June 23, 2025
Taxpayers claiming Investment Tax Credits (ITC) and Production Tax Credits (PTC) under the Inflation Reduction Act of 2022 (IRA) are eligible for a 5x credit multiplier if they comply with Prevailing Wage and Apprenticeship (PWA) requirements.
| For a full breakdown of PWA compliance requirements, read the “Prevailing Wage and Apprenticeship Background” section of our free IRA Field Guide (linked below).
The base credit under the IRA is set at 6%, meaning taxpayers that meet PWA standards can receive a 30% base credit. The multiplier also applies to eligible bonus credits, such as those for domestic content and energy communities, which can push the total credit value up to 70% in certain scenarios with the PWA multiplier.
| For a deeper dive into IRA tax credit structures, see the “Tax Credit Overview” section of our free IRA Field Guide (linked below).
In the event that a Taxpayer fails to comply with PWA requirements, they are still eligible to receive the bonus multiplier by making certain cure payments. This guide will go over the cure payment requirements under the base and intentional disregard scenarios.
There are three types of cure payments required:
(1) Backpay payment to the underpaid workers (the difference between what they were required to be paid and what they were actually paid), plus interest at the Federal short-term rate (4% for Q2 2025) plus 6%. For Q2 2025, this means a total combined interest rate of 10%.
(2) Penalty payment directly to the IRS equal to $5,000 per worker underpaid prevailing wages in a given year.
(3) Penalty payment directly to the IRS equal to $50 per hour for the total number of labor hours for which apprenticeship requirements were not met. The required apprentice labor-hour ratios depend on when construction began:
• 10% for projects that began before 2023
• 12.5% for projects that began in 2023
• 15% for projects that begin in 2024 or later
Until all required cure payments are made, the Taxpayer is ineligible for the 5x PWA multiplier.
There are three types of cure payments required:
(1) Backpay payment to the underpaid workers (the difference between what they were required to be paid and what they were actually paid), plus interest at the Federal short-term rate (4% for Q2 2025) plus 6%. This amount is then tripled as an additional penalty.
(2) Penalty payment directly to the IRS equal to $5,000 per worker underpaid prevailing wages in a given year. Additionally, the Taxpayer must pay the affected worker a $5,000 fine – bringing the total penalty to $10,000 per underpaid worker.
(3) Penalty payment directly to the IRS equal to $500 per hour for the total number of labor hours for which apprenticeship requirements were not met. The required apprentice labor-hour ratios depend on when construction began:
• 10% for projects that began before 2023
• 12.5% for projects that began in 2023
• 15% for projects that begin in 2024 or later
Until all required cure payments are made, the Taxpayer is ineligible for the 5x PWA multiplier.
The penalty difference between standard and intentional disregard can be severe, ranging from 2x to 10x higher depending on the infraction. This highlights how critical it is to track compliance proactively.
DSPTCH tracks prevailing wage obligations and apprenticeship ratios in real-time, allowing you to correct mistakes as they occur to avoid subsequent fines. Additionally, our platform includes 60+ compliance checks for each project to help you avoid an “intentional disregard” assessment.
Ready to learn more? Book a demo today.
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