Is Your Nonprofit Doing Green Construction or Renovation?

Is your nonprofit, healthcare or educational institution planning to undertake any construction or renovating or purchasing electric vehicles – snow blowers, lawn mowers, forklifts or other commercial vehicles? The exciting news is that now exempt organizations may be eligible for cash tax credits – even if they don’t have unrelated business income tax!

Green energy tax credits are available to tax-exempt organizations starting in 2023, as a result of the landmark Inflation Reduction Act that passed last August. It’s expected to generate billions of dollars of tax credits. The IRS and Treasury have recently issued proposed and temporary regulations on these green energy tax credits – allowing cash refunds – called “direct pay” for exempt and governmental entities.

You will want to see if this valuable cash tax refund is available for your organization! We invite you to join us for CLA’s upcoming webinar on August 16^th – Unlocking Green Energy Tax Credits From the Inflation Reduction Act: 2023 Event. You can register here!

The green energy tax credit is a great opportunity for all types of exempt organizations: charities, religious, associations, business leagues, hospitals and educational institutions – both private and public universities. It also applies to other non-taxpaying governmental agencies and instrumentalities.

There are twelve types of specific clean energy tax credits that are available to tax-exempt and other non-taxpaying entities. This is the first time these types of credits are available to nonprofits.

The credits are generally 6% for these green energy investments, with substantial increases in the tax credits to 30% or higher, under certain circumstances. The main incentive for obtaining the higher credits is for the project to employ and pay workers “prevailing wages” and to use apprentices from qualified programs. This is to encourage the policy priority of creating good paying jobs. Other higher tax credit percentages are obtained by using materials and supplies produced domestically. 

Read about the green tax credit opportunity in more detail in CLA’s recent article Inflation Reduction Act Credit Monetization Programs Take Shape : 2023 : Articles : Resources : CLA (CliftonLarsonAllen) (claconnect.com)

Also, follow along with our next blogs on when and how to claim these green energy tax credits, the latest guidance about projects made through partnerships and what happens when the project is funded by a grant.

These credits opportunities to reduce net capital expenditures for energy efficient investments are truly significant! CLA’s energy incentives team can help your organization navigate the available tax credits.