In depth: Accounting for Inflation Reduction Act energy incentives

At a glance

In August 2022, the Inflation Reduction Act (the IRA) was signed into law. In addition to introducing a new corporate alternative minimum tax and an excise tax on stock buybacks, the IRA provides for climate and clean energy tax credits, initially estimated to total $370 billion, but most recent estimates by the Joint Committee on Taxation indicate the total is closer to $660 billion.

This In depth focuses on the accounting and disclosure implications of the climate and clean energy incentives included in the IRA primarily from the perspective of the entity earning the credit. It also addresses the evolving area of the buyer’s accounting for the purchase of transferable credits at a summarized level. For further discussion of other aspects of the IRA, see our In depth, Accounting for the Inflation Reduction Act and the CHIPS Act.