Section 48C Manufacturing Tax Credit: Everything Leaders Need to Know

Clean energy isn’t just a national priority; it’s a business incentive. The federal government has earmarked $10 billion in tax credits to boost U.S. manufacturing investments in clean energy and critical technologies. Yet many manufacturers still don’t know they may qualify for a 30% tax credit on major project costs.

If you’re considering facility upgrades, new construction or equipment purchases tied to clean energy, the 48C manufacturing tax credit could provide significant savings — if you know how to secure it. Let’s talk about what the credit is, who qualifies and how manufacturers can benefit from proper planning and timely applications.

What is the 48C Manufacturing Tax Credit?

The 48C manufacturing tax credit, officially titled the Qualifying Advanced Energy Project Credit, was originally created under the American Recovery and Reinvestment Act of 2009. It was expanded and reauthorized in 2022 under the Inflation Reduction Act, then extended again in 2025 through the H.R.1 – One Big Beautiful Bill Act, adding new rounds of funding and revised qualification standards.

At its core, the credit provides a 30% federal tax credit for investments in facilities that manufacture clean energy technologies or process critical materials. These breaks are awarded through a competitive, application-based process led by the U.S. Department of Energy (DOE) and certified by the IRS. That means not every submission will receive funding, and timing matters.

The DOE has confirmed that $10 billion in total funding is authorized, with at least $4 billion reserved for projects located in energy communities (such as areas with retired coal plants or high unemployment due to energy transition). These targeted allocations are part of the federal push to combine energy policy with economic development.

To be considered, a project must involve new or re-equipped facilities that:

• Manufacture or recycle clean energy property (solar, wind, batteries, etc.);
• Process or refine critical minerals; or,
• Reduce greenhouse gas emissions in an industrial process

The DOE’s official guidance outlines technical requirements and scoring criteria for applicants. You can review that directly on their Section 48C landing page.

Manufacturers planning major capital expenditures should evaluate their alignment with these categories before application windows close. Because once allocations are distributed, you’ll need to wait for the next round or miss the credit entirely.

Who qualifies for the 48C credit?

Not every manufacturer will meet the bar for the 48c manufacturing tax credit, and that’s intentional. This incentive is focused on projects that directly support the U.S. transition to clean energy infrastructure and domestic supply chain independence.

To qualify, your business must be investing in a facility that manufactures clean energy property, processes or recycles critical materials, or upgrades processes to reduce industrial emissions. Think new or retrofitted operations that make solar components, electric vehicle batteries, carbon capture systems or wind turbines. It also includes facilities that refine lithium or other essential minerals used in clean technologies.

Another critical factor is geography. At least $4 billion of available credits are set aside for projects located in energy communities impacted by the decline of coal and other fossil fuel industries. These areas may include counties with closed coal plants, zones experiencing high unemployment due to energy sector loss, or communities near formerly contaminated sites. Projects in these locations receive preference during review.

Keep in mind, this is not a first-come-first-served credit. The 48C program operates on a competitive application cycle. Each applicant must submit detailed documentation and demonstrate how the project meets DOE criteria for technical merit, impact and readiness. Successful submissions must also align with climate, workforce and domestic content goals.

If your project is a candidate, it pays to work with advisors who understand both the policy and the numbers. At James Moore, our tax professionals help clients assess eligibility early and guide them through the application process. From structuring facility plans to preparing financial justifications, we ensure your submission reflects your project’s full value under the law.

What expenses are covered?

The 48C manufacturing tax credit applies to qualified investment costs, which include tangible property used in an eligible facility. This means construction, expansion or re-equipping of manufacturing plants may all count, if the core purpose supports advanced energy production or emissions reduction.

So what qualifies? Here’s what the IRS has outlined:

• Construction costs for new buildings dedicated to clean energy manufacturing
• Equipment and machinery that plays a direct role in clean energy production
• Retrofits that convert existing lines to produce qualifying products
• Specialized tools or property that directly supports the energy-efficient process

Eligible investments must be tangible, depreciable and integral to the operation of the project. This includes everything from production equipment to physical upgrades to utility systems, if the upgrades serve the facility’s clean energy purpose.

The property must be placed in service within a reasonable period following project approval. The IRS defines this as a timeframe consistent with project scope, permitting and financing conditions. If that clock runs out, the credit is forfeited.

Another key detail: Expenditures related to land, building acquisition or unrelated general infrastructure don’t qualify. These rules mean manufacturers need a clear cost allocation plan and clean recordkeeping to support it.

For a full breakdown, refer to the IRS’s official 48C guidance. The notice includes definitions, allocation timelines and documentation requirements critical to your application.

We’ve helped clients analyze planned costs line by line to ensure compliance before a dollar is spent. The more deliberate your cost tracking and categorization, the better your chances of maximizing the credit’s value without tripping over disallowed expenses.

The application process: How and when to apply

Applying for the 48C manufacturing tax credit is a two-phase process that requires preparation, technical documentation and strategic timing. Since this is a competitive credit, allocations are limited by funding rounds. Projects not selected must reapply in the next cycle, and there’s no guarantee those funds will still be available.

Here’s how the process works:

1. DOE concept paper and full application: Applicants must first submit a concept paper to the Department of Energy. If encouraged, the business proceeds with a full application that outlines the project’s technical merits, environmental benefits, and readiness.
2. IRS certification: If the DOE recommends the project, the IRS reviews the financial and technical components. If approved, the applicant receives a formal certification that reserves the credit allocation (contingent on the project being completed as proposed).

The most recent guidance from the IRS and DOE recommends that applicants prepare detailed plans, including environmental impact assessments, capital cost summaries and a clear project timeline. This level of planning takes time, and it’s one reason we urge manufacturers to begin early — even before funding rounds are officially opened.

Because of the volume and complexity of applications, projects that lack clear documentation or fail to meet technical criteria are rarely approved. We’ve seen companies benefit from assembling a strong advisory team that includes legal, financial and engineering expertise.

Strategic planning considerations for manufacturers

Taking advantage of the 48C manufacturing tax credit can help you align your capital investments with the federal government’s goals and prove your project’s long-term contribution to clean energy manufacturing.

One major consideration is timing. Because credits are awarded through application windows, missing one could delay your project or eliminate your eligibility for the credit entirely. This matters for manufacturers planning expansions or equipment upgrades in the next 12 to 24 months. You’ll need to line up project milestones, design, permitting, procurement, with credit deadlines.

Another consideration is how your project supports national objectives. Projects that advance domestic supply chains, reduce emissions or create jobs in energy transition communities receive stronger scoring from DOE reviewers. While these are not strict requirements, failing to connect your project to these goals may weaken your case.

If you’re building out financial models or capital budgets, it helps to integrate the potential credit into your overall return analysis. You could unlock value to reinvest in long-term capacity and sustainability goals.

James Moore’s team supports clients from early feasibility through final certification. We help evaluate qualifying activities, project location benefits and risk factors that could impact your allocation. The sooner you map out a strategy, the better your chances of securing your share of the funding.

Tax planning that puts the 48C credit to work

The 48C manufacturing tax credit helps manufacturers reinvest in clean energy, critical materials, and long-term production goals. But timing, documentation, and strategy are essential. Between eligibility standards, location-based preferences, and strict submission deadlines, there’s little room for uncertainty.

That’s why manufacturers benefit from a focused tax partner who understands how to move projects through the process before funding runs out. Our team helps manufacturing leaders quantify their credit opportunity, prepare application documentation and support full IRS compliance throughout the process.

Contact a James Moore professional to discuss how this tax credit fits into your capital planning. You’ve already got the vision. We help make it count.

All content provided in this article is for informational purposes only. Matters discussed in this article are subject to change. For up-to-date information on this subject please contact a James Moore professional. James Moore will not be held responsible for any claim, loss, damage or inconvenience caused as a result of any information within these pages or any information accessed through this site.