Production tax credits for producing renewable electricity are the same this year for projects placed in service in 2022 or later.

The IRS published the 2025 inflation adjustment factor and reference price that are used to determine the annual PTC rate. The notice was published in the Federal Register on May 27, 2025: [LINK]

The inflation adjustment factor for calendar year 2025 is 1.9971.

PTCs for generating electricity from projects that use wind, geothermal energy or closed-loop biomass and that were placed in service in 2021 or earlier are 3.0¢ per kilowatt hour in 2025, 0.1¢ higher than in 2024.

PTCs for the same projects, plus solar, placed in service in 2022 or later will also be 3.0¢ per kilowatt hour if the prevailing wage and apprenticeship requirements are satisfied or do not apply. The PTCs will be 0.6¢ per kilowatt hour if the PWA requirements are not satisfied and do apply. The Inflation Reduction Act made changes to how the inflation and rounding adjustments are calculated for newer projects. Those changes resulted in fewer PTCs in 2024 for projects placed in service in 2021 or earlier. This year there is no difference in PTCs for newer and older projects.

The tax credits will be 1.5¢ per kilowatt hour in 2025 for generating electricity from open-loop biomass, landfill gas, trash, qualified hydropower and ocean energy for newer and older projects (assuming the PWA requirements are otherwise satisfied or do not apply). Such projects qualify for PTCs at only half the full rate. However, qualified hydropower facilities and ocean energy projects qualify for PTCs at the full rate if they were placed in service in 2023 or later.

The credits are adjusted each year for inflation as measured by the GDP price deflator and run for 10 years after a project is originally placed in service.

The credits phase out if contracted electricity prices from a particular resource reach a certain level. There is no phase out for wind in 2025 because the 3.1¢ per kilowatt hour reference rate does not exceed 8¢ multiplied by the 1.9971 inflation adjustment factor. No phase out applies to electricity produced from closed-loop or open-loop biomass, geothermal, solar, municipal solid waste, qualified hydropower or ocean energy projects for calendar year 2025.