Inflation Reduction Act Resources for Nonprofits and Government
The Inflation Reduction Act (IRA) is a game-changer for public and nonprofit entities looking to take a front-seat role in building the American clean energy economy. Thanks to IRA’s transformative “direct pay” provisions, tax-exempt and governmental entities can now receive a cash payment equal to the full value of the tax credit for eligible clean energy investments.
Historically, tax-exempt entities such as schools, local governments, and nonprofit organizations have not been able to access tax credits used to reduce an entity’s tax liability and instead relied on the uncertainty of competitive grant and loan programs. Direct pay will now allow these entities to recover a significant portion of a clean energy project’s cost as a tax-free cash payment from the U.S. Internal Revenue Service (IRS) for the taxable year the project is placed in service. This allows public and nonprofit entities that would like to deliver clean and affordable energy to their communities a chance to access our federal clean energy benefits.
WHO IS ELIGIBLE: The following entities are eligible for direct payment.
- State and Tribal Governments: States, counties, cities, and municipal utilities, Tribal governments, and governments of U.S. territories.
- Public Institutions: Public institutions governed by a political body (e.g. public schools, hospitals, and universities).
- Nonprofit Entities: Entities that are considered 501(c)(3) organizations or other entities that are not required to pay federal income tax.
- Other Eligible Entities: The Tennessee Valley Authority, rural electric cooperatives, and Alaska Claims Corporations, etc.
TO START YOUR CLAIM FOR DIRECT PAY: Entities that would like to utilize direct pay must pre-register with the IRS before the tax return is due and receive a registration number. Information on the IRS pre-filing registration process can be found here.
- Identify the project and credit you want to pursue.
- Complete your project, place it into service, and determine the corresponding tax year.
- Determine when your tax return will be due.
- Complete pre-filing registration with IRS before your tax return is due.
- Once you receive a valid registration number, file your tax return by the due date, including extensions.
- Receive your direct payment.
Learn more about direct pay here.
BONUS CREDITS: Through the Inflation Reduction Act, eligible entities can also maximize the value of direct pay by utilizing “bonus credits” that incentivize investments in our clean energy workforce and low-income and energy transition communities. Particularly, entities can receive the full value of the credit by meeting labor standards, utilizing domestic content, and locating projects in disadvantaged communities.
Learn more about maximizing your clean energy tax credits here.
TAX CREDITS:
Clean Energy Production Tax Credit: §45 (Up to $27.50/MWh and an additional 20% in bonus credits may apply)
DESCRIPTION_____________________________________________________________________________
This production tax credit provides a technology-neutral tax credit for production of clean electricity. Energy sources can include wind, biomass, geothermal, solar, small irrigation, landfill and trash, hydropower, and marine and hydrokinetic renewable energy.
The current base PTC value is $5.50/MWh, with enhanced values of $27.50/MWh for projects meeting the prevailing wage and apprenticeship requirements or for those less than 1 MW. Projects can further increase the credit value by 10% for meeting domestic content requirements and an additional 10% for projects located in energy communities.
Current Production Tax Credit Structure
|
PROJECT SIZE |
BASE INCENTIVE |
ENERGY COMMUNITY BONUS |
DOMESTIC CONTENT BONUS |
TOTAL POSSIBLE |
|
< 1 MW |
$27.50/MWh |
$2.75/MWh |
$2.75/MWh |
$33.00/MWh |
|
> 1 MW |
$5.50/MWh |
$0.55/MWh |
$0.55/MWh |
$6.6/MWh |
|
> 1 MW that meets prevailing wage and apprenticeship requirements |
$27.50/MWh |
$2.75/MWh |
$2.75/MWh |
$33.00/MWh |
Source: DOE Water Power Technologies Office
Learn more about the clean energy production tax credit here.
USE CASE EXAMPLES____________________________________________________________________
Governments: A local government that owns and operates a municipal water utility can receive a clean energy production tax credit for installing floating solar on recycled water ponds at their wastewater facility.
Public Institutions Schools that install rooftop solar are eligible to receive this tax credit and can receive additional bonus credits for being located in an energy community.
Nonprofits: Nonprofits can install solar panels on the roof of its headquarters and receive a clean energy production tax credit.
ACCESS____________________________________________________________________________________
To claim the credit, the applicable entity must complete the pre-filing IRS electronic portal, file the applicable Form 990 (Form 990-T Exempt Organization Business Income Tax Return if the applicable entity does not otherwise file an income tax return), Form 3800 General Business Credit, and Form 8835, Renewable Electricity Production Credit.
Clean Energy Investment Tax Credit: §48 (Up to 30% and an additional 40% in bonus credits may apply)
DESCRIPTION_____________________________________________________________________________
This investment tax credit provides a technology-neutral tax credit for investment in facilities that generate clean electricity. Eligible projects include solar photovoltaics, geothermal heating, battery storage, and more.
The base credit value is 6% and an enhanced value of 30% for projects meeting prevailing wage and apprenticeship requirements or for those less than 1MW. Projects can receive bonus credit of up to 10 percentage points for meeting domestic content requirements and up to 10 percentage points for projects in energy communities.
The Inflation Reduction Act also offers an additional Low-Income Communities Bonus Credit that is only available to projects using the Investment Tax Credit and is subject to a 1.8 GW program cap per year. This bonus provides projects that are under 5 MW either:
- An additional 10% tax credit for being located in a low-income community or is located on tribal land.
- An additional 20% tax credit for being classified as a “qualified low-income residential building project” or “qualified low-income economic benefit project".
Learn more about the Low-Income Communities Bonus Credit here.
Clean Electricity Investment Tax Structure
|
PROJECT SIZE |
BASE INCENTIVE |
ENERGY COMMUNITY BONUS |
DOMESTIC BONUS CONTENT |
TOTAL POSSIBLE |
|
< 1 MW |
30% |
10% |
10% |
50% |
|
> 1 MW |
6% |
2% |
2% |
10% |
|
> 1 MW that meets prevailing wage and apprenticeship requirements |
30% |
10% |
10% |
50% |
Source: DOE Water Power Technologies Office
Learn more about the clean energy investment tax credit here.
USE CASE EXAMPLES____________________________________________________________________
Governments: A federally recognized Tribe can access the investment tax credit to build a solar array to power their community center. On top of that 30-50% incentive for projects that are <5 MW, a Tribe may qualify for an additional 20% off the capital cost under the Low-Income Communities Bonus Credit program (up to a total of 70%).
Public Institutions: Schools can access the investment tax credit for qualified costs of renewable energy projects such as solar, geothermal heating, battery storage, and more.
Nonprofits: Nonprofits can use this investment tax credit for projects such as community solar development or to install solar panels on the roof of their building.
ACCESS____________________________________________________________________________________
To claim the credit, the applicable entity must complete the pre-filing IRS electronic portal, file the applicable Form 990 (Form 990-T Exempt Organization Business Income Tax Return if the applicable entity does not otherwise file an income tax return), Form 3800 General Business Credit, and Form 3468, Investment Credit.
Commercial Clean Vehicle Tax Credit: §45W (Up to $40,000)
DESCRIPTION_____________________________________________________________________________
Businesses and tax-exempt organizations that buy a qualified commercial clean vehicle can receive a clean vehicle tax credit of up to $40,000. The maximum credit is $7,500 for qualified vehicles with gross vehicle weight ratings (GVWRs) of under 14,000 pounds and $40,000 for all other vehicles.
Learn more about the Commercial Clean Vehicle Tax Credit here.
USE CASE EXAMPLES____________________________________________________________________
Governments: A city purchases a large electric garbage truck for municipal waste collection. Through the Commercial Clean Vehicle Credit, the city can receive up to 30% or $40,000 whichever is lower.
Public Institutions: Schools can take advantage of this tax credit for the purchase of commercial electric vehicles such as food service vehicles or electric school buses.
Nonprofits: Nonprofits including faith-based institutions can take advantage of this tax credit for commercial electric vehicles that are used to deliver food to the elderly or homeless.
ACCESS____________________________________________________________________________________
To claim the credit, the applicable entity must complete the pre-filing IRS electronic portal, file the applicable Form 990 (Form 990-T Exempt Organization Business Income Tax Return if the applicable entity does not otherwise file an income tax return), Form 3800 General Business Credit, and Form 8936-A Qualified Commercial Clean Vehicle Credit.
Charging Infrastructure Property Credit: §30C (Up to $100,000)
DESCRIPTION_____________________________________________________________________________
This tax credit is available to entities that install qualified vehicle refueling and recharging property at their location. The refueling property must be used to store or dispense clean-burning fuel, placed in service during the tax year, and primarily inside the United States. The Inflation Reduction Act expands qualified property to include charging stations for 2- and 3- wheeled vehicles, and bidirectional charging equipment. This incentive provides a credit of up to 30% of the cost (with a $100,000 limit) for qualified alternative fuel vehicle refueling property placed in service by applicable entities if certain prevailing wage and apprenticeship requirements are met.
Starting in 2023, qualifying property will be limited to property placed in service within low-income communities or non-urban census tracts. Find out if your location is eligible for this tax credit with guidance from the Department of Energy’s 30C Tax Credit Eligibility Locator (this mapping tool is intended to reflect all eligible locations for the 30C credit but is not formal IRS guidance).
Learn more about the Charging Infrastructure Property Tax Credit here.
USE CASE EXAMPLES____________________________________________________________________
Governments: Local governments can receive this 30% property credit for electric vehicle charging stations installed in low-income communities or non-urban census tracts.
Public Institutions: Schools can receive this 30% property credit toward the purchase and installation of EV and electric school bus charging equipment placed in service within low-income communities or non-urban census tracts.
Nonprofits: Nonprofits can receive this 30% property credit for electric vehicle charging installed in low-income communities or non-urban census tracts.
ACCESS____________________________________________________________________________________
To claim the credit, the applicable entity must complete the pre-filing IRS electronic portal, file the applicable Form 990 (Form 990-T Exempt Organization Business Income Tax Return if the applicable entity does not otherwise file an income tax return), Form 3800 General Business Credit, and Form 8911, Alternative Vehicle Refueling Property Credit.
Grants:
Environmental and Climate Justice Block Grants
DESCRIPTION_____________________________________________________________________________
This $3 billion from the Environmental Protection Agency funds community-led efforts in pollution monitoring, prevention, remediation, and more. Created by the Inflation Reduction Act under the Clean Air Act, this program provides funding for financial and technical assistance to carry out environmental and climate justice activities to benefit underserved communities. The EPA’s IRA Disadvantaged Communities Map can help potential applicants identify whether a community is disadvantaged for the purposes of implementing programs, such as this one, under the IRA.
Learn more here.
ELIGIBLE ENTITIES______________________________________________________________________
Governments
Public Institutions
Nonprofits
Greenhouse Gas Reduction Fund
DESCRIPTION_____________________________________________________________________________
The Solar for All competition under the Greenhouse Gas Reduction Fund is a $7 billion competitive grant funding opportunity run by the Environmental Protection Agency. These funds will go towards 60 recipients to expand access to residential and community solar.
The National Clean Investment Fund is $14 billion in competitive grant funding for 2-3 national nonprofits partnering with private capital providers to catalyze clean technology projects.
The Clean Communities Investment Acceleration is $6 billion in competitive grant funding for 2-7 hub nonprofits to finance clean technology projects and pollution-reducing initiatives.
Learn more about the Greenhouse Gas Reduction Fund here.
ELIGIBLE ENTITIES______________________________________________________________________
Governments
Nonprofits
Clean Heavy-Duty Vehicle Grant and Rebate Program
DESCRIPTION_____________________________________________________________________________
The Clean Heavy-Duty Vehicle Grant and Rebate Program invests $1 billion from the Environmental Protection Agency to local governments, Tribes, non-profit school transportation associations to invest in zero-emission vehicles and infrastructure.
Learn more here.
ELIGIBLE ENTITIES______________________________________________________________________
Governments
Nonprofits
Technical Assistance for the Adoption of Building Energy Codes
DESCRIPTION_____________________________________________________________________________
The Technical Assistance for the Adoption of Building Energy Codes is $1 billion from the Department of Energy to state and local governments that can be used to adopt, implement, and enforce the latest model, zero energy codes or equivalent codes and standards.
Learn more here.
ELIGIBLE ENTITIES______________________________________________________________________
Governments
Charging and Refueling Infrastructure Grant Program
DESCRIPTION_____________________________________________________________________________
The Charging and Refueling Infrastructure Grant Program invests $2.5 billion from the Department of Transportation to states and local governments and other public entities to deploy more charging and refueling infrastructure along “Alternative Fuel Corridors”.
Learn more here.
ELIGIBLE ENTITIES______________________________________________________________________
Governments
Climate Pollution Reduction Grants
DESCRIPTION_____________________________________________________________________________
The Climate Pollution Reduction Grants (CPRG) program provides $5 billion in grants to states, local governments, tribes, and territories to develop and implement ambitious plans for reducing greenhouse gas emissions and other harmful air pollution. Through the Inflation Reduction Act, this two-phase program provides $250 million for noncompetitive planning grants, and approximately $4.6 billion for competitive implementation grants.
Learn more here.
ELIGIBLE ENTITIES______________________________________________________________________
Governments
Air Pollution Monitoring and Screening Grants
DESCRIPTION_____________________________________________________________________________
Through the Inflation Reduction Act, EPA will provide grants to reduce pollution in neighborhoods where people live, work, play, and go to school. Funding includes funds that will support community air pollution monitoring ($117.5 million), multipollutant monitoring ($50 million), reduce diesel emissions ($60 million), and more.
Learn more here.
ELIGIBLE ENTITIES______________________________________________________________________
Governments
Grants to Reduce Air Pollution At Ports
DESCRIPTION_____________________________________________________________________________
The Inflation Reduction Act of 2022 provides EPA with $3 billion to fund zero-emission port equipment and technology and to help ports develop climate action plans to reduce air pollutants at U.S. ports. EPA anticipates this new funding opportunity will become available for application through a notice of funding opportunity (NOFO) released in late winter 2024.
Learn more here.
ELIGIBLE ENTITIES______________________________________________________________________
Governments
Clean School Bus Program
DESCRIPTION_____________________________________________________________________________
With funding from the Bipartisan Infrastructure Law, EPA’s Clean School Bus (CSB) Program provides $5 billion over five years (FY 2022-2026) to replace existing school buses with zero-emission and low-emission models. Under the Program's first funding opportunity, the 2022 CSB Rebates, EPA awarded up to $965 million to fund school bus replacements at nearly 400 schools. EPA anticipates awarding at least $400 million under the 2023 CSB Grants Program Notice of Funding Opportunity (NOFO).
Learn more here.
ELIGIBLE ENTITIES______________________________________________________________________
Public Institutions
Additional Resources:
- White House Clean Energy Tax Provisions in the Inflation Reduction Act
- White House Direct Pay Through the Inflation Reduction Act
Note: This resource page was compiled to raise awareness of new clean energy and electrification incentives for constituents and is not intended to substitute for professional financial advice.
Updated on February 5, 2024 by the House Sustainable Energy and Environment Coalition