New Federal Energy Tax Credit for Nonprofits

There is important news for your nonprofit in the “Inflation Reduction Act of 2022” that President Biden recently signed into law.Among its provisions, the law contains a new source of financial support for day schools, shuls and other nonprofits. By amending Internal Revenue Code 179D, nonprofits can now benefit from current energy-related tax credits by making them transferable.    For more than 10 years, OU Advocacy fought to expand the federal tax credits for energy efficiency measures to include nonprofits and not just businesses.The new law is a tremendous victory for day schools, shuls and other nonprofits, allowing them to make energy efficiency improvements to their buildings and transfer the value of the credit to for-profit companies designing or installing the new energy systems. The company would then deduct the value from its invoice to the nonprofit. Nonprofits can start using this new source of support beginning in January 2023. You can start planning energy efficiency upgrade projects now, while you wait for the IRS to issue more detailed implementing regulations in the next few months.We will keep you informed of these and other upcoming developments in the coming months.