Billions in Funding is available for USA munis!

Thanks to the Inflation Reduction Act’s “elective pay” (often called “direct pay”) provisions, tax-exempt and governmental entities will, for the first time, be able to 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.

Funding Overview

Direct pay can make it easier for local governments to invest in clean energy and can potentially allow them to take on bigger projects faster to demonstrate climate leadership. Deploying more clean energy into local communities advances environmental justice, helps save residents money, cuts harmful pollution, and improves public health.

Eligibility Requirements

  • State, Local, and Territorial Governments
  • Tribal and Native Entities
  • Rural Energy Cooperatives 
  • Other Tax-Exempt Entities
  • Agencies and instrumentalities of state, local, or territorial governments, including water districts, school districts, economic development agencies, and certain public universities and hospitals

Eligible Tax credits

Production Tax Credit for Electricity from Renewables

  • For the production of electricity from eligible renewable sources, including wind, biomass, geothermal, solar, small irrigation, landfill gas and solid waste resources, hydropower, marine and hydrokinetic energy.
  • Credit Amount: 0.55 cents/kilowatt (kW); (1/2 rate for electricity produced from open loop biomass,
    landfill gas, and trash); 2.75 cents/kW if Prevailing Wage and Apprenticeship (PWA) rules are met

Investment Tax Credit for Energy Property

  • For investment in renewable energy projects including fuel cell, solar, geothermal, small wind, energy storage, biogas, microgrid controllers, and combined heat and power properties.
  • Credit Amount: 6% of qualified investment (basis); 30% if PWA requirements met

Low-Income Communities Bonus Credit

  • Additional investment tax credit for small-scale solar and wind (§ 48(e)) or clean electricity (§48E(h)) facilities (<5MW net output) on Indian land, federally subsidized housing, in low-income communities, and benefit low-income households. Allocated through an application process
  • Credit Amount: 10 or 20 percentage point increase on base investment tax credit

Credit for Qualified Commercial Clean Vehicles

  • For purchasers of commercial clean vehicles. Qualifying vehicles include passenger vehicles, buses, ambulances, and certain other vehicles for use on public streets, roads, and highways.
  • Credit Amount: Up to $40,000 (max $7,500 for vehicles <14,000 lbs)

May 15, 2024

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