Unlocking the 45X Tax Credit: What Manufacturers Need to Know

The incentive targets clean energy parts manufacturing and critical minerals producers and allows credits to be transferred and sold, giving manufacturers immediate access to capital to scale production.

Since the IRA’s inception, the U.S. has added more than 95 gigawatts (GW) of solar manufacturing capacity, grown its offshore wind pipeline by 53% between 2023 and 2024, and increased its annual battery capacity to about 1,400 gigawatt-hours (GWh) as of mid-2024—more than 10 times higher than 2021 levels. 

This rise in domestic production can be largely attributed to the 45X tax credit, which acts as a core financial driver to localize supply chains and accelerate the clean energy transition.

Final regulations from the IRS and 45X tax credit rates

The advanced manufacturing production credit applies to eligible clean energy and battery components, as well as critical minerals that are produced in the U.S. and sold after December 31, 2022. Under current law, it will be phased out through 2032 for clean energy projects and battery components, though it will remain in place for critical minerals.

The incentive amount is determined per unit of the component produced and sold, at the following rates depending on the type of manufacturing:

Solar components

Wind components

Inverters

Battery components

Critical minerals

The minerals eligible under 45X were selected based on their critical role in the clean energy supply chain—particularly in batteries, solar components, and magnets—and their designation as critical minerals by the U.S. Geological Survey. The list reflects a strategic push to reduce reliance on foreign sources and build domestic capacity in materials essential to electrification and energy storage.

The 45X tax credit can be obtained by domestic producers of the following critical minerals: 

aluminum, antimony, arsenic, barite, beryllium, bismuth, cerium, cesium, chromium, cobalt, dysprosium, erbium, europium, fluorspar, gadolinium, gallium, germanium, graphite, hafnium, holmium, indium, iridium, lanthanum, lithium, lutetium, magnesium, manganese, neodymium, nickel, niobium, palladium, platinum, praseodymium, rhodium, rubidium, ruthenium, samarium, scandium, tantalum, terbium, tellurium, thulium, tin, titanium, tungsten, vanadium, ytterbium, yttrium, zinc, and zirconium. 

Source: Federal Register

How to claim and transfer the advanced manufacturing production credit

There are two ways manufacturers can claim the 45X tax credit: 1) Receiving a direct return from the U.S. Internal Revenue Service or 2) transferring the credit to a corporation with a large tax liability in exchange for cash. Both options require qualifying manufacturers to file a Form 7207 for each of their production facilities and a Form 3800 on their annual tax returns.

To transfer the incentive, companies can sell the 45X credit through online marketplaces such as Basis Climate or secure a corporate buyer directly in exchange for cash. To transfer the 45X credit, manufacturers need to provide buyers with the registration number, qualification confirmation, and minimum required documentation confirming the volume and purchaser of the equipment that qualifies for the credit. Afterward, they will need to complete a transfer election statement, which they will attach to their annual tax return.

Will political headwinds affect the 45X credit?

While the Trump administration poses uncertainty for the advanced manufacturing production credit, it may be insulated from bi-partisan politics due its support across party lines. While no Republicans voted for the IRA in 2022, the legislation created more than 216,300 jobs and funneled over $204.69 billion into Republican-led districts.

On May 12, 2025, the U.S. House Ways and Means Committee released draft language for its portion of the broader budget and reconciliation bill that would accelerate the termination of the 45X tax credit. This goes against many Republicans’ calls to maintain the incentive.

Just before, on May 8, 2025, 26 Republican lawmakers penned a letter to the House Ways and Means Committee highlighting how clean energy tax credits bolster “American supply chains, industrial capacity, grid reliability and resilience, and countless high-quality jobs across the nation.” On May 5, 2025, Republican and Democrat House representatives also introduced legislation to protect and expand the 45X credit, signaling potential hope for its long-term future.

Strong buyer appetite for the 45X tax credit

Buyers are interested in the 45X tax credit primarily because it offers a simple, direct way to reduce their federal tax burden. Because these are production volume based credits, rather than investment based credits, the diligence is simpler and has less post-transaction risk (specifically around recapture or partial disallowance / excess credit transfer). 

45X credits are purchased at a discount, which allows buyers to receive immediate tax savings without the complexity of traditional tax equity investments. Unlike other structures, transferring the advanced manufacturing production credit requires minimal legal overhead and is a one-time transaction with no ongoing obligations.

Remember, the 45X tax credit program supports domestic clean energy manufacturing, which is essential for strengthening the U.S.’s economy and energy independence.

Looking to sell or buy your 45X tax credit? Connect with our experts to guide you through the process.