One date. That is all it takes to determine whether prevailing wage and apprenticeship rules apply to your project or not. January 29, 2023. If construction started before that line, PWA compliance is irrelevant. You get the full 5x credit multiplier without touching a single apprenticeship log or certified payroll record.
Miss that cutoff by even a day? Different story entirely. PWA compliance becomes mandatory, or you are stuck claiming the base credit rate while the project next door walks away with five times more.
Why That Specific Date
A lot of people assume Congress picked January 29, 2023, out of thin air. They did not. The IRA said PWA requirements become operative 60 days after Treasury and the IRS publish guidance on the rules. That guidance dropped November 30, 2022, as Notice 2022-61. Do the math. Sixty days later lands on January 29, 2023.
So if your project broke ground before that date, you qualify for what the regulations call the beginning-of-construction exception. Full increased credit. No wage tracking. No apprenticeship ratios. Done.
Projects that started on or after January 29? PWA compliance is the price of admission for anything above base rate. The spread between base and full is massive. A Section 48 ITC at base rate is 6%. With PWA, it is 30%. Same project, same panels, same interconnection. The only variable is whether you can prove labor compliance. That is a 24-percentage-point swing on a single checkbox.
Proving You Started in Time
Here is where it gets tricky. Saying you began construction is not the same as proving it, and the IRS has specific tests for what counts.
Historically, two paths worked. First is the Physical Work Test. Construction begins when physical work of a significant nature actually starts. On-site grading, pouring foundations, installing racking. Off-site manufacturing of custom components counts too. The test cares about what kind of work happened, not how much you spent.
Second was the Five Percent Safe Harbor. Pay or incur at least 5% of total project costs before the deadline, and the IRS treated construction as having begun. Developers loved this one because it gave them flexibility when physical work had not kicked off yet but money was already committed.
Both paths came with a four-year continuity safe harbor. Place the project in service within four calendar years after construction began and you automatically satisfy the continuous construction requirement.
Then Treasury shook things up. Notice 2025-42, released August 2025, killed the Five Percent Safe Harbor for wind and large solar under Sections 45Y and 48E. Only the Physical Work Test survived. Developers scrambled. But a federal court stepped in and vacated that notice in June 2026, putting both methods back on the table. For now. Nobody should assume that is the final word.
A Transition Rule Most People Miss
Here is something that flies under the radar. The final PWA regulations from June 2024 included a transition rule that protects all work performed before January 29, 2023, from prevailing wage and apprenticeship scrutiny. Regardless of anything else.
Why does that matter? Because some credits (think Sections 45L, 45Z, 48C) do not even have a beginning-of-construction exception in the statute. For those credits, you might assume every hour of labor falls under PWA rules. Not true. The transition rule carves out pre-cutoff work even when the credit itself has no BOC exception.
Practically speaking, if your crew was already on-site before that January date, those hours stay clean. Only work from January 29, 2023, forward triggers the wage and apprenticeship requirements.
What Credit Buyers Should Be Checking
If you are buying credits in the transfer market, the BOC date is your first diligence question. Not your fifth. Not something you get to during the second round of document review. First.
A project that cleared the cutoff before January 29, 2023, has a completely different compliance profile than one that started after. For pre-cutoff projects, you are verifying the BOC documentation (Physical Work Test evidence or Five Percent Safe Harbor records) and confirming the four-year continuity window was met. That is pretty much it on the labor front.
Post-cutoff projects? Now PWA compliance verification gets serious. You need certified payroll records, apprenticeship program registrations, contractor attestations, and evidence that the applicable apprenticeship labor-hour threshold was met, such as 12.5% for projects beginning construction in 2023 and 15% for projects beginning in 2024 or later. The comprehensive guide to complying with prevailing wage and apprenticeship requirements breaks down exactly what that documentation trail looks like.
Conclusion
PWA compliance either applies or it does not. There is no middle ground. And the dividing line is one date that most people outside the deal team could not name. January 29, 2023, separates projects that owe nothing on labor compliance from projects that owe everything. Buyers who do not verify which side a project falls on before wiring cash are carrying risk they have not priced. Ask the BOC question first. The rest of diligence flows from the answer.
