U.S. Treasury Department Issues Final Regulations on Clean Hydrogen Tax Credits
Key Ideas
- The U.S. Treasury Department and IRS issued final regulations on clean hydrogen tax credits under sections 45V and 48(a)(15).
- The regulations provide guidelines on determining GHG emissions rates, petitioning for provisional rates, and verifying clean hydrogen production.
- Taxpayers have the option to apply these regulations for tax years beginning after December 31, 2022, offering flexibility in compliance.
- KPMG LLP prepared a report in February 2025 offering insights and analysis on the implications of these final regulations.
On January 3, 2025, the U.S. Treasury Department and IRS announced the release of the long-awaited final regulations (T.D. 10023) concerning the credit for clean hydrogen production under section 45V and the associated energy credit under section 48(a)(15). These regulations, applicable for tax years starting after December 26, 2023, address key aspects of clean hydrogen production. They outline rules for calculating lifecycle greenhouse gas emissions, the process for requesting provisional emissions rates, and procedures for verifying the production and use of qualified clean hydrogen. Additionally, the regulations cover aspects like modifying existing facilities for updated in-service dates and utilizing renewable zero-emission electricity for clean hydrogen production. Taxpayers are granted the flexibility to adopt these regulations for years starting after December 31, 2022, with the condition of consistent application. A report by KPMG LLP in February 2025 provided initial observations and analysis on the final regulations, shedding light on their implications and potential benefits for the clean energy sector.