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Inflation Reduction Overview

If fully implemented, IRA will reduce U.S. carbon emissions by ~40% by 2030, making it the U.S.’s most ambitious climate crisis bill yet.
Most programs run through EPA and DOE, but also some through USDA, HUD, DOI, DOT, and Commerce. Availability of funds is sometimes conditioned on the beneficiary ensuring that laborers are paid prevailing wages in the relevant region (as determined by DOL) and a minimum amount of apprenticeship labor is used.

The Inflation Reduction Act (IRA) authorizes $370 billion in federal funding to invest in domestic energy production, energy efficiency upgrades, clean transportation, climate-ready agriculture and resilience, and clean manufacturing.

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Inflation Reduction Overview

At its simplest interpretation, the IRA looks to achieve three things:

Cleaner, Cheaper and More Secure Energy Grids

Built Environments Ready to Take Full Advantage

Community Benefits and Environmental Justice

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Inflation Reduction Overview

Selected Guaranteed Incentives	Selected Competitive Funding Opportunities
Investment Tax Credit Production Tax Credit Commercial Electric Vehicle Tax Credit Refueling Infrastructure Tax Credit Commercial Buildings Energy Efficiency Tax Deduction Home Electrification for low-, moderate- and high-income households	R&D Hydrogen and Fuel Cell Technologies Sustainable Aviation Fuels Next Generation Materials and Manufacturing Environmental Justice Environmental and Climate Justice Block Grants Neighborhood Access and Equity Grants Climate Pollution Reduction Green Bank Competitive Funds for Non-Federal Foresters
Accessed via IRS forms, guaranteed dollars if projects meet Federal requirements.	Must be applied for at the Agency level via competitive process. May not receive even if all requirements are met.

The IRA contains a myriad of funding opportunities that can be broken into two buckets: Guaranteed Incentives and Competitive Funding. Each bucket requires a different approach to access the funding.

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Guaranteed Incentives

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If my organization is tax-exempt, can we benefit from tax credit programs?

IRA allows governments and other tax-exempt entities (such as nonprofits) to receive direct pay instead of a tax credit for most incentives.

Can treat tax credits such as ITC, PTC and Electric Vehicle Tax Incentives as payments and receive a refundable credit.
The new direct pay election is available to all 501(c)(3) colleges and universities, private and public. Public universities that are classified as either 1) an integral part of their state, or 2) a political subdivision are eligible for the direct pay election. Instrumentalities are absent from the eligibility list.

For Energy Efficiency Incentives for buildings, the credit will work as a cost deduction rather than direct payment.

Savings from the Energy Efficiency Incentives will be passed on to the architect, designer, or contractor, and then passed on to the building owner.

Information for Tax-Exempt Entities

Source: Power Options, NACUBO Tax Credits.

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What type of tax credit programs are available?

Investment Tax Credit (ITC) – For solar, standalone energy storage and interconnection costs.

Base rate of 6% that increases to 30% if Wage and Apprenticeship requirements are met. Exception for microturbines, which have 2% base rate and 10% bonus credit rate.
Bonus tax credits available for domestic content requirements, when a project is located in low-income communities, or for “Energy Communities”.

Production Tax Credit (PTC) – For solar energy facilities and may be more lucrative than the ITC for high producers. Expires in 2032, no $ cap.

Generates credit for each kilowatt-hour produced for the first 10 years of a project, as opposed to the ITC which provides full credit value upfront.
Base rate is 0.3 cents/kWh and max rate is 2.6 cents/kWh if Wage and Apprenticeship requirements are met.

Solar Tax Incentives

Source: Department of Energy; Power Options.

X 1,000

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What type of tax credit programs are available?

Commercial Electric Vehicles Tax Credit – Expires January 1, 2033.

Purchase a qualified commercial clean vehicle and receive a tax credit of up to 30% of the cost of an eligible electric vehicle OR the incremental cost between the electric vehicle and a comparable internal combustion vehicle (whichever is less).
Hybrid vehicles that have an internal combustion engine and at least a 15-kWh battery qualify for a 15% credit.
The maximum credit amounts are based on the weight, with heavy-weight vehicles (over 14,000lbs) capped at $40,000, and light-weight vehicles (less than 14,000lbs) capped at $7,500

Refueling Infrastructure Tax Credit – Expanded retroactively through the beginning of 2022 and will go through 2032, with credit phasedown 2033-2035.

New maximum credit of either $100,000 or 30% of the cost per charger (whichever is less). Must comply with Wage and Apprenticeship requirements, otherwise the base credit is 6%.
2- and 3-wheel vehicle (e.g., e-bike) charging can qualify if placed on public roads.

Electric Vehicle Tax Incentives

Source: Power Options.

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What type of tax credit programs are available?

Commercial Buildings Energy-Efficiency Tax Deduction

Previously existing deduction now made permanent, so in effect unless repealed.
Primarily applies to commercial building owners, real estate investment trusts, etc., but public buildings and tax-exempt entities can access by transferring deduction to project designer.
Deduction for qualifying efficiency improvements to a minimum of $2.50 per sq. ft. and maximum of $5.00 per sq. ft. for new and existing buildings, up from $1.88 per sq. ft. (assuming the Wage and Apprenticeship Requirements are met).
Qualifying improvements include the Building Envelope (insulating and retrofitting), Lighting (fixture replacements, skylights and LED), and HVAC and hot water.
Creates a sliding scale of credit amounts based on energy cost savings or energy usage (minimum 25% annual energy savings to qualify, with full deduction available for 50% annual energy savings).

Energy Efficiency Incentives and Rebates

Source: Power Options.

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How can Individual Households benefit?

Income-Dependent Programs

Low- (<80% Area Median Income) and moderate-income households (80-150% AMI) qualify for up-front discounts up to $14,000.

Note: Rebates can also be issued to governmental entities to carry out electrification projects on behalf of low- or moderate-income households.

Most higher income households qualify for electrification tax credits of up to 30% instead.
Qualifying projects and items include:

Electric home appliances (Heat pumps, Heat pump water heaters, Heat pump clothes dryer, Electric/induction stoves)
Weatherization
Electrical panel and wiring updates
Rooftop solar (including community solar)
Geothermal heating
Battery storage
Electric vehicles (including used ones) and chargers
Installation costs

Source: Rewiring America: Your Guide to the Inflation Reduction Act

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Competitive Opportunities

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Selected Relevant R&D Grant Appropriations

Program	Description	Appropriation
Hydrogen and Fuel Cell Technologies	Grant program – support the goals of the H2@Scale Initiative, which aims to advance affordable hydrogen production, transport, storage, and utilization to enable decarbonization and revenue opportunities across multiple sectors. .	$47 million
Alternative Fuels – Aviation	Grant program – support production, transportation, blending or storage of sustainable aviation fuel and developing, demonstration or application of low-emission aviation technologies	$244.53 million for projects relating to the production, transportation or storage of sustainable aviation fuel $46.53 million for projects relating to low-emission aviation technologies Available through September 30, 2026
Next Generation Materials and Manufacturing	Grant program – validate and demonstrate next generation materials and manufacturing processes including domestic pilot demonstrations and related technologies to support the transition to U.S. manufacturing	$52 million

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Selected Relevant Community-Based Grant Appropriations

Program	Description	Appropriation
Environmental and Climate Justice Block Grants	Grant program – invest in community led projects in disadvantaged communities and community capacity building centers to address disproportionate environmental and public health harms related to pollution and climate change.	$3 billion.
Neighborhood Access and Equity Grants	Grant program – reconnect communities divided by existing infrastructure barriers, mitigate negative impacts of transportation facilities or construction projects on disadvantaged or underserved communities, and support equitable transportation planning and community engagement activities.	$3 billion.
Climate Pollution Reduction	Grant program – development and implementation of plans to reduce greenhouse gas pollution.	$250M for planning��$4.75B for plan implementation
Forestry	Grant programs – Competitive Funds for Non-Federal Foresters - $550 million State and Private Forestry Conservation Programs - $2.2 billion National Forest System Restoration and Management - $2.15 billion Urban and Community Forestry - $1.5 billion	$6.4 billion
Green Bank	Grants program - supports competitive grants to national and local “green banks,” which will use the money to invest in projects and innovations intended to reduce or avoid greenhouse gas emissions and other forms of air pollution $7 billion earmarked to help low-income and disadvantaged communities deploy or benefit from zero-emission technology or other greenhouse gas emission reduction activities $9 billion earmarked to support low income and disadvantaged communities by funding direct or indirect investments in renewable energy projects that would otherwise lack access to financing $12 billion to be used broadly to support eligible direct and indirect investments in renewable energy projects nationwide.	$27 billion.

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Additional Relevant Provisions

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Expanded Clean Energy Loans

Department of Energy Loan Program Office

Cumulative loan authority of $350 billion for deeply innovative clean energy projects (e.g., utility scale solar, wind, geothermal, and electric vehicle manufacturing and production).
Example of University Involvement: Record Hill Wind

Source: Department of Energy: Loan Program Office and IRA

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Key Takeaways

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How can my university position itself to fully leverage the IRA?

Guaranteed Incentives	R&D Funding Opportunities	Community Funding Opportunities
Don’t underestimate the power of a guaranteed incentive. Begin linking these incentives to your organization’s upcoming construction plans. Are there additional opportunities you hadn’t considered that could push you over the qualification thresholds? Involve Facilities, Finance, Operations, and Legal (among others) early and often in the process. Pay attention to IRS regulations as they come. Determine if your existing contractors have the capacity to deliver; if not, begin discussions with potential contractors.	Confirm pursuit and assist in coordinating applications by relevant departments. Leverage Commercial partnerships; many opportunities will require or be more competitive with industry involvement. Lead when advantageous or offer knowledge; Federal grants can be high barrier to entry and universities have experience navigating Federal funding.	Discuss opportunities with your City/County Government and other local Community Based Organizations. Many regions suffer similar challenges; innovative partnership models can set you apart.

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