Tax Credits for Wind Turbines

The U.S. Federal government provides tax credits for qualifying renewable and energy efficient products (including distributed wind turbines) installed in U.S. residential and commercial properties since 2006. This was amended with the passage of the Inflation Reduction Act of 2022 (“IRA”), and the rules to claim the tax credit have been updated.  The rules differ for commercial and residential installations since they are covered under different sections of the tax code.  See below for more information on each.

Commercial Installations (Section 48)

The rules for commercial wind turbine installations under Section 48 of the Internal Revenue Code were published in the U.S. Federal Register, Vol 89, No. 239 on 12/12/2024 (89 FR 100598). The rules establish qualification requirements for all technologies installed in commercial applications and covered under the IRA.  The specific qualification rules for small wind turbines can be found in 26 CFR, Part 1 §48–9(c)(2) which is on p.49 of the Federal Register document and excerpted below:

(ii) Special rules for performance and quality standards   (A) Small wind energy property     (1) Small wind energy property must meet one of the following performance and quality standards in effect at the time of acquisition of the small wind turbine:      

(i) American Wind Energy Association Small Wind Turbine Performance and Safety Standard 9.1 (AWEA standards);      

(ii) International Electrotechnical Commission standards 61400–1, 61400– 2, 61400–11, 61400–12 (IEC standards); or

(iii) ANSI/ACP Small Wind Turbine Standard 101–1 (ACP standards).

See the full rule and other referenced and related documents for all requirements and guidance.  And consider consulting a qualified tax professional for more information.  Additional resources include the following webpages:

• IRA-Related Tax Guidance
• Taxpayer IRA Resource Hub
• U.S. Federal Register, Vol 89, No. 239 on 12/12/2024 (89 FR 100598)

Residential Installations (Section 25D)

Clean Energy Tax Credits for residential installations are addressed under Section 25D of the Internal Revenue Code. The updated rules to implement Section 25D for small wind turbines have not been released by the U.S. Department of the Treasury to date.  See the following resources for currently available information:

• Form 5695 (IRS)
• Form 5695 Instructions (IRS)
• IRA-Related Tax Guidance (US Department of the Treasury)
• Taxpayer IRA Resource Hub (US Department of the Treasury)