How elective pay works, at a high level
An eligible tax-exempt entity that owns a qualifying solar or storage system can file for elective pay and receive the credit as a payment instead of a reduction in tax. It generally requires pre-filing registration with the IRS and filing a return for the year the system is placed in service.
Additional requirements — domestic content, prevailing wage and apprenticeship for larger projects, and FEOC sourcing — can change the payment amount or eligibility. We provide the equipment and project documentation; your advisor decides eligibility (as of September 2026; verify current terms).
Deadlines are the main constraint
Solar projects that didn’t begin construction by July 4, 2026 must be placed in service by December 31, 2027 to qualify for §48E. Board approvals, budgets and procurement rules move slowly, so a nonprofit starting from scratch in late 2026 has limited time.
Storage has a longer runway: the §48E storage credit continues at full value for construction starting through 2033.
Buildings and loads we see
Churches often use most of their power on weekends and evenings, which means much of a weekday’s production is exported — how your utility credits exports matters a lot. Schools use power during the day but mostly outside summer, the season of highest production.
Municipal buildings, water and wastewater facilities often have demand charges and critical loads where storage and backup are worth modeling alongside solar.
FAQ
Questions we hear
Can a church get the federal solar tax credit?
A tax-exempt church may be eligible to receive the §48E credit value as a direct payment through elective pay (IRC §6417), subject to deadlines and requirements. Confirm eligibility with a tax advisor.
Is elective pay still available after the 2025 budget law?
As of September 2026, yes — the law kept elective pay but shortened solar’s timeline. Verify current IRS guidance before committing.
Does domestic content matter for elective pay?
It can. For some projects, failing domestic-content requirements reduces or eliminates the elective payment, with exceptions for smaller systems. Your advisor should check this before equipment is chosen.
Can a town or school district use elective pay too?
State and local governments, including school districts, are among the entity types eligible for elective pay. Procurement rules still apply; we can work within an RFP process.
Is a PPA better for a nonprofit than owning?
Sometimes. A PPA avoids upfront capital and puts the tax paperwork on the owner. Owning with elective pay may deliver more value over time if you have capital and advisor support.