The §45X Advanced Manufacturing Production Credit offers one of the most powerful federal incentives available to domestic manufacturers of clean energy components. Although not new, being introduced as part of the Inflation Reduction Act of 2022, many companies are still unaware of how much value is at stake.

Further, many manufacturers do not realize how urgent it is to act, as the §45X Credit can only be claimed on a timely filed original return. That means no amended returns, no retroactive elections, and no second chances. To take advantage of §45X, it is essential to understand and prepare for its compliance requirements now, before the next filing deadline.

What Is the §45X Credit?
The §45X is a federal production tax credit designed to promote domestic manufacturing of clean energy components. The credit is either calculated on a per-unit basis for each eligible item produced in the U.S. or upon a percentage of costs. The list of eligible components includes:

• Solar components – photovoltaic cells, wafers, modules, solar-grade polysilicon
• Wind components – blades, nacelles, towers
• Battery components – electrode active materials, battery cells and modules
• Inverters – residential, commercial, utility-scale, and microinverters
• Critical minerals – such as lithium, nickel, graphite, and others used in energy storage and renewables

Credit values vary by product type. For example, manufacturers can earn $0.04 per watt for solar cells or 10% of production costs for critical minerals. In many cases, the total annual benefit can exceed millions of dollars if claimed properly and on time.

Why Timely Filing Is Non-Negotiable
The §45X credit is only available if claimed on a timely filed original return, including extensions. This applies not just to the credit itself, but also to key elections that determine whether the company qualifies. Missing the deadline means losing the credits for that year, which can amount to millions of dollars.

Favorable Policy Outlook Boosts Credit Value
The proposed “One, Big, Beautiful Bill” currently moving through the Congress includes sweeping reforms to clean energy tax incentives but largely leaves §45X as-is. While there are some adjustments to later years, the core structure and availability of the credit remain intact. This relative stability has reassured buyers and increased demand in the credit transfer market.

The transfer market for §45X credits has seen a notable increase in pricing, with buyers paying 91 to 95 cents per credit dollar in many transactions. As a result, manufacturers looking to monetize their §45X credits through sales to third parties are seeing stronger pricing and lower discount rates, making now an especially favorable time to act.

Monetizing the §45X Credit

Direct Pay and Transferability
§45X credits can either be used to offset tax liability or be converted to cash through two pathways:

• Elective Pay (Direct Pay) – available to for-profit companies for the first five years of claiming §45X
• Transferability – allows companies to sell credits to unrelated taxpayers for cash

These monetization options are powerful tools, especially for companies with low or no tax liability. But again, the required elections must be made on a timely filed original return.

Steps to Take Now
If the company qualifies for §45X, here’s what should be done immediately:

1. Determine Eligibility
   • Review production activity with an experienced tax professional to identify any components that fall within the scope of §45X.
   • Confirm technical specifications align with IRS definitions for eligible products.
2. Set Up Tracking
   • Record quantities of each eligible component produced and sold.
   • Document production location, date of sale, and buyer relationship status.
3. Delay Filing Until Confirmed
   • Do not file the return until eligibility status for §45X has been confirmed.

Conclusion
The §45X credit has been in place since 2023, but many eligible manufacturers are still not claiming it or are at risk of missing out due to poor timing or a misunderstanding of the compliance requirements. This is not a credit that can be claimed later. The return must be filed on time and include every required election. For manufacturers with eligible production, this can mean millions of dollars in value each year. Whether a manufacturer or a CPA advising one, now is the time to act. Delaying means leaving money on the table, a mistake that cannot be afforded. Contact ICS to speak with an experienced §45X expert.