The Inflation Reduction Act of 2022 (IRA) has changed the game for nonprofits by creating a direct pay version of the solar Investment Tax Credit (ITC). Now, nonprofits have just as much to gain by going solar as for-profit businesses.
The federal solar tax credit allows for-profit businesses to receive a tax credit worth 30% of their total installation costs when they install solar panels and/or battery storage. The new direct pay option allows not-for-profit organizations to benefit from this incentive even though they do not pay taxes. Non-profits can now receive a direct payment for 30% of their total solar energy system installation costs, making solar installation easier and more affordable.
Any organization that has tax-exempt status with the federal government is eligible for the nonprofit solar tax credit direct pay option. Some examples are:
