Tax News Update    Email this document    Print this document  

November 23, 2021

Build Back Better Act reconciliation bill passes House with most housing and energy tax credits intact

On November 19, 2021, the House passed the Build Back Better Act (H.R. 5376) reconciliation bill (the bill). The bill's provisions on housing and energy credits differ from those in the House Ways & Means Committee proposal (HW&M proposal) released on September 10, 2021 (Tax Alert 2021-1677).

The bill includes the following credits for housing and energy, which would extend and expand many current programs.

Housing tax credits

New markets tax credit: Effective for tax years beginning in 2022, the bill would make the new markets tax credit (NMTC) permanent and create a new, permanent, annual $175 million NMTC allocation for low-income communities in tribal areas. The bill did not include the HW&M proposal authorizing additional allocation or making the program permanent.

Historic rehabilitation tax credit: The bill did not include this credit, which had been included in the HW&M proposal.

Low-income housing tax credit: The bill would increase the 9% housing credit and the small state minimum. The bill would temporarily reduce the tax-exempt bond financing requirement (from 50% to 25% through 2026). It would also provide a 50% basis boost for buildings that have limits on rent and have at least 20% of their occupied units designated for extremely low-income tenants. The bill also changes the right-of-first-refusal safe harbor into an optional safe harbor.

Neighborhood homes credit: As in the HW&M proposal, the bill would establish a new neighborhood homes credit to encourage the rehabilitation of deteriorated homes in distressed neighborhoods.

Energy tax incentives

Production tax credit for electricity produced from certain renewable resources: The bill would extend the production tax credit (PTC) for wind, landfill gas (municipal solid waste), trash (municipal solid waste), qualified hydropower, marine and hydrokinetic renewable energy facilities and geothermal facilities through the end of 2026 (the HW&M proposal would have extended the credit through 2031 and phased it down after that). For solar facilities, the PTC would be revived and extended through 2026. The base and bonus credit system from the HW&M proposal remains unchanged.

Investment tax credit: The investment tax credit for solar, geothermal energy property, fiber optic solar equipment, fuel cell property, microturbine property, small wind energy property and biogas property, would be extended through 2026. The investment tax credit for geothermal heat pumps, combined heat and power property, and waste energy recovery property would be extended through 2031.

The following new technologies would now be eligible for investment tax credits:

  • Energy storage technology
  • Linear generators with a nameplate capacity of at least 1 kW
  • Microgrid controllers
  • Dynamic glass or electrochromic glass
  • Biogas property

The investment tax credit for the above technologies is 6% base and can go up to 30% with a bonus based on meeting wage and apprenticeship requirements.

Both PTCs and ITCs would be eligible for enhanced credits if certain domestic content requirements were met.

Credit for carbon oxide sequestration: The bill would extend the credit for carbon oxide sequestration facilities that begin construction before the end of 2031. The credit could be claimed for 10 years after beginning of placement in service.

Green energy publicly traded partnerships: The bill would expand the definition of qualified income for publicly traded partnerships from certain income derived from minerals and natural resources to include income derived from green and renewable energy.

Nonbusiness energy property credit: The bill would extend the nonbusiness energy property credit to property placed in service before the end of 2031. This credit would be taken in the year the project is placed in service.

Investment credit for electric transmission property: The bill would provide for a tax credit equal to either 6% (base) or 30% (base and bonus) of the basis of qualifying electric transmission property placed in service by the taxpayer. The credit is for property that is placed in service before January 1, 2022.

Elective payment for energy property and electricity produced from certain natural resources: The bill would allow taxpayers to elect to be treated as having paid tax equal to the value of the various credits (PTC under IRC Section 45, ITC under IRC Section 48 and various credits under IRC Sections 30C, 45E, 45Q, 45W, 45X, 45AA, 45BB, 45CC, 48C, 48D, 48E, 48F) for which they would have been otherwise eligible.

Emissions tax credits

Zero emissions facility credit: The bill would allow taxpayers to claim a 30% credit for making qualified investments in their zero emissions facility.

Advanced energy manufacturing tax credit: The bill would revive the IRC Section 48C qualified advanced energy property credit, allowing Treasury to allocate an additional $25 billion in credits over the next 10 years.

Zero-emission nuclear power production credit: The bill would provide a credit for the production of electricity from a qualified nuclear power facility. The base credit rate is 0.3 cents/kilowatt hour and the bonus credit rate is 1.5 cents/kilowatt hour for electricity produced by the taxpayer and sold to an unrelated person during the taxable year.


The bill's renewable energy provisions are less beneficial than those in the HW&M proposal, which extended numerous ITC and PTC technologies to 2031, rather than 2026, and included the historic rehabilitation tax credit and new markets tax credit. Despite the changes, the remaining provisions would still represent one of the largest investments in clean energy ever made. Long-term extensions and new tax credits would help finance the renewable energy projects that are necessary to fight climate change. Interested taxpayers should consider following the Senate's deliberation process as the bill on which the Senate ultimately votes will likely differ from the bill that passed the House.


Contact Information
For additional information concerning this Alert, please contact:
Tax Credit Investment Advisory Services
   • Michael Bernier (
   • Dorian Hunt (
Americas Power & Utilities Tax Group
   • Brian Murphy (