IRS Form 3468: Guide to Claiming the Investment Tax Credit
In the United States, the federal government often passes laws to provide tax incentives for businesses to invest in projects that benefit the general public. One of the oldest existing tax incentives is the investment tax credit, which taxpayers claim by filing IRS Form 3468. The tax form itself has been around since 1962.

While today’s version of this IRS form looks much different from the original, there still are different credits available for businesses to make certain types of investments. This article will outline more details about this federal tax incentive, specifically:
- What is IRS Form 3468
- What the investment credit consists of
- How to complete IRS form 3468
Let’s start with a brief overview of the tax form itself.
Before we begin, please understand that this article was written for educational purposes only. Do not interpret this article as containing tax advice or legal advice. For specific recommendations on your tax situation, you should consult a tax professional.
Contents
What is IRS Form 3468?
IRS form 3468, Investment Credit, is the tax form that the Internal Revenue Service uses to allow businesses to reduce corporate income taxes by investing in certain projects designed for society’s overall benefit. Examples of eligible projects include:
- Purchasing eligible property, such as historic buildings, to enhance urban development
- Creating affordable housing
- Certain investments in renewable energy sources or energy conservation projects
What investment credits are available?
Eligible taxpayers may claim the following investment credits by filing IRS Form 3468:
- Rehabilitation credit
- Energy credit
- Qualifying advanced coal project credit
- Qualifying gasification project credit
- Qualifying advanced energy project credit
Rehabilitation credit
The IRS permits taxpayers to receive a rehabilitation tax credit for qualified rehabilitation expenditures for any qualified rehabilitated building.
What is a qualified rehabilitated building?
According to the IRS, a qualified rehabilitated building must meet 5 requirements:
Must be a certified historic structure
To be considered a certified historic structure, the building must either be:
- Listed in the National Register of Historic Places, or
- Certified by the Secretary of the Interior and located in a registered historic district as defined in Internal Revenue Code Section 47(c)(3)(B)
The building must be substantially rehabilitated
To meet this criteria, the taxpayer’s expenditures during a 24-month period must be more than the greater of:
- Taxpayer’s adjusted basis in the building and its structural components, or
- $5,000
If the taxpayer is rehabilitating the building in phases under a written architectural plan and specifications that were completed before the rehab began, then the expenditures can take place over a 60-month period.
Depreciation must be allowable
For depreciation to be allowable, the taxpayer must place the building into service within a reasonable period of time. If the building is permanently retired from service, depreciation is not allowed.
The building must have been placed in service before starting rehabilitation
The taxpayer can meet this requirement by placing the building into service at any time before rehabilitation begins.
Certain structural components must remain in place
For a building under the transition rule, it must meet two criteria:
- At least 75% of the external walls must be retained with 50% or more kept in place as external walls, and
- At least 75% of the existing internal structural framework of the building must be retained in place.
What are qualified rehabilitation expenditures?
Qualified rehabilitation expenditures must meet the following six criteria:
Only certain property qualifies
The rehabilitation expenditures must be for one of the following:
- Nonresidential real property
- Residential rental property that is also a certified historic structure; Treasury Regulations Section 1.48-1(h) contains additional information
- Real property with a class life of more than 12.5 years
Expenditures must be connected to the rehabilitation project
The property owner must be able to prove that all expenditures were directly related to the structure’s rehabilitation costs.
Taxpayer must use straight-line depreciation for expenditures
The rehabilitation costs must be depreciated using the straight line method. No accelerated depreciation or Section 179 depreciation allowed.
The taxpayer cannot include acquisition or expansion costs
These costs only include rehabilitation, not acquiring the building or creating an expansion project.
If not directly connected to a certified historic structure or district, the rehabilitation must be certified by the Secretary of the Interior
This requirement does not apply if:
- The building is not a certified historic structure
- The Secretary of the Interior certifies that the building isn’t of historic significance, or
- Certification occurred after rehab began, and the taxpayer certifies in good faith that he or she wasn’t aware of the certification requirement when the project started
The expenditures cannot be made on tax-exempt property
The expenditures cannot include costs allocable to the part of the property that is reasonably expected to be tax-exempt use property
However, claiming this tax credit results in a dollar-for-dollar reduction in the taxpayer’s basis in the rehabilitated building.
In essence, claiming the rehabilitation credit in the current year will reduce today’s tax liability, but might raise taxable income in a subsequent tax year.
Energy credit
Energy credits consist of one or more of the following:
- Qualified geothermal energy property
- Qualified solar illumination or solar energy property
- Qualified fuel cell property
- Qualified microturbine property
- Combined heat and power system property
- Qualified small wind energy property
- Waste energy recovery property
- Geothermal heat pump systems
- Qualified investment credit facility property
To qualify for the energy credit, property must meet the following criteria:
Meet certain performance and quality standards
If there are standards prescribed by regulations, and in effect at the time of acquisition, the property must meet or exceed those standards.
Be depreciable property
The taxpayer must be able to amortize or depreciate the property in question.
Be either constructed or acquired by the taxpayer
The taxpayer must either build the property or be the person that places the property into original use.
Energy property doesn’t include any property acquired before February 14, 2008, or to the extent of basis attributable to construction, reconstruction, or erection before February 14, 2008, that is public utility property.
Generally, the taxpayer must reduce the tax basis of the property by 50% of the claimed tax credit.
Qualifying advanced coal project credit
IRC Section 48A(d)(3)(B)(i) authorizes a federal income tax credit for qualifying coal projects. To qualify, a coal project must be located in the United States and meet the following criteria:
- Uses advanced coal-based generation technology to power a new electric generation unit or to refit or repower an existing electric generation unit (including an existing natural gas-fired combined cycle unit);
- As defined in section 48A(f)
- Has fuel input which will be at least 75% coal when completed;
- Has an electric generation unit or units at the site that will generate at least 400 megawatts;
- Has a majority of the output that is reasonably expected to be acquired or utilized;
- Is to be constructed and operated on a long-term basis when the taxpayer provides evidence of ownership or control of a site of sufficient size;
- Includes equipment that separates and sequesters at least 65% (70% in the case of an application for reallocated credits) of the project’s total carbon dioxide emissions for project applications described in section 48A(d)(2)(A)(ii)
Qualifying gasification project credit
Likewise, a gasification project must meet certain criteria to qualify for a tax credit:
A qualifying gasification project is a project that:
- Employs gasification technology as defined in IRC Section 48B(c)(2),
- Is carried out by an eligible entity, defined in section 48B(c)(7), and
- Includes a qualified investment of which an amount not to exceed $650 million is certified under the qualifying gasification program as eligible for credit.
Qualifying advanced energy project credit
Finally, to be eligible for the qualifying advanced energy project credit, some or all of the qualified investment in the qualifying advanced energy project must be certified by the IRS under Section 48C(d).
The following references contain more information about the advanced energy project credit:
- Notice 2009-72, 2009-37 I.R.B. 325
- Notice 2013-12, 2013-10 I.R.B. 543
How do I complete IRS Form 3468?
This form contains 3 parts, but can be very complex. Most taxpayers will use a tax professional, such as a certified public accountant or enrolled agent, to help prepare this form correctly.
Part I: Information Regarding the Election To Treat the Lessee as the Purchaser of Investment Credit Property
If you are claiming this federal credit as a lessee based upon a Section 48(d) election, you must complete Part I. If you acquired more than one property as the lessee, you must attach a statement with the required information for all properties.
Line 1: Name of lessor
Self-explanatory.
Line 2: Address
You must include the full address, including the lessor’s suite, room, or other unit number after the street address. Do not include information about the lessor’s registered agent. If a third party receives mail on the lessor’s behalf, you may mark, “C/O” followed by the third party’s name.
Line 3: Description of property
Self-explanatory.
Line 4: Amount for which you were treated as having acquired the property
You may need to discuss this with the lessor, if you did not already receive this information.

Part II: Qualifying projects
Part II helps calculate the total amount of the following credits:
- Qualifying advanced coal project credit
- Qualifying gasification project credit
- Qualifying advanced energy project credit
Line 5: Qualifying advanced coal project credit
In Line 5a, enter the qualified investment in integrated gasification combined cycle property placed in service during the tax year, specifically for projects described in IRC Section 48A(d)(3)(B)(i). Multiply this amount by 20%.
Integrated gasification combined cycle is an electric generation unit that produces electricity by converting coal to synthesis gas, which in turn is used to fuel a combined cycle plant to produce electricity from both a combustion turbine (including a combustion turbine/fuel cell hybrid) and a steam turbine.
In Line 5b, enter the qualified investment in advanced coal-based generation technology property placed in service during the tax year for projects described in IRC Section 48A(d)(3)(B)(ii). Multiply this amount by 15%.
Any property that is part of a qualifying advanced coal project (defined earlier) not using an integrated gasification combined cycle, is eligible for the credit under Line 5b.
In Line 5c, enter the qualified investment in advanced coal-based generation technology property placed in service during the tax year for projects described in IRC Section 48A(d)(3)(B)(iii). Multiply this amount by 30%.
To qualify for this credit, the project must be a qualifying advanced coal project which has equipment that separates and sequesters at least 65% of the project’s total carbon dioxide emissions (70% if the credits are reallocated by the IRS).
Line 6: Qualifying gasification project credit
For Line 6a, enter the qualified investment in qualifying gasification project property that meets the following criteria:
- Placed in service during the tax year for which credits were allocated or reallocated after October 3, 2008, and
- That includes equipment that separates and sequesters at least 75% of the project’s carbon dioxide emissions.
Multiply this number by 30%.
For Line 6b, enter the qualified investment in qualifying gasification project property that does not meet the criteria outlined in Line 6a. Multiply this number by 20%.
Line 7: Qualifying advanced energy project credit
Enter the total qualified investment in qualifying advanced energy projects that re-equips, expands, or establishes the production capability for one or more of the following:
- Property designed to be used to produce energy from one of the following renewable resources:
- Sun
- Wind
- Geothermal deposits (within the meaning of Section 613(e)(2))
- Other renewable resources;
- Fuel cells, microturbines, or an energy storage system for use with electric or hybrid-electric motor vehicles;
- Electric grids to support the transmission of intermittent sources of renewable energy, including storage of the energy;
- Property designed to capture and sequester carbon dioxide emissions;
- Property designed to refine or blend renewable fuels or to produce energy conservation technologies (including energy-conserving lighting technologies and smart grid technologies);
- New qualified plug-in electric drive motor vehicles (as defined in section 30D), or components that are designed specifically for use with those vehicles, including electric motors, generators, and power control units; and
- Other advanced energy property designed to reduce greenhouse gas emissions

Line 8
Reserved for future use. Leave blank.
Line 9
If you are part of a cooperative, you may be eligible for unused investment credits. If this applies to you, enter this amount here.
Line 10: Total
Add the total of Lines 5d, 6c, 7, and 9. Enter the total here and on IRS Form 3800, Part III, Line 1a.
Part III: Rehabilitation Credit and Energy Credit
Complete Part III if seeking either the rehabilitation credit or energy credit.
Line 11: Rehabilitation credit
If only seeking the energy credit, skip to Line 12.
Line 11a
Check this box if you are electing under IRC Section 47(d)(5) to account for qualified rehabilitation expenditures for the taxable year paid. This election applies to the current tax year and future tax years.
The taxpayer may not revoke this election without IRS consent.
Line 11b
Enter the beginning and end dates for the 24-month or 60-month measuring period.
Line 11c
Enter the taxpayer’s adjusted basis of the building as of the later of:
- The beginning date outlined in Line 11b, or
- The first day of the holding period
Line 11d
Enter the amount of the qualified rehabilitation expenditures during the period noted in Line 11b.
Line 11e: Pre-1936 buildings under the transition rule
Multiply the qualified rehabilitation expenditures by 10%. For amounts paid after 2017, the 10% credit no longer applies, unless the taxpayer qualifies under the transitional period outlined in the IRS instructions.
Line 11f: Certified historic structures under the transition rule
Multiply the qualified rehabilitation expenditures by 20%. For amounts paid after 2017, the 20% credit for a certified historic structure is modified generally to allow 100% of qualified rehabilitation expenditures ratably over a 5-year period for amounts paid or incurred after 2017.
Line 11g: Certified historic structures with expenditures paid or incurred after 2017, and not under transitional rule
Multiply the qualified rehabilitation expenditures by 4%.
Line 11h: Project number or employer identification number
If you are claiming a credit for a certified historic structure on Line 11f or Line 11g, enter the assigned National Park Service (NPS) project number on Line 11h.
If the qualified rehabilitation expenditures are from an S corporation, partnership, estate, or trust, enter the employer identification number (EIN) of the pass-through entity instead. Skip Line 11i below.
The lessor will provide the lessee with the NPS project number to enter on Line 11h.
Line 11i: Date of approval
If there is an assigned NPS project number, enter the date that the NPS approved the request.

Line 12: Energy credit
Line 12a – Line 12c
Lines 12a through 12c calculate the tax credit for geothermal and solar energy investments according to the following schedule:
- Line 12a: 10%.
- This is for investments in geothermal projects
- Line 12b: 30%.
- This is for investments in solar projects in which the construction began before 2020
- Line 12c: 26%.
- This is for investments in solar projects in which the construction began after 2019, but before 2023.
Enter the qualifying expenditure in the appropriate field and multiply by the applicable rate. Enter this amount in the line.
Line 12d
Reserved for future use.
Line 12e: Qualified fuel cell property
Line 12e begins the tax credit calculations for fuel cell property.
In Line 12e, enter the basis of property placed in service during the tax year that:
- Was acquired between January 1, 2006 and October 3, 2008, or
- Was attributable to construction, reconstruction, or erection between those two dates
Multiply this number by 30%.
Line 12f
Calculate the applicable kilowatt capacity of the property on Line 12e. Multiply this number (must be a whole number) by $1,000 and enter in Line 12f.
Line 12g
Enter the smaller of Line 12e or Line 12f.
Line 12h
In Line 12h, enter the basis of property placed in service during the tax year that:
- Was acquired between October 4, 2008, and
- Was constructed before 2020
Multiply this number by 30%.

Line 12i
Calculate the applicable kilowatt capacity of the property on Line 12h. Multiply this number (must be a whole number) by $3,000 and enter in Line 12i.
Line 12j
Enter the smaller of Line 12h or Line 12i.
Line 12k
In Line 12k, enter the basis of property placed in service during the tax year that was constructed after 2019, but before 2023.
Multiply this number by 26%.
Line 12l
Calculate the applicable kilowatt capacity of the property on Line 12k. Multiply this number (must be a whole number) by $3,000 and enter in Line 12l.
Line 12m
Enter the smaller of Line 12k or Line 12l.
Line 12n – Line 12p
Reserved for future use
Line 12q: Qualified microturbine property
Line 12q begins the calculations for qualified microturbine property.
In Line 12q, enter the basis of property placed in service during the tax year that:
- Was acquired after December 31, 2005
- Was attributable to construction, reconstruction, or erection after that date
Multiply this number by 10%.
Line 12r
Calculate the applicable kilowatt capacity of the property on Line 12q. Multiply this number (must be a whole number) by $200 and enter in Line 12r.
Line 12s
Enter the smaller of Line 12q or Line 12r.
Line 12t
Line 12t begins the combined heat and power system property credit. However, a taxpayer cannot claim this federal tax credit if the electrical capacity of the property:
- Is more than 50 megawatts or
- Has a mechanical energy capacity of more than 67,000 horsepower, or
- Has an equivalent combination of electrical and mechanical energy capabilities
In Line 12t, enter the basis of property placed in service during the tax year that:
- Was acquired after October 3, 2008
- Was attributable to construction, reconstruction, or erection after that date
Multiply this number by 10%.
Line 12u
If the electrical capacity is measured in megawatts, divide 15 by the megawatt capacity. Enter 1.0 if the capacity is 15 megawatts or less.
If the electrical capacity is measured in horsepower, divide 20,000 by the number of horsepower. Enter 1.0 if the capacity is 20,000 horsepower or less.
Line 12v
Multiply Line 12t by Line 12u. Enter the result in Line 12v.

Line 12w: Qualified small wind energy property
Line 12w begins calculations for qualified small wind energy property.
Qualified microturbine property is a stationary microturbine power plant that:
- Generates less than 2,000 kilowatts, and
- Has an electricity-only generation efficiency of at least 26% under International Standard Organization conditions
In Line 12w, enter the basis of property placed in service during the tax year that:
- Was acquired after October 3, 2008
- Was attributable to construction, reconstruction, or erection after that date, but before January 1, 2009
Multiply this amount by 30%.
Line 12x
Enter the smaller of:
- Line 12w
- $4,000
Line 12y
In Line 12y, enter the basis of property placed in service during the tax year that:
- Was attributable to periods after December 31, 2008, and
- Construction of which began before 2020
Multiply this amount by 30%.
Line 12z
In Line 12z, enter the basis of property placed in service during the tax year, and that construction began after 2019, but before 2023.
Multiply this amount by 26%.
Line 12aa
Reserved for future use.
Line 12bb: Waste energy recovery property
Line 12bb begins calculations for qualified small wind energy property.
Qualified waste energy recovery property means property that:
- Generates electricity solely from heat from buildings or equipment if the primary purpose of such building or equipment is not the generation of electricity, and
- The capacity of which does not exceed 50 megawatts
Taxpayers cannot take a credit for both combined heat and power system property and waste energy recovery property for the same property.
In Line 12bb, enter the basis of property placed in service during the tax year, and that construction began after 2020, but before 2023.
Multiply this amount by 26%.
Line 12cc: Geothermal heat pump systems
Geothermal heat pump systems constitute equipment that uses the ground or ground water as either:
- A thermal energy source to heat a structure, or
- A thermal energy sink to cool a structure
In Line 12cc, enter the basis of property placed in service during the tax year, and that construction began after October 3, 2008.
Multiply this amount by 10%.
Line 12dd: Qualified investment credit facility property
Qualified investment credit facility property is property that:
- Is tangible personal property or other tangible property (not including a building or its structural components)
- But only if the property is used as an integral part of the qualified investment credit facility;
- Is constructed, reconstructed, erected, or acquired by the taxpayer
- Depreciation or amortization is allowable
- The original use begins with the taxpayer
In Line 12dd, enter the basis of property placed in service during the tax year, and that construction began before 2022. This does not include wind facility property where construction began after 2016.
Multiply this amount by 30%.
Line 12ee
In Line 12ee, enter the basis of wind facility property placed in service during the tax year, and that construction began during 2017.
Multiply this amount by 24%.
Line 12ff
In Line 12ff, enter the basis of wind facility property placed in service during the tax year, and that construction began during 2018.
Multiply this amount by 18%.
Line 12gg
In Line 12gg, enter the basis of wind facility property placed in service during the tax year, and that construction began during 2019.
Multiply this amount by 12%.
Line 12hh
In Line 12hh, enter the basis of wind facility property placed in service during the tax year, and that construction began during 2020 or 2021.
Multiply this amount by 18%.
Line 13: Unused investment credit from cooperatives
Enter any unused investment credit from cooperatives, if applicable.
Line 14: Total tax credits
Combine the following lines:
- Lines 11e through 11g
- Lines 12a through 12c
- Line 12g
- Line 12j
- Line 12m
- Line 12s
- Line 12v
- Lines 12x through 12z
- Lines 12aa through 12hh
- Line 13
Enter the total on Line 14 and on IRS Form 3800, Part III, Line 4a.
How do I file IRS Form 3468?
File IRS Form 3468 as an accompaniment to your regularly filed federal income tax return. If you file electronically, you may also need to send a paper Form 8453, U.S. Individual Income Tax Transmittal, for any attachments that you cannot include with IRS Form 3468 and your income tax return.
Where can I find IRS Form 3468?
You may find this tax form on the IRS website or download the file below.