IRS Instruction 3468 – Instructions for Form 3468, Investment Credit – In the ever-evolving landscape of tax incentives, the IRS Form 3468 stands out as a vital tool for taxpayers looking to claim credits for investments in energy-efficient and sustainable projects. Whether you’re a business owner installing solar panels or rehabilitating a historic building, understanding the instructions for Form 3468 can help you maximize your tax savings. This comprehensive guide breaks down everything you need to know about IRS Instruction 3468 for the 2025 tax year, including key updates, eligibility, and filing tips.
What Is IRS Form 3468?
IRS Form 3468, also known as the Investment Credit form, allows taxpayers to claim various investment tax credits under the Internal Revenue Code. These credits are designed to encourage investments in renewable energy, advanced manufacturing, and historic preservation. The form covers credits such as the energy credit (under section 48), rehabilitation credit (section 47), advanced manufacturing investment credit (section 48D), and more.
The primary purpose of Form 3468 is to calculate and report the investment credit, which can offset your federal income tax liability. For 2025, the form emphasizes clean energy initiatives, reflecting recent legislative changes aimed at promoting sustainability and reducing carbon emissions.
Who Should File Form 3468?
Any taxpayer—individuals, businesses, partnerships, S corporations, estates, trusts, or cooperatives—claiming the investment credit must file Form 3468. This includes those investing in qualified energy properties, rehabilitated buildings, or advanced projects. You should file if:
- You’re claiming credits for solar, geothermal, wind, or other renewable energy installations.
- You’ve incurred qualified rehabilitation expenditures on certified historic structures.
- Your project qualifies for advanced coal, gasification, or clean electricity credits.
Note that applicable entities like tax-exempt organizations or governments can elect to treat certain credits as payments against tax. Partnerships and S corporations pass through credits to partners or shareholders via Schedule K-1.
Key Changes and Updates for 2025
The 2025 instructions for Form 3468 incorporate several important updates to align with recent tax laws, including the Inflation Reduction Act and subsequent amendments. Here’s what’s new:
- Introduction of Form 7220: If claiming increased credits under sections 48, 48C, 48E for meeting prevailing wage and apprenticeship (PWA) requirements, you must now file Form 7220 for verification.
- Advanced Manufacturing Investment Credit Increase: For fiscal years ending in 2026, the credit rate rises to 35% for qualified investments in property placed in service after 2025.
- Restrictions on Foreign Entities: New rules under P.L. 119-21 prohibit credits if material assistance comes from certain foreign entities. Credits for wind or solar facilities are terminated if construction begins after July 4, 2026.
- Phaseouts and Bonuses: Applicable percentages for geothermal and solar properties are adjusted, with bonuses for domestic content, energy communities, and low-income projects. Elective payment phaseouts apply for certain 2024 constructions.
- Reporting Relief: For tax years 2023 and 2024, the IRS provided relief for Forms 3468 and 8835, with corrections issued in May 2025 for interconnection property.
These changes reflect ongoing efforts to incentivize clean energy while ensuring compliance. Always check for post-release updates on IRS.gov, as the instructions were last revised on January 30, 2026.
Types of Investment Credits Available on Form 3468
Form 3468 covers a wide array of credits. Below is a breakdown of the major ones:
Energy Credit (Section 48)
This is one of the most popular credits, applicable to investments in renewable energy properties. It includes:
- Solar energy equipment for electricity generation, heating, or illumination.
- Geothermal systems for energy production or heat pumps.
- Fuel cells, microturbines, combined heat and power systems, small wind turbines, energy storage, biogas, and microgrid controllers.
- Qualified investment credit facilities (e.g., wind, biomass, hydropower).
Credit rates vary (e.g., 6% base, up to 30% with PWA compliance), with bonuses for domestic content (10%), energy communities (10%), and low-income projects (10-20%). Phaseouts apply for constructions starting after 2024.
Rehabilitation Credit (Section 47)
Aimed at preserving historic buildings, this credit is 20% of qualified rehabilitation expenditures for certified historic structures. It requires National Park Service certification and substantial rehabilitation. For 2025, transitional rules for certain expenditures have been removed.
Other Credits
- Qualifying Advanced Coal and Gasification Project Credits (Sections 48A and 48B): For projects with carbon sequestration.
- Qualifying Advanced Energy Project Credit (Section 48C): Up to 30% with PWA.
- Advanced Manufacturing Investment Credit (Section 48D): 25-35% for manufacturing facilities.
- Clean Electricity Investment Credit (Section 48E): For qualified facilities and energy storage, with similar bonuses.
Pre-filing registration is required for elective payments or transfers under sections 6417 and 6418.
How to Fill Out Form 3468: Step-by-Step Overview?
Filling out Form 3468 requires detailed calculations. Use a separate form for each qualified property or facility. Here’s a high-level guide based on the instructions:
- Part I: Facility Information – Provide the IRS registration number, DOE control number (if applicable), facility type, location, and checkboxes for PWA compliance, bonuses, and more.
- Parts II-VII: Credit Calculations – Enter qualified investments, applicable percentages, and bonuses for the specific credit type. Adjust for subsidies, tax-exempt bonds, or at-risk rules.
- Totals and Reductions – Sum credits, apply reductions (e.g., for tax-exempt financing), and report elective payments or transfers.
- Attach to Form 3800 – Carry the total credit to Form 3800, General Business Credit.
Retain records for recapture events, which could trigger repayment if property use changes within five years. For detailed line-by-line guidance, refer to the official instructions.
Filing Requirements and Deadlines
File Form 3468 with your tax return for the year the property is placed in service, including extensions. Electronic filers may need Form 8453 for attachments. For 2025 taxes, the deadline is April 15, 2026 (or October 15, 2026 with extension). Partnerships and S corporations must provide Schedule K-1 details to owners.
Important cautions: Credits can’t be claimed for property used outside the U.S., by governments (with exceptions), or for lodging. Double-dipping with other credits (e.g., section 45) is prohibited.
Download IRS Instruction 3468 PDF
To get started, download the latest IRS Instruction 3468 (Instructions for Form 3468) directly from the official IRS website: https://www.irs.gov/pub/irs-pdf/i3468.pdf. This PDF includes all the details you’ll need for accurate filing.
For the form itself, visit https://www.irs.gov/pub/irs-pdf/f3468.pdf.
Maximizing Your Investment Credit: Tips and Considerations
To optimize your claim:
- Ensure PWA compliance for higher rates—file Form 7220 if applicable.
- Apply for bonuses like domestic content or energy community by attaching certifications.
- Consult a tax professional, as recapture rules and phaseouts can be complex.
- Stay updated via IRS.gov for any 2026 developments affecting 2025 filings.
By leveraging Form 3468, you can significantly reduce your tax burden while contributing to sustainable development. If you’re eligible, don’t miss out on these valuable incentives.