Inflation Reduction Act

• Drives the goals of expansion and quality
• Enhances opportunities for greater collaboration with State Apprenticeship Agencies (SAAs) like Apprenticeship Colorado
• Presents an opportunity for greater promotion and awareness of Registered Apprenticeship Programs

• Alternative Fuel Refueling Property Credit
• Production Tax Credit
• Credit for Carbon Oxide Sequestration
• Credit for Production of Clean Hydrogen
• Clean Fuel Production Credit
• Investment Tax Credit
• Advanced Energy Project Credit
• Energy Efficient Commercial Buildings Deduction

• Under the new rules enacted by the IRA, taxpayers (and their contractors and subcontractors) must employ qualified apprentices for work on qualified facilities if they want the 5x enhanced tax credit. The rules generally require a certain number of apprentice hours based on the percentage of overall hours on a project.
• Specific rules include:
  • Labor hours requirement: A minimum percentage of the total labor hours of the construction, alteration, or repair work (including such work performed by any contractor or subcontractor) has to be performed by qualified apprentices
    • Escalating percentages: 12.5% for projects beginning in 2023, 15% starting in 2024
    • Qualified apprentice means an individual who is participating in a registered apprenticeship program that has been recognized by the Department of Labor or a State Apprenticeship Agency.
  • Ratio requirement :The labor hours requirement is subject to any applicable requirements for apprentice-to-journeyworker ratios of DOL or the applicable State Apprenticeship Agency 
    This requirement is intended to ensure there are sufficient experienced workers to oversee apprentices
  • Participation requirement: Each taxpayer (or contractor or subcontractor) who employs four or more workers to perform construction, alteration, or repair work on a qualified facility must employ one or more apprentices
    • Designed to prevent taxpayers from satisfying the labor hours requirement by only hiring apprentices to perform one type of work, encourages taxpayers to utilize apprentices across the full range of work performed with respect to the facility
• There are two statutory exemptions: The statute provides two exceptions to the apprenticeship requirements:
  • Good Faith Effort Exception: A taxpayer may be deemed to satisfy the apprenticeship requirements if a request for apprentices is made to a Registered Apprenticeship Program, and: 
    • Such request is denied provided that such denial is not the result of a refusal by the taxpayer (or any contractors) to comply with the established standards and requirements of the Registered Apprenticeship Program, or 
    • The Registered Apprenticeship Program fails to promptly respond to such request
  • Ability to Cure: If a taxpayer fails to satisfy the labor hours requirement or the participation requirement, such taxpayer can cure such failures by paying the IRS a penalty equal to $50 multiplied by the total labor hours for which the requirements were not satisfied with respect to the construction, alteration, or repair work on such qualified facility
    • The penalty payment may increase to $500 x the labor hours in the case of intentional disregard

For more information on the tax incentives, criteria, and guidance associated with the IRA, visit the IRS website.
 

• To find the Colorado Registered Apprenticeship Programs, you can review the Colorado Registered Apprenticeship Directory. 
  • Please note that the address and counties reflect the Sponsor's address, and apprentices may be available statewide. 
  • Projects are encouraged to reach out directly to all applicable Sponsors in your occupation using the contact information available on the Directory. 
     

The Inflation Reduction Act is a federal incentive. For more information, please contact: ApprenticeshipIRA@dol.gov or Visit USDOL’s IRA Apprenticeship Resources Webpage for more detailed information and resources.