IRS Issues Critical Wage and Apprenticeship Guidance under the IRA

IRS Issues Critical Wage and Apprenticeship Guidance under Inflation Reduction Act of 2022


The US Department of the Treasury just released its guidance on the labor requirements that must be fulfilled in order to maintain the credit for the full amount for clean energy and infrastructure projects under the Inflation Reduction Act of 2022 (Act). This includes renewable energy, energy storage, hydrogen, biogas, carbon capture and electric vehicle charging infrastructure. The guidance covers the Act’s two fundamental critical labor requirements— providing prevailing wages and employing a certain amount of registered apprentices—that project developers must meet for clean energy projects to maintain the credit for the full amount of 30% for the investment tax credit (ITC) or the full amount of the production tax credit (PTC).

As detailed further below, depending upon a project’s development status, such guidance either triggers a mad dash to begin construction by January 28, 2023, in order to be exempted from such requirements or continues to leave developers a bit in the dark on operational and administrative requirements for projects beginning construction after January 28, 2023 (as actual wages are not yet published), each assuming formal guidance is published in the Federal Register on November 30.

In Depth

Key Takeaways

  • The guidance is scheduled to be published Wednesday, November 30, 2022.
  • The guidance starts the clock on a 60-day period for the labor provisions to take effect and impacts renewable energy, storage, hydrogen, biogas and carbon capture projects and electric vehicle charging infrastructure.
  • The net result is twofold and depends upon where a project is on its development timeline.
  • For those projects further along in the development lifecycle and that seek both (i) an exemption from the requirements as well as (ii) qualification for such tax benefits, such projects must be under construction by January 28, 2023, to be exempted from the new requirements (assuming formal guidance is published in the Federal Register on November 30).
  • For such projects, the guidance triggers a sprint to start construction of such projects before the new wage and apprentice requirements take effect.
  • The guidance clarifies that the two existing, long-standing methods to determine the start date of construction on a project still apply: (i) physical work and (ii) 5% safe harbor tests.
  • For those projects not seeking to “beat the clock” and that will start construction after January 28, 2023, there is currently little information about how to actually confirm you are paying appropriate wages.
  • The required wages vary by job type and location.
  • The guidance instructs project developers to access the wages published on the US Department of Labor website at
  • However, there are currently no postings for many job types or locations.
  • The guidance also includes instructions on how to request a wage determination from the department if the information is not available online.
  • Developers should send emails requesting wage determinations to with the “facility, facility location, proposed labor classifications, proposed prevailing wage rates, job descriptions and duties, and any rationale for the proposed classifications.”
  • The guidance reiterates certain information on qualified apprentices under the Act.
  • It states qualified apprentices must be used for 10% to 15% of total labor hours.
  • The percentage is 10% for projects on which construction starts in 2022 or earlier, 12.5% for projects starting construction in 2023 and 15% thereafter.
  • At least one qualified apprentice must be used on any project that at least four individuals will participate.
  • The guidance further directs owners to employ general record-keeping requirements, such as accounting for contractors and subcontractors, to prove to the federal government that they are hiring qualified apprentices or made a good faith effort to find them and that required wages were paid.
  • Such records must identify the wage determinations, the mechanics and laborers who performed the work, the classifications of work they performed, their hours worked in each classification and the wage rates paid for the work.


The newly released guidance is important to those developers and investors who may benefit from “beating the clock” in order to gain an exemption from the new requirements. And while the guidance is informative on certain other aspects of project development post the 60-day clock, there are still some gaps that remain for developers to fill in before they can be certain these projects will meet the guidance on wages and pencil out.

For counseling on your project on how to “beat the clock” or continue to develop and implement further IRS guidance, please contact a McDermott IRA team member. Additionally, we will be hosting a webinar to unpack this topic on Friday, December 2, 2022. Click here to register.