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An overview by Leo Berwick, Taxand USA
A U.S. court recently struck down an IRS Notice, reinstating the 5% safe harbour for many wind and solar developers. This marks a significant shift from recent guidance, which had effectively removed the safe harbour as a route to federal tax credit eligibility after 1 September 2025, leaving developers reliant on the “physical work” test.
The reversal restores flexibility, with the 5% safe harbour once again offering a potential pathway alongside the physical work test, although uncertainty remains, particularly as Treasury is expected to appeal. Developers should now review recent construction activity and expenditure to assess whether they may qualify under the reinstated rules.
Dorian Hunt from our USA member firm Leo Berwick provides an overview of what the decision means for renewable energy projects, which you can read here.
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