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March 16, 2023

IRS releases guidance on IRC Section 45J credit for advanced nuclear power facilities

  • Notice 2023-24 instructs owners of advanced nuclear power facilities on how to apply for the unutilized national megawatt capacity limitation (NMCL) so they can become eligible for IRC Section 45J credits.
  • The credits can be transferred to an "eligible project partner."
  • With many nuclear technologies nearing commercial viability, the IRC Section 45J credits are a significant incentive to build or invest in these projects.

In Notice 2023-24 (Notice), the IRS provides guidance to owners of advanced nuclear power facilities that want to apply for an unutilized national megawatt capacity limitation (NMCL) in order to be eligible for tax credits under IRC Section 45J. The Notice includes (1) guidance for computing the credit, (2) the amount of unutilized NMCL, (3) the procedures for taxpayers to apply for, and the IRS to allocate, the unutilized NMCL, and (4) how a "qualified public entity" can transfer the IRC Section 45J credit to an "eligible project partner."

The IRS requested comments by May 8, 2023.


Under IRC Section 45J, an advanced nuclear facility owner that has applied for and received an allocation of unutilized NMCL may receive a tax credit during the eight-year period beginning on the date the facility is placed in service and sells electricity to an unrelated person during the tax year. The total NMCL is 6,000 megawatts, all of which is available to be allocated.

A taxpayer may claim an IRC Section 45J credit for a tax that is the lesser of:

  • The tentative credit (1.8 cents multiplied by the kilowatt hours of qualifying electricity) for the facility for the tax year multiplied by the taxpayer's credit percentage


  • $125 million per 1,000 megawatts of the facility limitation that is allocated to the taxpayer

If a facility is owned by a partnership or S corporation, then the partnership or S corporation, and not the partners or shareholders, will be treated as the taxpayer that owns the facility.

Unutilized NMCL allocation process

Because no advanced nuclear power facility that received an allocation of the NMCL under the original notice (Notice 2013-68) was placed in service before January 1, 2021, the IRS said that all previous allocations were withdrawn and the entire 6,000 megawatts are available.

The unutilized NMCL will only be allocated to facilities certified by the Department of Energy (DOE). According to the Notice, the only owners that can apply for allocations at this time are those that (1) owned or acquired a facility that was previously certified by the DOE under Notice 2013-68, and (2) maintain an active Nuclear Regulatory Commission construction permit or license.

The Notice said, however, that the IRS will be issuing further guidance on allocating unutilized NMCL to a facility that was not certified as an advanced nuclear facility by the DOE.

Application process

The facility owner must apply for the unutilized NCML no later than 30 days after the date the facility is placed in service. The Notice gives detailed instructions on what to include in the application. The IRS will review the application, let the taxpayer know if it needs more information, and then notify the taxpayer of its allocation.

Facility owners receiving allocations will receive unutilized NMCL equal to their nameplate capacity in the order in which the facilities are placed in service. Each nuclear power reactor on a multi-reactor site is considered a separate facility.

Transferring credits

A "qualified public entity" (utilities defined under IRC Section 45J(e)(2)(A)) may elect to transfer some or all of its IRC Section 45J credit to an "eligible project partner" (owners or developers defined under IRC Section 45J(e)(2)(B)).

The qualified public entity must make a separate election each year for each eligible project partner by furnishing them with the election statement transferring all or a portion of the qualified public entity's IRC Section 45J credit. Once made, the election is irrevocable. The eligible project partner then claims the credit by filing the election statement with its tax return.


Advanced nuclear power facilities are complex projects and capital-intensive investments. Many of these new nuclear technologies are nearing commercial viability and the credits under IRC Section 45J are a significant incentive toward successful construction of a qualified facility.

The refresh of the unused NMCL and the ability to transfer credits to eligible project partners will be critical to unlocking the value of these credits and making the IRC Section 45J credits effective in advancing these projects to market.


Contact Information
For additional information concerning this Alert, please contact:
National Tax
   • Greg Matlock, Americas Energy Transition and Renewable Energy Leader (
   • Dorian Hunt (
Americas Power & Utilities Tax Group
   • Brian Murphy, Americas Power & Utilities Tax Leader (
   • Mike Reno (
   • Jim Barrett (
Tax Credit Investment Advisory Services
   • Michael Bernier (
Credits and incentives and sustainability
   • Paul Naumoff (
   • Akshay Honnatti (
   • David Camerucci (

Published by NTD’s Tax Technical Knowledge Services group; Andrea Ben-Yosef, legal editor