Incentives for Tax-Exempt Organizations

Taking advantage of energy incentives can help your organization cut costs and reduce your environmental footprint.

For example, with these new incentives, you can:

• Get $100,000 off building an EV charger.
• 30% off the costs of installing solar panels.
• Up to $7,500 off new light-duty electric vehicles and $40,000 off new heavy-duty vehicles.

This page breaks down types of projects that can help you save money and modernize your organization by generating renewable energy and purchasing electric vehicles and chargers.

Generating your own renewable energy can help you save money on purchasing electricity, make your business more energy-independent from grid instability, and reduce company emissions to meet sustainability goals. New incentives help make it more affordable to:

• Install solar panels at your business.
• Build energy storage to save excess energy for later.

View renewable energy generation incentives

Electric vehicles typically have lower lifecycle costs than traditional gasoline and diesel vehicles due to lower fuel and maintenance costs. Making the swap to electric vehicles can also create cleaner air in your community and reduce your company's pollution.

Take advantage of incentives to help you:

• Purchase or lease an electric vehicle.
• Install electric vehicle charging equipment.

View electric vehicle and charger incentives

New incentives can support manufacturing investments, production, and facility upgrades if your project reduces industrial emissions or creates components for eligible clean energy equipment or electric vehicles.

Find two examples of tax-exempt clean manufacturing activities below.

• A nonprofit could build a carbon sequestration plant to cut community greenhouse gas emissions, improve local air quality, and get money back on the project with the Credit for Carbon Sequestration 45Q.
• A local government that wants to increase solar electricity production to create job growth can start manufacturing solar panel components at a municipally owned facility and receive a payment from the federal government through the Advanced Manufacturing Production Tax Credit 45X.

View clean manufacturing incentives

Tax-exempt entities are now able to take advantage of key tax credits through direct pay, also known as elective pay. Direct pay is a process in which the Internal Revenue Service (IRS) will provide a payment to eligible organizations for the full value of a tax credit.

How to claim direct pay:

1. Identify the project and the credit you want to pursue.
2. Complete your project.
3. Determine the corresponding tax year your return will be due.
4. Complete pre-filing registration with the IRS before your tax return is due to get a registration number.
   • In general, each registration number corresponds to one clean energy project in one tax year—you will need to renew the number if you need to use it in other tax years.
5. Once you receive a valid registration number, file your tax return by the due date, including extensions.
   • You’ll need to provide your registration number and make the elective payment selection on your tax return (typically a Form 990-T for most entities that don’t normally file a tax return).
   • You also need to provide additional required documentation (forms specific to the tax credit) and underlying credit forms when you file your return.
6. Receive your direct payment.

Read the direct pay frequently asked questions for more information.

Tax-exempt entities are organizations that do not pay federal income taxes. Tax-exempt entities include:

• Political subdivisions such as local governments.
• Indian tribal governments.
• Agencies and instrumentalities of state, local, tribal, and U.S. territorial governments.
• Rural electric cooperatives.
• School districts and universities.
• 501(c)(3) nonprofit organizations such as public charities, hospitals, and houses of worship.
• States.

For a comprehensive list of federal funding programs that public and nonprofit entities can access, check out America’s Federal Funding Opportunities and Resources for Decarbonization (AFFORD).

Disclaimer: None of the information presented on this website should be considered official legal or financial advice. Please contact a licensed tax professional for additional information.