Elective Pay (Direct Pay) for Clean Energy Tax Credits

Elective Pay (Direct Pay) for Clean Energy Tax Credits is sponsored by U.S. Department of Energy (DOE). This program, enabled by the Inflation Reduction Act, allows nonprofits to receive direct cash payments for qualifying clean energy or transportation projects, equivalent to the full value of tax credits. Nonprofits can get up to 70% of the project cost back.

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* Contact Us Access general information and ways to connect with the Department of Energy. * Internships & Fellowships * Apprenticeships & Workforce Development #### What is Elective Pay?

Elective Pay (also called “direct pay”) allows applicable entities that do not owe Federal income taxes to, for the first time, receive a payment equal to the full value of tax credits for building qualifying clean energy projects or making qualifying investments.

Unlike a competitive grant program, entities are eligible to get their payment if they meet the requirements for both elective pay and the underlying tax credit (however, some incentives do require an application and allocation). #### Who is eligible for Elective Pay? * State and Local governments (including D.

C.) , Territorial governments, Federally Recognized Tribes, and Alaska Native Corporations. * Agencies and instrumentalities of State, Local, Tribal, and Territorial governments.

Examples include water districts, school districts, economic development agencies, certain public universities and hospitals, and energy or natural resource agencies. * Public power utilities, including municipal electric utilities and rural electric cooperatives. * All tax-exempt organizations under sections 501 through 530 of the U.S. tax code, including all 501(c)(3) organizations and religious 501(d) organizations.

Examples include public charities, private foundations, social welfare organizations, labor organizations, schools, hospitals, and houses of worship. * Partnerships, even if all the partners are individually eligible, are not eligible for elective pay.

However, certain joint operating arrangements can “elect out” of being treated as a partnership under the tax code in order to permit eligible co-owners to elect to receive an elective payment on their share of eligible credits. #### What is Transferability?

Transferability allows entities that can't use elective pay but do qualify for an eligible tax credit to transfer (i.e. sell) all or a portion of the credit to a third-party buyer in exchange for cash. The buyer and seller would negotiate and agree to the terms and pricing.

DOE Elective Pay Resources How to Access Clean Energy Tax Credits in the U.S. Territories Using Elective Pay - Fact Sheet How to Access Clean Energy Tax Credits Using Elective Pay - Churches and Religious Orgs How to Access Clean Energy Tax Credits Using Elective Pay - Non-profit Orgs How to Access Clean Energy Tax Credits Using Elective Pay - Public Power Utilities How to Access Clean Energy Tax Credits Using Elective Pay - Schools and Universities How to Access Clean Energy Tax Credits Using Elective Pay - State and Local Govs How to Access Clean Energy Tax Credits Using Elective Pay - Tribes and ANCs Elective Pay - Blueprints for Communities This funding opportunity from the DOE is supporting the development and distribution of blueprints to serve as a resource to communities as they plan and develop projects which are eligible for clean energy tax credits through Elective Pay or the 179d energy efficient commercial building property tax deduction.

Blueprints developed through this funding opportunity will help guide interested entities through all stages of a sample project, identifying important considerations, opportunities, and restrictions along the road to claiming Elective Pay. A total of $915,000 in funding was made available through this opportunity, and applications are now closed.

Blueprints produced by the selectees for this opportunity will be distributed widely and made available here when complete. The opportunity is managed by ENERGYWERX in partnership with DOE, a collaboration made possible through an innovative PIA set up by DOE's Office of Technology Transitions.

Other Federal Elective Pay Resources * Internal Revenue Service * Elective Pay and Transferability * Elective Pay and Transferability FAQs * Pre-filing Registration Tool & User Guide * Frequently Asked Questions - PWA Requirements * U.S. Department of the Treasury * Inflation Reduction Act Homepage * Direct Pay Through the Inflation Reduction Act Committed to Restoring America’s Energy Dominance.

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