Governments and Nonprofits: Direct Pay Tax Credits Now Available!

January 10, 2024

Qualifying businesses, tax-exempt organizations or entities such as state, local and tribal governments can take advantage of certain tax credits even if they don’t have taxable income through new elective payment and transfer options. These options can be applied to certain clean energy and manufacturing credits under the Inflation Reduction Act of 2022 and CHIPS Act.

A wide range of clean fuel tax credits and clean energy tax credits can be taken directly through the system for cities, governments and nonprofits.

To monetize applicable credits, an authorized representative of the entity must:

  • Use the IRS online tool to register the intention to make an elective payment or transfer election
  • Include registration numbers received through this online tool on the entity’s tax return

Read more at the IRS webpage below.

The registration tool is part of the IRS business tax account application. For detailed guidance on how to use the tool, refer to Publication 5884, Inflation Reduction Act (IRA) and CHIPS Act of 2022 (CHIPS) Pre-Filing Registration Tool — User Guide and Instructions.