Federal Tax Credit Ends for Wind Turbines Built in Inland Lakes Starting in 2023

The aptly named “Lakes Before Turbines Act” zeroes in on a specific tax break for renewable energy developers. This bill amends the Internal Revenue Code to stop certain offshore wind facilities from claiming the Investment Tax Credit (ITC) if they are located in the “inland navigable waters of the United States.” Essentially, if you were planning to build a wind farm in a large lake or an internal river system and wanted that sweet federal tax subsidy, this bill says, “Nope, not anymore.”

The Fine Print on Tax Breaks

This isn’t a ban on building wind turbines in inland waters, but it is a major financial disincentive. The ITC is a huge deal for large infrastructure projects; it allows developers to claim a percentage of the project’s cost as a credit against their federal taxes. Losing this credit can completely change the economic viability of a project. This restriction applies to tax years starting after December 31, 2022. That means any project that was already up and running or substantially underway before 2023 is probably safe, but any new development in these areas loses the federal subsidy.

Who Feels This Change?

This change primarily affects renewable energy developers who were looking at major bodies of water like the Great Lakes or large navigable rivers for their “offshore” wind projects. For example, a development company that spent years planning a wind farm on Lake Michigan based on the assumption they could claim the ITC is now facing a massive budget hole if their project wasn’t already in service by 2023. This bill clarifies that the federal government is prioritizing the use of this specific tax credit for wind projects located in genuine ocean waters, not internal waterways.

Why the Shift?

While the bill doesn’t state its reasoning, the effect is clear: it draws a line in the sand—or rather, the water. By limiting the ITC to ocean-based projects, the government is essentially deciding where it wants to spend its tax dollars to incentivize renewable energy development. For the average person, this might mean fewer large-scale industrial wind projects popping up on popular recreational lakes or major inland waterways, potentially preserving those areas for other uses. However, it also means that inland states lose a key financial tool to encourage local, large-scale renewable energy generation, potentially making it more expensive to meet state clean energy goals without that federal boost. It’s a classic trade-off: environmental preservation of inland waters versus the economic cost of building green energy infrastructure elsewhere.