The Direct Pay provisions in the Inflation Reduction Act of 2022 (IRA) unlocked the potential for cities, nonprofit organizations and other tax-exempt entities to utilize clean energy tax incentives. Cities and nonprofits have been historically ineligible for federal tax benefits because they do not owe federal taxes. Direct Pay (also called “Elective Pay”) has changed this dynamic by providing cash payments equal to the value of the tax benefit.
Direct Pay Questions and Answers
Answers to questions asked during Local Infrastructure Hub webinars that covered Direct Pay.
IRA: Putting Direct Pay into Action
December 12, 2023
- Webinar Recording & Summary: How cities can use Direct Pay tax credits to transition toward a clean energy economy in their Climate Action Plans and finance planning
- Direct Pay: Full Report: This resource will help you identify clean energy and clean vehicle projects that are eligible under IRA Direct Pay; which federal grants can be paired with these tax credits; and which tax credits are eligible for Direct Pay.
- Promoting Clean Energy Projects Through Direct Pay: Use this resource to help you identify what kind of clean energy projects are eligible under IRA Direct Pay, which tax credits can be used for clean energy projects, and which federal grants can be paired with these tax benefits.
- Promoting Clean Vehicles Through Direct Pay: Use this resource to help you identify what kind of clean vehicle projects are eligible under IRA Direct Pay, which tax credits can be used for clean vehicle projects, and which federal grants can be paired with these tax benefits.
- Understanding the Direct Pay Provisions in the Inflation Reduction Act : Use this resource to understand how Direct Pay works, what tax benefits are eligible for direct pay, and review some example projects that have been done using Direct Pay.
- Innovative Climate Financing in Denver: Discover how Denver is using Inflation Reduction Act (IRA) Direct Pay can be used alongside existing revenue streams to enable greater investments in climate action and sustainability projects.
- Fleet Electrification in Madison: Discover how Madison is focusing on fleet electrification to identify Direct Pay eligibility under IRA.
IRA Guidance for Local Leaders: Direct Pay
July 18, 2023
- Webinar Recording – IRA Guidance for Local Leaders: Direct Pay: Strategies for local leaders to unlock the full potential of IRA and move forward on their climate priorities.
- Webinar Slides – IRA Guidance for Local Leaders: Direct Pay