The Application Period for the 2025 Low-Income Communities Tax Credit Bonus Adder Begins Today

As of today, applications are open for the 2025 Low-Income Communities Tax Credit Bonus Adder program. This initiative, established under the Inflation Reduction Act (IRA), provides vital incentives for clean energy projects, aiming to enhance environmental justice and deliver financial benefits to underserved communities.

What Is the Low-Income Communities Bonus Adder?

The Low-Income Communities Bonus Adder program is designed to encourage investment in clean energy projects in disadvantaged areas. This year, the LIC program expands to adjust to the new Tech-Neutral ITCs (48E), again providing an increased 10-20 percentage points increase to the 30% Section 48E ITC - assuming the project meets the PW&A criteria - depending on what category the projects fall under.

There are four categories under which a project can be eligible for the LIC Bonus Adder program, each with a specific allocation of capacity totaling 1.8GW of allocated capacity:

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It is important to note the key updates introduced in the 48E(h) program as compared to its predecessor, the 48(e) program. While the foundational goals remain consistent, the final rules incorporate changes driven by statutory transition from Section 48(e) program to Technology-Neutral Section 48E(h) program and feedback received from previous years:

1. Expanded Technology Eligibility: Facilities now include zero-emission technologies as described in Section 48E, e.g. hydropower, nuclear, and geothermal.
2. Enhanced Impact for Low-Income Households: The final rules provide broader eligibility for housing programs and clearer financial benefit requirements for low-income households.
3. Opportunities for Small Businesses: Emerging clean energy businesses will be prioritized.

How to Apply

The application process is straightforward but requires careful preparation (find the Applicant User Guide here):

1. Access the Portal: Applications must be submitted through the IRS’s online portal at eco.energy.gov/licbonus. Additional guidance and user instructions are available on the portal.
2. Timeline: The application window runs from January 16, 2025, at 9:00 AM EST, to August 1, 2025, at 11:59 PM EST.
   1. First 30 Days: During the initial 30-day period, all submitted applications are treated equally and evaluated through a randomization process. This ensures fairness and gives all applicants an equal opportunity to secure their allocation.
   2. After 30 Days: Once the initial period closes, the remaining capacity is allocated on a first-come, first-served basis. Submitting early is crucial to increase your chances of securing an allocation.
3. Documentation: Prepare necessary materials, such as facility ownership details, evidence of eligibility, and project-specific data.

Required Documents for Application by Category

For full details, we recommend reviewing the Applicant Checklist provided by the DOE.

Step 1 - Allocation Application

1. Required for all Categories
   1. Final executed interconnection agreement (if FTM or BTM > 1MW capacity)
   2. Executed PPA / lease / installation contract - see Section 7 here
2. Required for Category 3
   1. Documentation demonstrating property is installed in eligible residential building
   2. A Benefits Sharing Statement see Section 7 here for more info and a template here
3. Conditional for all Categories if applying under Additional Selection Criteria Ownership Criteria
   1. Documentation demonstrating applicant meets Ownership Criteria
   2. Final executed interconnection agreement (if FTM or BTM > 1MW capacity)

Step 2 - Placed in Service (PIS) Application

1. Required for all Categories
   1. PTO Letter
   2. Documentation verifying nameplate capacity, it can be any of the following:
      1. Professional Engineer (PE) stamped plan as-built design plan
      2. PTO Letter with nameplate capacity listed
      3. Third party documentation verifying as-built nameplate capacity
2. Required for Category 3
   1. Final Benefits Sharing Statement demonstrating that the financial benefits requirements will be met based on the expected annual energy produced by the as-built facility at placed in service- see Section 10 here
3. Required for Category 4
   1. Final Demonstration of Financial Benefits Statement - *see Section 10 here*
   2. Documentation proving the facility is enrolled in a utility tariff, program, or otherarrangement used to distribute financial benefits in the form of a bill discount credit rateto Qualifying Households

The Opportunity Is Now

The 2025 Low-Income Communities Tax Credit Bonus Adder program represents a unique chance to enhance your clean energy project’s financial performance while advancing environmental and social equity. With limited capacity for allocations, early preparation and prompt application submission are critical.

Take advantage of this opportunity to make a difference for your project and the communities you serve. Visit eco.energy.gov/licbonus to begin your application today. At Concentro, we’re more than happy to support you with any questions or topics related to clean energy project financing. Don’t hesitate to reach out to us for guidance and insights—we’re here to help you succeed.

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