Incentives for Tax-Exempt Organizations

What qualifies: A tax credit for producing clean electricity at a facility that sells it. The credit is good for 10 years after the equipment is placed in service. To be eligible, the clean electricity facility must be:

• Located in the United States or US territories
• Using equipment that is new or being used for the first time

For projects beginning before January 1, 2025, eligible facilities are limited to facilities generating electricity from wind, biomass, geothermal, solar, small irrigation, landfill and trash, hydropower, and marine and hydrokinetic renewable energy. This tax credit is called the Production Tax Credit for Electricity from Renewables, 45.

For projects beginning after January 1, 2025, the tax credit is technology-neutral, and eligible facilities are defined as those with zero emissions electricity generation. The tax credit then changes name to the Clean Electricity Production Tax Credit 45Y.

Incentive value:

For projects beginning before January 1, 2025

• Base credit amount of 0.3 cents/kWh, adjusted for inflation.
• Credit is increased by 5 times for projects meeting prevailing wage and registered apprenticeship requirements.
• Credit is increased by 10% if the project meets certain domestic content requirements for steel, iron, and manufactured products.
• Credit is increased by 10% if located in an energy community. See if your location is eligible here.

For projects beginning after January 1, 2025

• The base credit amount is 0.3 cents/kWh and can be adjusted for inflation up to 1.5 cents/kWh.
• Credit is increased by 5 times for projects meeting prevailing wage and registered apprenticeship requirements.
• Credit is increased by 10% for projects meeting certain domestic content requirements for steel, iron, and manufactured products.
• Credit is increased by 10% if located in an energy community. See if your location is eligible here.
• You may not combine the Clean Electricity Investment Tax Credit 48E and Clean Electricity Production Tax Credit 45Y for the same facility.

For both credits, you may transfer the credit by selling all or a portion of the tax credit to an unrelated taxpayer. Credits from a single property can be sold to multiple buyers in the same tax year. Direct pay is available for tax-exempt organizations.

Who is eligible: Producers of clean electricity, including tax-exempt organizations.

When the credit is available: For projects placed in service after December 31, 2024 through 2032 or when US greenhouse gas emissions from electricity are 25% of 2022 emissions or lower.

How to claim the credit: Eligible electricity producers must fill out form 8835 to claim the credit when filing their taxes. Additional guidance may come on applying for 2025 tax credits.

Tax-exempt entities must follow the instructions for direct pay. Preregister with the IRS and submit annual tax paperwork, typically a Form 990-T for most entities that don’t normally file a tax return.

Organizations that wish to transfer their tax credits must pre-register with the IRS before the tax return is due and receive a registration number.

See more information on this tax credit here.

What qualifies: A tax credit for the investment costs of installing eligible energy or electricity equipment.

For projects beginning before January 1, 2025, eligible energy investments can include wind, solar, geothermal, clean hydrogen, marine and hydrokinetic, biogas, microgrid controllers, fuel cell, interconnection property, and energy storage. For projects beginning after January 1, 2025, the tax credit is technology-neutral and eligible facilities are defined as investment in projects for the generation of zero-emissions electricity.

Incentive value: Base credit is 6% of qualified investments.

• Credit is increased by 5 times for facilities meeting prevailing wage and apprenticeship requirements.
• Credit is increased by up to 10% for facilities meeting certain domestic content requirements for steel, iron, and manufactured products.
• Credit is increased by up to 10% if located in an energy community. See if your location is eligible here.

You may transfer the credit by selling all or a portion of the tax credit to an unrelated taxpayer. Direct pay is available for tax-exempt organizations.

You may not combine the Clean Electricity Investment Tax Credit 48E and the Clean Electricity Production Tax Credit 45Y for the same facility.

Who is eligible: Builders of clean electricity and energy storage facilities, including tax-exempt organizations.

When the credit is available: Facilities placed in service after December 31, 2024 through 2032 or when US greenhouse gas emissions from electricity are 25% of 2022 emissions or lower.

How to claim the credit: Additional guidance may come on applying for 2025 tax credits.

Tax-exempt entities must follow the instructions for direct pay. Preregister with the IRS and submit annual tax paperwork, typically a Form 990-T for most entities that don’t normally file a tax return.

Organizations that wish to transfer their tax credits must pre-register with the IRS before the tax return is due and receive a registration number.

See more information on this tax credit here.

What qualifies: The following investments on Indian land, federally subsidized housing, in low-income communities, or as a qualified economic benefit project.

• 48(e): a small-scale solar, wind, and/or energy storage facility that generates less than 5MW bonus credit for 2023 and 2024.
• 48E(h): a small-scale technology-neutral clean electricity generation bonus credit for facilities with a less than 5MW net output from 2025 to 2032.

Incentive value: Base credit is 6% of qualified investments.

• Credit is increased by 10% for projects located in low-income communities or on Tribal land.
• Credit is increased by 20% for projects that are part of certain federally subsidized housing programs or that offer at least 50% of the financial benefits of the electricity produced to low-income households. This bonus amount will require an application by the taxpayer.

Tax credit can be combined with other credits.

Direct pay is available for tax-exempt organizations.

Who is eligible: Owners of eligible facilities, including tax-exempt organizations.

When the credit is available:  48(e) is available for projects that come online through December 31, 2024. 48E(h) Clean Electricity Investment Tax Credit becomes available in 2025 through 2032.

How to claim the credit: Applications for 48(e) opened on May 28, 2024 here. Additional guidance may come on applying for 48E(h).

Since there are two tax credits — the investment tax credit (ITC) and production tax credit (PTC) — to build or purchase renewable energy systems, the Department of Energy created key resources to help inform your decision.

The Department of Energy has published the following guidance:

“The ITC is an upfront tax credit that does not vary by system performance, while the PTC provides tax credits earned over time. Whether to choose the ITC or the PTC depends largely on the cost of the project, the amount of sunlight available, and whether it is eligible for any bonus tax credits. See an example calculation below.

In general, large-scale PV projects will receive more value if they opt for the PTC in sunny places, while projects located in less sunny areas, that incur high installation costs, or that qualify for bonus tax credits, are more likely to benefit from the ITC.

Smaller-scale PV projects and CSP projects generally receive more value utilizing the ITC, particularly if they can utilize a low-income communities bonus, which is not available with a PTC. However, as installed PV and CSP system costs reduce over time (or generate more electricity), the PTC may become more attractive for all sectors.”

Summary of Investment Tax Credit and Production Tax Credit Values Over Time

What qualifies: The 45W tax credit is for businesses and tax-exempt organizations to purchase qualified commercial clean vehicles. You may use this credit on as many qualified vehicles as you purchase (there is no cap).

In addition, eligible vehicles must either be:

• A plug-in electric vehicle with a battery capacity of:
  • 7 kilowatt hours if the gross vehicle weight rating (GVWR) is under 14,000 pounds
  • 15 kilowatt hours if the GVWR is 14,000 pounds or more

• A fuel cell motor vehicle that satisfies the requirements of IRC 30B(b)(3)(A) and (B).

Eligible vehicles must be:

• Manufactured primarily for use on public roads or mobile machinery as defined in IRC 4053(8)
• Made by a qualified manufacturer
• For use in your business, not for resale
• Not have been allowed a credit under sections 30D or 45W
• Be for use primarily in the United States

Incentive value: The credit is the lesser of 15% of the vehicle’s basis (30% if the vehicle is not powered by gas or diesel) or the incremental cost of the vehicle. The credit is capped at $7,500 for vehicles with a gross vehicle weight rating (GVWR) under 14,000 pounds and $40,000 for all other vehicles.

Credits are nonrefundable. Credits may be carried over as a general business credit but cannot exceed the taxes owed. There is no limit on the number of credits a business can claim.

Direct pay is available for tax-exempt organizations.

Who is eligible: Businesses and tax-exempt organizations.

When the credit is available: For qualified purchases from January 1, 2023, to January 1, 2033.

How to claim the credit: Partnerships and S corporations must file Form 8936, Clean Vehicle Credits. All other taxpayers can report this credit directly on line “1aa” in Part III of Form 3800, General Business Credit.

Tax-exempt entities should follow the instructions for direct pay. Preregister with the IRS and submit annual tax paperwork, typically a Form 990-T for most entities that don’t normally file a tax return.

Visit the federal website here for more details on what qualifies and how to use the credit.

What qualifies: The 30C tax credit can be used to install qualified vehicle refueling and recharging equipment for electricity, ethanol, natural gas, hydrogen, and biodiesel vehicles. Eligible equipment includes bidirectional charging and charging for 2- and 3-wheel vehicles.

The credit only applies to projects in eligible census tracts. You can search your location on this 30C eligible location map to see if your property qualifies.

To qualify, your project must meet the following criteria:

• Equipment must be new or be used for the first time.
• The refueling station must be in the United States.

This tax credit can also be used by an individual to install charging at your home. Find more information on that here.

Incentive value: 6% credit, up to $100,000 per item. The credit is increased to 30%, with the same $100,000 per item cap, if prevailing wage and apprenticeship requirements are met.

Who is eligible: Businesses, tax-exempt organizations, and individuals placing qualified refueling projects.  

When the credit is available: The 30C credit is available for purchases on or after January 1, 2023, through 2032. You are eligible for the credit the year the project is operational.

How to claim the credit:

• Check the 30C eligible location map to confirm your location is eligible.
• Use Form 8911 to figure and report your credit for alternative fuel vehicle refueling project for the tax year when the alternative fuel recharging project is operational. Partnerships and S corporations must file Form 8911, while other taxpayers can report directly on Form 3800.

Tax-exempt entities should follow the instructions for direct pay. Preregister with the IRS and submit annual tax paperwork, typically a Form 990-T for most entities that don’t normally file a tax return.

What qualifies: Manufacturing of components for solar and wind energy, inverters, battery components, and critical minerals. The credit aims to make the domestic production of the components in these industries cost-competitive with international manufacturing.

Incentive value: The credit is determined by the production quantity for each technology. Click here to find a specific credit value for the component you are interested in manufacturing.

You may transfer the credit by selling all or a portion of the tax credit to an unrelated taxpayer.

Direct pay is available for tax-exempt organizations.

You may not combine the Qualifying Advanced Energy Project 48C with the Advanced Energy Project Credit 45X for the same facility.

Who is eligible: Domestic manufacturers and tax-exempt entities.

When the credit is available: Credit for critical minerals is permanent starting in 2023. For other items, the full credit is available from 2023 through 2029 and phases down from 2030 through 2032.

How to claim the credit: Form 7207 is used to claim the advanced manufacturing production credit under section 45X for eligible components produced and sold. Partners, S corporation shareholders, and beneficiaries of estates and trusts are generally not required to file Form 7207 if their only source for the credit is the pass-through entity. Instead, they can report this credit directly on Form 3800, General Business Credits.

Tax-exempt entities should follow the instructions for direct pay. Preregister with the IRS and submit annual tax paperwork, typically a Form 990-T for most entities that don’t normally file a tax return.

Organizations that wish to transfer their tax credits must pre-register with the IRS before the tax return is due and receive a registration number.

For more information, see section 45X and Notice 2022-47

What qualifies: Sale or use of sustainable aviation fuel (SAF), which achieves a lifecycle greenhouse gas emissions reduction of at least 50% compared to petroleum-based jet fuel; production and aircraft fueling must occur in the United States.

Incentive value: Base credit of $1.25/gallon of SAF. Bonus credit of $0.01/gallon for each percentage point by which the SAF lifecycle greenhouse gas emissions are reduced above 50% compared to petroleum-based jet fuel, up to $0.50/gallon.

Who is eligible: Registered producers or blenders of sustainable aviation fuel.

When the credit is available: SAF sold or used after December 31, 2022, and before January 1, 2025.

How to claim the credit: There are two ways to claim the SAF credit. The first is through an excise tax claim. The second is through a general business credit that is nonrefundable and must be included in income. There are no direct pay or transferability options for this credit. See Notice 2023-06 for additional details.

What qualifies: A credit for the production and sale of clean transportation fuels emitting no more than 50 kilograms of CO₂ per 1 million British Thermal Units (kg/MMBtu). The fuel must be suitable for use in highway vehicles or aircraft. The tax credit is intended to encourage the production of clean fuels with 50% lower greenhouse gas emissions than petroleum.

Incentive value: The credit value is based on a sliding scale, increasing towards the maximum as GHG emissions of the fuel approach zero.

• The maximum credit amount is $0.20 per gallon for non-aviation fuel and $0.35 per gallon for aviation fuel.
• If prevailing wage and apprenticeship requirements are met, the maximum credit amount is $1.00 per gallon for non-aviation fuel and $1.75 per gallon for aviation fuel.

Direct pay is available for tax-exempt entities.

You may transfer the credit by selling all or a portion of the tax credit to an unrelated taxpayer.

Facilities cannot claim both the Clean Fuel Production Tax Credit 45Z and other specific credits like the Clean Hydrogen Production Tax Credit 45V.

Who is eligible: Clean fuel producers registered with the IRS, with production facilities in the U.S. and its territories, who produce fuel meeting the specified emissions criteria. Producers can include tax-exempt organizations.

When the credit is available: For qualifying transportation fuel produced on or after January 1, 2025, and sold on or before December 31, 2027.

How to claim the credit: Additional guidance on applying for 2025 tax credits to come. Find more information on this tax credit here.

What qualifies: Projects that capture carbon oxides (including CO2) directly from the atmosphere or from industrial and power facilities. A performance-based tax credit for projects that capture storage of carbon dioxide (CO₂) from the atmosphere or industrial and power facilities. The credit can be realized for 12 years after the carbon capture equipment is operational or 5 years if transferred. Projects must meet carbon capture thresholds.

Eligible projects include:

• Secure storage of captured carbon dioxide (CO₂) in appropriate geologic formations, including saline or other geologic formations or oil and gas fields
• Reuse of captured CO₂ or carbon monoxide (CO) as a feedstock to produce low embodied carbon products such as fuels, chemicals, and building materials

Incentive value: Credit amounts are determined by technology type and the amount of CO2 sequestered or reused. For details on credit amounts please click here.

Tax exempt entities can utilize direct pay. All other entities are allowed a one-time transfer to sell their credits another entity.

Who is eligible: Owners of eligible carbon capture equipment, including tax exempt entities.

When the credit is available: For qualifying projects that start construction between January 1, 2023, and January 1, 2033.

How to claim the credit: Use Form 8933 to claim the 45Q carbon oxide sequestration credit. Preregister with the IRS and submit annual tax paperwork, typically a Form 990-T for most entities that don’t normally file a tax return.

What qualifies: A credit for the production clean hydrogen. The credit provides a varying, four-tier incentive depending on the carbon intensity of the hydrogen production pathway. Hydrogen can be produced in new or retrofitted facilities. The credit can be claimed for 10 years beginning with the date the facility is operational.

The credit measures emissions up to the point of production using the Argonne National Laboratory Greenhouse gases, Regulated Emissions, and Energy use in Technologies (GREET) Model and, more specifically, 45VH2-GREET.

Incentive value: The level of the credit provided is based on carbon intensity, up to a maximum of four kilograms of CO₂-equivalent per kilogram of H₂.

Credit value increases 5-fold if prevailing wage standards and apprenticeship requirements are met.

Clean Hydrogen Production Tax Credit 45V can be used in combination with the renewable energy production tax credit and zero-emission nuclear credit. The Clean Hydrogen Production Tax Credit 45V cannot be used with the Carbon Capture and Sequestration Tax Credit 45Q at the same facility.

Tax-exempt entities can utilize direct pay.

Who is eligible: Qualified hydrogen producers, including tax-exempt entities.

When the credit is available: 45V is available for projects that begin construction by 2033.

How to claim the credit: Use Form 7210 to claim the 45V Clean Hydrogen Production Credit. Preregister with the IRS and submit annual tax paperwork, typically a Form 990-T for most entities that do not normally file a tax return.

For more information on the 45V Clean Hydrogen Production Credit, click here.