Direct Pay Provision of the Inflation Reduction Act
The Inflation Reduction Act (IRA) is one of the largest investments in clean energy in the history of the world. The rebates for green technologies are provided through the tax code, which typically keeps government and non-profit organizations out.
However, the direct pay provision of the IRA provides direct payments of these rebates for tax-exempt organizations. All that is required is proof of purchase of investments made in qualifying clean energy technologies.
Potential projects include microgrid reinforcement with battery storage, solar on municipal rooftops that contribute energy to the overall grid, conversion of municipality fleets to electric, and more.
Frequently asked questions
There are no limits to the credits available. If a qualifying purchase is made, a rebate will be provided, regardless of the amount.
The amount of credit received is stackable. It will depend on qualities met by the project or the types of products purchased. For more detail on qualifying projects and products see page 13 of the IRS presentation linked below.
Rebates can also be combined with grants to cover the costs of projects. Rebates will not exceed the cost remaining after grants are applied.
Relevant Resources
IRS Factsheet on tax incentives and the elective/direct pay provision
IRS step by step application process
White House Overview of the direct pay provision
IRS presentation from the direct pay provision workshop
- UConn CIRCA Guidance document
CT Institute for Resilience and Climate Adaptation outline of IRA energy opportunities
