Harvest the Sun for Your Non-Profit Organization!

The Inflation Reduction Act of 2022 gives tax-exempt entities equal access to clean energy incentives by introducing the direct pay (a.k.a. elective pay) option. This allows qualifying tax-exempt entities to receive a direct payment from the Internal Revenue Service (IRS), in lieu of a tax credit.

• From the years 2023 to 2032, tax-exempt entities can claim direct pay tax incentives when installing a clean energy project in their properties.
• Qualified entities installing eligible clean energy upgrades can benefit from direct pay/elective pay if they have “placed into service” such upgrades after January 1, 2023.
• Thanks to this new option, nonprofits, including houses of worship, theaters, libraries, animal shelters, community health centers, and museums, can better afford clean energy upgrades. The resulting savings can be used to advance these nonprofits’ missions and expand services to disadvantaged communities.
• Most organizations and entities will be eligible for tax incentives of between 30 and 50 percent of the project’s total cost, depending on the project’s location and how much of the hardware content is produced domestically.
• Altogether, tax-exempt entities installing clean energy systems in energy community-designated census tracts and low-income residential buildings may receive up to 70 percent of their renewable energy project’s costs.

Reference: Environmental and Energy Study Institute – 9/14/2023: https://www.eesi.org/articles/view/direct-pay-nonprofits-can-now-benefit-from-clean-energy-tax-credits

By: Steve Kliman | November 13th, 2023 | News