IRS Form 3468 - Investment Credit

Table of Contents

IRS Form 3468 – Investment Credit – In today’s evolving tax landscape, businesses and individuals investing in energy-efficient projects, historic building rehabilitations, or advanced manufacturing can significantly reduce their tax liabilities through targeted credits. IRS Form 3468, known as the Investment Credit, serves as the key tool for claiming these incentives. Whether you’re a solar energy installer, a real estate developer preserving historic structures, or a manufacturer expanding clean tech facilities, understanding Form 3468 can unlock substantial savings. This guide breaks down everything you need to know about IRS Form 3468, including eligibility, filing steps, and recent updates influenced by the Inflation Reduction Act (IRA).

What is IRS Form 3468?

IRS Form 3468 is a federal tax form used to claim the investment tax credit under Internal Revenue Code Section 46. This credit encompasses several sub-credits designed to encourage investments in sustainable energy, historic preservation, and innovative projects. The form allows taxpayers to calculate and report credits based on qualified investments in depreciable property placed in service during the tax year.

Key purposes of Form 3468 include:

Promoting energy efficiency and renewable sources.
Supporting the rehabilitation of historic buildings.
Incentivizing advanced energy and manufacturing projects.

Taxpayers must file a separate Form 3468 for each qualified facility or property, ensuring detailed reporting for accuracy. It’s typically attached to your main tax return, such as Form 1040 for individuals or Form 1120 for corporations, and credits are often carried over to Form 3800 (General Business Credit) for aggregation.

Types of Investment Credits Available on Form 3468

Form 3468 covers a range of credits, each with specific qualifications and rates. Here’s a breakdown of the main categories:

1. Energy Credit (Section 48)

This is one of the most utilized credits, applying to investments in solar, wind, geothermal, fuel cells, and other renewable energy properties. Base rates are 6% (or up to 30% with prevailing wage and apprenticeship compliance), plus bonuses for domestic content (up to 10%) and energy communities (up to 10%).

2. Rehabilitation Credit (Section 47)

Aimed at preserving historic buildings, this credit offers 10-20% on qualified rehabilitation expenditures for certified historic structures or pre-1936 buildings. Transitional rules apply for projects started before 2018.

3. Clean Electricity Investment Credit (Section 48E)

Introduced under the IRA, this tech-neutral credit replaces phasing-out energy credits after 2024. It provides up to 30% (base 6%, multiplied by 5 for wage/apprenticeship compliance) for zero-emission electricity facilities and energy storage, with additional 10% bonuses for domestic content and energy communities. Phaseout begins after 2032 or when U.S. electricity GHG emissions drop to 25% of 2022 levels.

4. Advanced Manufacturing Investment Credit (Section 48D)

Offers 25% on investments in semiconductor or equipment manufacturing facilities, excluding foreign entities of concern.

5. Other Credits

Qualifying Advanced Coal Project (Section 48A): Up to 30% for coal tech with CO2 sequestration.
Qualifying Gasification Project (Section 48B): Up to 30% for gasification with sequestration.
Qualifying Advanced Energy Project (Section 48C): 6-30% for re-equipping facilities for clean energy production.

Credit Type	Base Rate	Maximum with Bonuses	Key Eligibility
Energy Credit	6%	50%	Renewable energy properties
Clean Electricity	6%	50%	Zero-emission facilities post-2024
Rehabilitation	10-20%	N/A	Historic buildings
Advanced Manufacturing	25%	N/A	Semiconductor facilities

Who Is Eligible for the Investment Credit?

Eligibility varies by credit type, but general requirements include:

The property must be depreciable or amortizable.
It must be placed in service in the U.S. (with exceptions).
Taxpayers cannot claim credits if they’ve received certain grants or used tax-exempt financing (basis reductions apply).
For increased rates, projects must meet prevailing wage and apprenticeship (PWA) rules, unless under 1 MW or started before January 29, 2023.
Businesses, individuals, partnerships, S-corporations, estates, trusts, and cooperatives can claim it. Tax-exempt entities may elect direct payments under Section 6417.

Special considerations: Credits may be recaptured if property is disposed of or fails requirements within 5 years (report on Form 4255).

IRS Form 3468 Download and Printable

Download and Print: IRS Form 3468

How to File IRS Form 3468: Step-by-Step Guide

Filing Form 3468 requires careful documentation. Here’s a streamlined process based on official instructions:

Gather Documentation: Collect basis amounts, placement-in-service dates, certifications (e.g., NPS for rehabilitation, DOE for advanced projects), and pre-filing registration numbers for elective payments or transfers.
Complete Part I (Facility Information): Enter details like IRS registration number, facility type, address, coordinates, and checkboxes for bonuses (e.g., domestic content, low-income).
Fill Relevant Credit Parts (II-VII): Calculate qualified investment basis, apply rates, and add bonuses. For example, in Part VI (Energy Credit), enter basis in specific sections (e.g., solar on Line 3a) and multiply by percentages.
Apply Reductions and Bonuses: Reduce for subsidized financing or tax-exempt bonds. Add PWA multipliers, domestic content (Line 9), energy community (Line 10), and low-income bonuses (Line 11).
Total and Report: Sum credits and transfer to Form 3800. Attach statements for elections, certifications, or PWA compliance.
File with Your Return: Submit electronically or by mail with your annual tax return. For 2023-2024, relief allows aggregated filing for high-volume claimants (attach “CleanEnergyRelief.pdf”); check if extended to 2025.

Common tip: Use tax software like TurboTax for guided entry, or consult a professional for complex projects.

Recent Changes to IRS Form 3468 for 2025

The IRA has transformed Form 3468, emphasizing clean energy:

Clean Electricity Credit Expansion: Fully effective post-2024, with elective payment phaseouts (90% for 2024 starts, 85% for 2025) unless exceptions met.
Bonus Credits Updates: Domestic content now requires certifications; energy community definitions expanded to include certain MSAs after July 4, 2025.
Safe Harbor Removal: For commercial solar, the 5% expenditure safe harbor ended September 2, 2025, requiring detailed tracking.
Pre-Filing Mandatory: For payments/transfers, register via IRS.gov.
Draft Form Insights: The 2025 draft cautions against dual claims (e.g., no 48C if claiming 45X).

Stay updated via IRS.gov for final 2025 forms.

Common Mistakes to Avoid When Filing Form 3468

Failing to file separate forms per property.
Overlooking basis reductions for grants or bonds.
Missing PWA documentation for higher rates.
Not attaching required statements or certifications.
Claiming incompatible credits (e.g., production vs. investment).

FAQs About IRS Form 3468 and the Investment Credit

What if I have multiple properties?

File a separate Form 3468 for each, unless qualifying for 2023-2024 aggregation relief.

Can individuals claim this credit?

Yes, for qualifying investments like home solar installations.

How does the IRA affect 2025 filings?

It boosts clean energy incentives but requires stricter compliance for bonuses.

What happens if I miss the deadline?

File an extension with your return, but credits may carry forward.

Where can I download Form 3468?

From IRS.gov/forms.

Conclusion

IRS Form 3468 is a powerful tool for taxpayers investing in America’s future through energy innovation and historic preservation. By leveraging these credits, you can offset costs while contributing to sustainability goals. Always consult a tax advisor for personalized advice, as rules can be complex. For the latest details, visit the IRS website and review your eligibility today to maximize your 2025 tax savings.