net output is less than 5 MW (AC), provided the settings are permanent.

Q3. How do I demonstrate that the settings of my facility’s inverter or inverters have been programmed to ensure a maximum net output of less than 5 MW (AC), and that such settings are permanent? (added Nov. 16, 2026)

A3. To demonstrate that the settings of a facility’s inverter or inverters have been permanently programmed to ensure a maximum net output of less than 5 MW (AC), the applicant must submit with their application one of the following documents: (1) a letter from the manufacturer certifying that firmware-level limits have been placed on the inverter(s) and that these limits are locked and cannot be adjusted by owner through their credentials/passwords. If the operator of the facility is not also the owner of the facility, then the manufacturer must certify firmware-level limits for the operator and the owner, either in the same or separate letters; or (2) professional engineer stamped facility design documentation which includes a certification from the engineer that the facility’s inverter or inverters are permanently limited to a maximum net output of less than 5 MW (AC). If the limitation is through firmware-level limits on the inverter(s), then the engineer must also certify that the firmware-limits are locked and cannot be adjusted by the owner, and, if applicable, user/operator through their credentials/passwords.

Q4. Can an individual homeowner apply for allocation under section 48E(h) for a personal residence? (added Nov. 16, 2026)

A4. No. For property to be qualified for the section 48E credit, it must be property with respect to which depreciation (or amortization in lieu of depreciation) is allowable (i.e. business property).  Individual ownership of a facility for use at a homeowner’s personal residence does not meet this requirement.

Q5. What happens if the ownership of the facility changes? (added Nov. 16, 2026)

A5. An allocation award applies only to the taxpayer who applied for and received an allocation award for the facility the taxpayer owns. If a facility ownership change occurs after receiving an allocation, and before the facility is placed in service, the new owner of the facility will need to request a transfer of the allocation (Allocation Transfer Request) in the Applicant Portal.  This will allow the successor taxpayer to complete the placed in service reporting and claim the low-income adder under section 48E(h).  In this scenario, the original owner should not complete placed in service reporting because only the taxpayer that owned the facility at the time the facility is placed in service may complete placed in service reporting. There is no ability for one taxpayer to complete placed in service reporting on behalf of another taxpayer.  In addition, the process to transfer the allocation to a successor taxpayer is not available if the original owner has already placed in service the facility before selling or otherwise transferring ownership of the facility. Finally, transfers of an allocation are only permitted between entities which are regarded for federal tax purposes. An allocation may not be transferred to a disregarded entity.

Q6. Are taxpayers able to make an Allocation Transfer Request for a facility that has already been placed in service at the time of the request if the change of ownership took place prior to the facility being placed in service? (added Nov. 16, 2026)

A6. Yes.  However, the transfer of ownership must have occurred prior to the facility being physically placed in service, and the successor must be the taxpayer that placed in service the facility. 

For the successor to submit a placed in service report, the successor must first initiate an Allocation Transfer Request and receive IRS approval of the request, so that the allocation is associated with the successor in the portal. After receiving IRS approval of the transfer request, the successor must submit the placed in service report directly from its own portal account.  The transferor cannot submit a placed-in-service report on behalf of the successor, and an Allocation Transfer Request may not be processed for a facility once it has already been reported as placed in service in the portal.

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