Direct Pay / Elective Pay Provisions in the IRA
New provisions in the IRA expand access to tax credits, allowing tax exempt entities – including local governments, Tribes, nonprofits, schools and community organizations – to qualify for tax credits as a direct payment from the government.
These tax exempt entities can now take advantage of opportunities to electrify their vehicle fleets, install electric vehicle charging infrastructure, invest in solar and energy storage, or implement other green technologies.
What are Elective Pay Provisions in the IRA?
Thanks to the Inflation Reduction Act’s “elective pay” (often called “direct pay”) provisions, tax-exempt and governmental entities can, for the first time, receive a payment equal to the full value of tax credits for building qualifying clean energy projects.
Unlike competitive grant and loan programs in which applicants may not receive an award, direct pay allows entities to get their payment if they meet the requirements for both direct pay and the underlying tax credit.
How Can My Organization Leverage Elective Pay Tax Credits?
The White House has provided guidance about the Elective Pay process:
- Identify the project and the 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 the 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 elective payment.
Additional Resources
Bring clean energy to your community with the help of the IRA.
Bring clean energy to your community with the help of the IRA.
Funding for Tribes in the IRA
President Biden’s Investing in America agenda has secured historic levels of funding for Tribal Nations and Native communities – including more than $720 million in the IRA.
The White House has developed a guidebook that outlines the clean energy, climate mitigation and resilience, agriculture, and conservation-related funding programs in the IRA for which Tribes are eligible, as well as guidance on how Tribes can leverage new and expanded clean energy tax credits to reduce energy costs and pollution on Tribal lands. Download the guidebook here.
How Cities Can Make the Most of IRA Dollars
The Local Energy Rules Podcast is a biweekly podcast about monopoly power, energy democracy, and how communities can take charge to transform the energy system. In this episode, the hosts discuss how cities can use IRA dollars to advance local goals and encourage their residents to do the same.
Additional Resources
Bring clean energy to your community with the help of the IRA.
Bring clean energy to your community with the help of the IRA.
Funding for Tribes in the IRA
President Biden’s Investing in America agenda has secured historic levels of funding for Tribal Nations and Native communities – including more than $720 million in the IRA.
The White House has developed a guidebook that outlines the clean energy, climate mitigation and resilience, agriculture, and conservation-related funding programs in the IRA for which Tribes are eligible, as well as guidance on how Tribes can leverage new and expanded clean energy tax credits to reduce energy costs and pollution on Tribal lands. Download the guidebook here.
How Cities Can Make the Most of IRA Dollars
The Local Energy Rules Podcast is a biweekly podcast about monopoly power, energy democracy, and how communities can take charge to transform the energy system. In this episode, the hosts discuss how cities can use IRA dollars to advance local goals and encourage their residents to do the same.