The Inflation Reduction Act (IRA) of 2022 introduced a provision that allows for the transferability of certain clean energy tax credits. This means that businesses, non-profits, and other eligible entities can sell or purchase these tax credits rather than having to use them directly. Here’s how it works:

1. Transferability of Tax Credits:

   • Instead of needing tax liability to benefit from credits, entities can sell their unused credits to those who can use them.

   • This creates a market where tax credits can be monetized, helping companies finance clean energy projects.

2. Applicable Credits:

   • The IRA allows transferability for a variety of renewable energy and clean technology credits, including those for:

     • Solar and wind energy production

     • Carbon capture and storage

     • Clean hydrogen production

     • Advanced manufacturing of clean energy components

3. One-Time Transfers:

   • The credits can be sold only once (no secondary resales).

4. Tax-Exempt Entities Benefit:

   • Non-profits, municipalities, and other tax-exempt organizations—previously unable to benefit from tax credits—can now sell them for cash, making clean energy investments more viable.

This provision incentivizes investment in clean energy by making tax credits more accessible and liquid, reducing financial barriers to energy development.