Tax-Exempt Entities Remain Eligible for IRS Credits for Solar and Wind through 2027; Geothermal and Energy Storage through 2034-35

News Release
FOR IMMEDIATE RELEASE
July 23, 2026

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NORTHWEST LOWER, MI - Under the Inflation Reduction Act (IRA), tax-exempt entities, such as municipalities, tribal governments, non-profits, public utilities, and public schools, can receive clean-energy-related tax credits through a mechanism called elective pay.

Elective pay, sometimes called direct pay, is designed to make it more cost-effective for tax-exempt organizations to implement and benefit from clean energy and electrification projects, such as solar, wind, geothermal, or energy storage (thermal or battery).  After completing a qualifying project, eligible entities can file for the corresponding credit(s) with the IRS and receive a portion of the capital investments made on the project back in the form of a cash refund.  Credits typically amount to 40% or 50% of eligible project costs.

A solar or wind project that starts construction after July 4, 2026 must be placed in service by December 31, 2027 in order to be eligible for that particular tax credit.  Credits remain available for geothermal and energy storage projects through 2034 and 2035, respectively.

Through funding from the Michigan Infrastructure Office Technical Assistance Center, Networks Northwest provides free assistance to help tax-exempt organizations understand what they need to do to meet the rules for obtaining the credits, and how to navigate the IRS pre-filing application process.  Please contact Stephanie Marchbanks, the region’s Elective Pay Program Ambassador, or visit nwm.org/electivepay for more information.