By Catherine Clifford | CNBC
Federal agencies on Wednesday paved the way for state, city and local governments and other nonprofit entities to join the private sector in accessing the lucrative tax credits included in the Biden administration’s landmark climate bill.
The U.S. Department of the Treasury and Internal Revenue Service on Wednesday released guidance on what tax-exempt entities need to do to access the credits the provisions that were included in the Inflation Reduction Act, which President Joe Biden signed into law in August.
In the 10 months since the IRA passed, private sector companies have announced more than $107 billion in new clean energy investments, John Podesta, senior advisor to the president for clean energy innovation and implementation, said on a call with reporters on Tuesday.
Conventionally, states, territories, tribes, local governments and nonprofits have not been not eligible for tax credits, because they do not derive profits from which to deduct the value of a tax credit.
The IRA changed that.
“The Inflation Reduction Act’s biggest tools are tax credits, which provide an unprecedent 10 years of policy certainty for the clean energy sector,” Podesta said.
“For the first time, tax-exempt entities will be able to receive a payment equal to the full value of the tax credit for building qualifying clean energy projects,” Podesta said. “That’s a game-changer for our ability to spread the benefits of clean energy to every community in America.”
The IRA opens new doors for not-for-profits to access clean energy tax credits there were previously only available to taxpayers. This much anticipated guidance is an important step to unlocking the full potential of this policy. -Court Rich, Rose Law Group co-founder
