Apply for the Low-Income Bonus Before You Energize
The low-income communities bonus has to be applied for and awarded before the system runs, and the order of events decides whether you get it. Treasury and the IRS published final regulations for the program on August 15, 2023. A facility placed in service before the application goes in is rejected. A facility placed in service after the application but before the award lands has its allocation rescinded. There’s no appeal and no cure in either case.
The bonus is worth 10 or 20 percentage points of eligible basis, so on a project with $2 million of eligible basis that sequencing question is worth up to $400,000.
What the four categories pay
Four categories qualify, and the increase is 10 or 20 percentage points depending on which one the facility falls into.
| Category | Who qualifies | Increase |
|---|---|---|
| 1 | Facility located in a low-income community, using the New Markets Tax Credit definition | 10 percentage points |
| 2 | Facility located on Indian land | 10 percentage points |
| 3 | Qualified low-income residential building project, where the building participates in a covered affordable housing program and financial benefits are shared equitably among tenants | 20 percentage points |
| 4 | Qualified low-income economic benefit project, where at least half the financial benefits of the electricity go to households under 200% of the poverty line or under 80% of area median gross income | 20 percentage points |
Two limits sit on top. The facility has to have a maximum net output of less than 5 MW, measured in alternating current at the level of the facility. And the program has a fixed annual capacity limitation, so an application competes against others in its category.
Category 3 is the one most often misread. The building has to participate in the housing program, not simply house low-income tenants.
When does the allocation have to arrive?
The regulations say qualified solar or wind facilities must be placed in service after being awarded an allocation. The order runs like this.
Order 1Apply
The application goes in while the project is still under construction.
Order 2Receive the allocation
Treasury notifies you that capacity has been allocated to your facility.
Order 3Place in service
The system is energized after that notification arrives.
Order 4Report
You report the placed in service date and final documentation, and only then claim the increase.
Placed in service, for this purpose, is the earlier of the year depreciation begins or the year the property is in a condition and state of readiness for its assigned function. A nonprofit that records no depreciation still hits the second prong. Permission to operate, substantial completion, and utility interconnection are the dates that give this away, so they have to be held behind the award, not just the paperwork.
After the award, the facility has four years from the date the applicant was notified to be placed in service, and neither the statute nor the regulations provide for an extension. The same paragraph disqualifies a facility for three other things that can happen between award and energization: the site moves, ownership changes before the facility is placed in service, or capacity changes, meaning net output reaching 5 MW (AC) or more, or nameplate capacity falling by the greater of 2 kW or 25% of the capacity awarded.
Why this catches tax-exempt owners in particular
A developer running dozens of projects has a program manager watching the application calendar. A school district or housing authority usually has one project, one general contractor, and an interconnection date set by the utility. The contractor’s incentive is to finish; nobody on site knows that flipping the switch three weeks early costs the owner the bonus.
The practical fix is a contract term. If you’ve applied, the EPC agreement should require written notice before the system is energized or before permission to operate is requested, and the project team should know why.
What to file when you claim it
The allocation is reported on Form 3468. You check the box identifying the facility category, enter the control number for the allocation, and enter the facility’s nameplate capacity. The credit itself, for an applicable entity, runs through Form 3800 and onto Form 990-T with the elective payment election and a pre-filing registration number for the facility.
Eligibility is confirmed after the placed in service report is reviewed. The owner is notified that it may claim the increase. An entity can’t self-certify the bonus onto a return ahead of that notification.
Updated September 2026. These rules were written for the Section 48(e) program, which covered the 2023 and 2024 program years. The program moved to Section 48E(h) for 2025 forward under final regulations published January 13, 2025, with the same allocation-before-placed-in-service rule and the same four year window. Application periods now open the first Monday in February at 9:00 a.m. ET and close the first Friday in August at 11:59 p.m. ET, so the 2026 window closed on August 7, 2026 and the next one opens February 1, 2027. The date that actually binds is earlier than the close: applications filed in the first 30 days are all treated as submitted at the same time and share in the allocation, and anything filed after that is reviewed on a rolling basis and only if capacity is left. For the 2027 program year that initial window closes March 2, 2027. One new trap: for wind and solar facilities that began construction after July 4, 2026, the underlying Section 48E credit is unavailable for property placed in service after December 31, 2027. A 2026 or 2027 allocation can nominally run four years while the credit behind it expires much sooner, so the four year figure is no longer the binding date for those projects.
How to protect the sequence on your schedule
If the bonus is in your project budget, put the application date and the expected award date on the construction schedule next to the interconnection date, and treat the award as a gate the project can’t pass without.
Working through an allocation? GreenFile Advisory handles the filing side of Section 6417 claims, including bonus allocations and the placed in service reporting. Tell us where the project stands and we'll map the sequence against your construction schedule.
Have a project and a deadline?
GreenFile Advisory handles the filing side of Section 6417 direct pay: eligibility confirmation, IRS pre-filing registration, and the Form 990-T with the elective pay election. Filing and compliance only, so we are not competing with your installer or your financing.
This article is general information, not tax advice, and it reflects IRS guidance as of August 21, 2023. Deadlines and eligibility depend on your organization's tax year and entity type. Please confirm your own facts with a qualified tax professional before relying on anything here.