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into effect Jan. 29, 2023, 60 days after the
Credits Against Tax notice was published. The Inflation
This item addresses and summarizes
Inflation Reduction Act of the prevailing wage and apprenticeship Reduction Act is
2022: Prevailing wage and requirements of the Inflation Reduction the United States’
apprenticeship requirements Act, to which credits the labor require-
On Aug. 16, 2022, President Joe ments apply, and taxpayer considerations largest investment in
clean energy
Biden signed into law the Inflation related to the labor requirements.
Reduction Act of 2022, P.L. 117-169. to date.
One of the act’s key changes relates Background
to project developers meeting certain The Inflation Reduction Act is the United
labor requirements for the project to States’ largest investment in clean energy ■ Alternative fuel vehicle refueling
qualify for increased tax incentives. to date. The act modified existing rules to property credit (Sec. 30C);
Specifically, under the act, taxpayers create a regime of energy-related federal ■ Electricity produced from certain
can receive increased clean energy tax tax incentives with base and bonus credit renewable resources (Sec. 45);
credit rates by meeting the prevailing rates. Bonus credit rates are contingent ■ New energy-efficient home credit
wage and apprenticeship requirements upon satisfying the labor requirements. As (Sec. 45L) (prevailing wage require-
(the labor requirements). The prevail- Biden and others have stated, the policy ments only);
ing wage and apprenticeship require- of the labor requirements is to create an ■ Credit for carbon oxide sequestra-
ments, by statute, apply to qualifying increased number of higher-paying jobs tion (Sec. 45Q);
facilities where construction begins 60 in the renewable energy project construc- ■ Zero-emission nuclear power pro-
days or more after Treasury and the tion sector. In his Aug. 16, 2022, signing duction credit (Sec. 45U) (prevailing
IRS publish guidance on those spe- ceremony, the president said the act would wage requirements only);
cific requirements. “create tens of thousands of good-paying ■ Credit for production of clean
On Nov. 30, 2022, the IRS and jobs and clean energy manufacturing jobs” hydrogen (Sec. 45V);
Treasury released Notice 2022-61, and domestic facilities that will produce ■ Clean electricity production credit
providing guidance on the prevailing renewable energy “all across America, (Sec. 45Y);
wage and apprenticeship requirements every part of America.” ■ Clean fuel production credit (Sec.
and how to satisfy them. Pursuant to The act’s prevailing wage and appren- 45Z);
the notice, the prevailing wage and ticeship requirements apply to the follow- ■ Energy credit (Sec. 48);
apprenticeship requirements went ing credits and one deduction: ■ Qualifying advanced energy project
credit (Sec. 48C);
■ Clean electricity investment credit
(Sec. 48E); and
■ Energy-efficient commercial build-
ings deduction (Sec. 179D).
The prevailing wage requirement
The act’s prevailing wage provisions
refer to the wage rates that must be
paid to laborers and mechanics on the
construction of renewable energy proj-
IMAGE BY TATTYWELSHIE/GETTY IMAGES paid by contractors to workers under the
ects. A prevailing wage is a wage that
the federal government requires to be

Davis-Bacon Act of 1931, P.L. 71-798,
as amended. The prevailing wage is an
hourly wage plus overtime and benefits
and is set by the U.S. Department of
Labor based on the locality where the

April 2023 7
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