The IRS’ IRA Direct Pay Guidance Underscores How Communities Can Unlock a Clean Energy Future

Following the Internal Revenue Service’s (IRS) release of guidance on Elective Payment of Applicable Credits for the Inflation Reduction Act’s (IRA) tax credits, Evergreen Action Deputy Policy Director Rachel Patterson released the following statement:

“The IRA’s tax credits may very well be dubbed the key that unlocks our clean energy future. By taking advantage of the ‘direct pay’ provision for IRA tax credits, state, local, and Tribal governments, governments of U.S. territories, agencies, rural electricity co-ops, and nonprofits with federal tax-exempt status will be able to get the full value of tax credits up front. This will allow local control over projects that ramp down pollution while reaping benefits like community ownership, lower energy costs, and local workforce participation. 

“The guidance released today by the IRS opens the door for large and small nonprofit entities to invest in the next generation of energy resources. Governments with fewer capital resources, like small municipalities, Tribal governments and governments of U.S. territories, will now have a fair playing field when it comes to owning and deploying clean energy. And the guidance includes nonprofits with federal tax-exempt status, meaning local organizations will be able to play a role in securing clean energy.

“Every community deserves to have a stake in the clean energy investments that will power the next generation. By making direct pay available to tax-exempt government entities and rural co-ops for the first time, this guidance expands access to clean energy investments and accelerates the path to a zero emissions reality.”