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Background – IRC §45J Advanced Nuclear PTC​

 

The Advanced Nuclear Production Tax Credit (IRC §45J) provides a credit of 1.8 cents per kilowatt-hour (kWh) of electricity produced and sold to an unrelated person from qualifying advanced nuclear facilities during the first eight years of operation. Credit applies for eight years beginning when the facility is placed in service (IRC §45J(b)(1)).

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Eligibility

A qualifying advanced nuclear facility must (i) use nuclear energy to generate electricity, (ii) be owned by the taxpayer, and (iii) use a reactor design approved by the Nuclear Regulatory Commission (NRC) after December 31, 1993 — such that the design (or a substantially similar design) was not previously approved before that date.

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The facility must be placed in service after August 8, 2005 and before January 1, 2021—although any unutilized national allocation capacity may, under § 45J(b)(5), be reallocated to later-placed facilities under certain conditions.

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National Capacity Limitation

The total national capacity limit is 6,000 MW (IRC §45J(b)(2)), allocated by the IRS procedures (e.g., Notice 2006-40. Allocation required DOE certification and IRS approval before Dec. 31, 2014. The credit that each facility may claim is proportionately reduced (via a credit percentage) if the facility’s allocated capacity is less than its nameplate capacity (i.e. allocation ÷ nameplate) as per § 45J(b)(1).

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Calculation Summary

• Tentative Credit = 1.8¢ × kWh of qualified electricity × credit percentage (IRC §45J(b)(1)-(3)).

• Credit percentage = allocated MW ÷ nameplate capacity (if allocation < nameplate).

  • This result is then compared to the annual limitation, which cannot exceed the ratio of allocated capacity to 1,000 MW times $125,000,000, and the smaller of the two is allowed.​

• Annual cap = $125M per 1,000 MW allocated.

 

Additionally, under § 45J(c)(2), the credit is subject to a phaseout reduction when the reference price for electricity in the calendar year exceeds 8¢/kWh, with a 3¢ band over which the credit is reduced proportionally (adjusted for inflation).

Sale to Unrelated Person
Electricity must be sold to an unrelated person — the ultimate purchaser must not be related to the producer, per § 45(e)(4).

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Effect of Grants & Other Credits

Under § 45J(b)(3), the credit is generally not reduced by the receipt of certain grants, tax-exempt bond financing, or other credits. However, any interactions with newer incentive regimes and IRS regulations should be carefully reviewed.

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New Developments & Considerations

• § 45U (Zero-Emission Nuclear Power Production Credit) was created by Section 13105 of the Inflation Reduction Act of 2022 (IRA) to provide a production tax credit for electricity generated by qualified nuclear power facilities. It is designed to support existing nuclear plants and maintain zero-emission baseload power in the U.S. With the IRA’s creation of § 45U, new nuclear facilities may now be eligible for the zero-emission production tax credit (for electricity produced after December 31, 2023).

  • But by statute and IRS rules, a facility qualifying under § 45J (Advanced Nuclear Production Tax Credit) is not eligible under § 45U (Zero-Emission Nuclear Power Production Credit).​

• In addition, the One Big Beautiful Bill Act (OBBBA) of 2025 introduced significant new compliance rules through Foreign Entity of Concern (FEOC) restrictions, which now apply to multiple clean energy tax credits, including §45U Zero-Emission Nuclear Production Tax Credit (PTC).

• The OBBBA also includes a bonus PTC “adder” under § 45Y (Clean Electricity PTC) specifically for advanced nuclear facilities sited in “nuclear energy communities,” which may be competitive or complementary to § 45J eligibility. In general, it adds 10% to the base §45Y credit (which starts at 0.3¢/kWh and scales up to 1.5¢/kWh with prevailing wage/apprenticeship compliance). §45Y applies to new clean electricity projects placed in service after 2024, while §45J was limited to facilities placed in service before Jan. 1, 2021. If a facility previously qualified under §45J and undergoes major upgrades or repowering, it may qualify for §45Y incentives going forward.

• Although §45J is closed for new allocations (applications ended in 2014; service deadline was Jan. 1, 2021), §45Y now provides a forward-looking incentive for advanced nuclear projects, including those in communities impacted by nuclear plant closures.

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IRS Links, Notices, & Filing Requirements​

• ​See Form 7213.

  • Taxpayers claim § 45J credit on Form 7213, Part I, attaching a copy of the IRS acceptance letter per Notice 2023-24, § 6.05.​

  • The IRS instructions now explicitly treat advanced nuclear facilities (eligible for § 45J) as distinct from qualified nuclear power facilities under § 45U, meaning § 45U is not available for § 45J-eligible facilities.

• Retain IRS allocation letter and DOE certification.​​