Solar and wind tax credits aren't going to ride off into the sunset just yet.

On December 18, 2015, Congress extended the Investment Tax Credit (ITC) and Production Tax Credit (PTC) for five years.

The Section 48 ITC for commercial installations had been set to decrease from 30% to 10% at the end of 2016 and the Section 25D individual tax credit would have disappeared altogether. Now, the Section 48 ITC will continue at 30% for facilities commencing construction before January 1, 2020 and will decline to 26% in 2020, 22% in 2021, leveling off at 10% in 2022. The Section 25D individual tax credit will remain at 30% until January 1, 2020, and decline at the same schedule as the Section 48 ITC.

The PTC, which had expired at the end of 2014, will be retroactively applied from 2015 through 2019, and expire again in 2020. In addition to the PTC extension, wind facilities may elect to use the Section 48 ITC until January 1, 2020.

Already, many are touting the beneficial impacts of this extension. GTM Research forecast the ITC extension will contribute to $40 billion in additional solar investment between 2016 and 2010. Bloomberg New Energy Finance predicts the extension will lead to an additional 20 gigawatts of solar power and 19 gigawatts of wind power over the next five years.

Source: Bloomberg New Energy Finance, December 17, 2015

The ITC and PTC extensions were part of a larger package of spending provisions and tax extenders for programs ranging from agriculture to defense.  President Obama signed the bill into law on December 18, 2015.

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