What is the 45L Tax Credit?
The 45L tax credit is a home federal tax credit available to new construction multifamily and single-family projects that meet energy-efficiency building standards. It has been updated and extended through 2032.
How much is the 45L Tax Credit worth for multifamily projects?
|Tax Credit Value
|ENERGY STAR MFNC *
|ENERGY STAR MFNC + DOE Zero Energy Ready **
|ENERGY STAR MFNC + Prevailing Wage ***
|ENERGY STAR MFNC + DOE Zero Energy Ready + Prevailing Wage
* ENERGY STAR Multifamily New Construction
** DOE Zero Energy Ready: Department of Energy’s Zero Energy Ready Homes certification program
*** Prevailing Wage: The average wage paid for similar positions in an area of employment.
Looking for information on single-family 45L Tax Credits?
Head over to this page for the full scoop!
Can LIHTC projects claim the 45L Tax Credit?
Yes! Many LIHTC Projects are required to meet ENERGY STAR under their state’s Qualified Allocation Plan (QAP), so these projects may already qualify for the $500/unit ENERGY STAR credit! With the signing of the Inflation Reduction Act (IRA), there are also different parameters around claiming 45L for LIHTC Projects which makes it more feasible than it previously was.
Let us know if you’re interested in revisiting the value of 45L for your LIHTC project. In the meantime, here are our top tips for achieving building certifications for LIHTC projects.
Can market rate projects claim the 45L Tax Credit?
Also Yes! The 45L tax credit is one of several tax credits that are available to residential projects pursuing an energy efficiency program. If you’re interested in other incentives that you may qualify for, be sure to reach out.
What is the process for claiming 45L for multifamily projects?
As of right now, the details for claiming the 45L are not yet finalized for multifamily projects. We recommend reaching out to your tax attorney to find out more. In the meantime, you can still reach out to our team to get the certification process started for ENERGY STAR MFNC or DOE Zero Energy Ready, so you’ll be in the best place to take advantage of 45L.
Frequently Asked Questions
- Do all units in a project have to qualify? Is it all or nothing?
- Yes, ENERGY STAR needs all units to meet the requirements in order to achieve certification.
- Who can benefit from 45L credits?
- This Tax Credit is intended for multifamily and single-family builders and developers (not homeowners or tenants).
- Single-family builders can learn more here →
- What types of buildings qualify?
- Any residential buildings (single-family, multifamily, or manufactured homes) that meet the ENERGY STAR definition of a dwelling unit will qualify.
- In this case, a dwelling unit is defined as a single unit providing complete independent living facilities for one or more persons, including permanent provisions for living, sleeping, eating, cooking, and sanitation.
- Can multifamily projects be retroactively eligible for 45L Tax Credits?
- Potentially. ENERGY STAR can only be achieved on new construction or major renovations. If the project is undergoing renovation, reach out to us and we can help determine if it is being renovated enough to be eligible for certification.
- When do new multifamily projects need to get started on ENERGY STAR or DOE Zero Energy Ready certification in the development process?
- As soon as possible! We always like to say the earlier the better so we can get the requirements designed in, but ideally no later than CD’s.
Seem complicated? That’s where we come in!
If you’re interested in qualifying for the 45L Tax Credit by pursuing ENERGY STAR or the DOE Zero Energy Ready Program, or are interested in more information about incentives for energy efficiency in general, please reach out to us today! Remember, the sooner the better to reach out. If you’d like to pursue any of these programs, we highly recommend involving us early in design.
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