Certain federal clean energy tax credits offer the opportunity to receive a reimbursement of up to 30% to 70% on project costs. Historically, these incentives were largely unavailable to tax-exempt entities, including nonprofits, local governments, and low-income households. However, with the introduction of Elective Pay, tax-exempt entities can claim these same tax credits in the form of cash payments, unlocking significant savings for community-driven clean energy projects. These funds can be used for a range of eligible projects, including solar, energy storage, geothermal installations, and electric vehicles and charging infrastructure.

Elective pay (often referred to as direct pay) is a mechanism that allows tax-exempt entities to take advantage of federal clean energy tax credits.

Examples of eligible entities include:

• Tax-exempt organizations under sections 501 through 530 of the U.S. tax code, including all 501(c)(3) organizations and religious 501(d) organizations.
• Examples include public charities, private foundations, social welfare organizations, labor organizations, schools, hospitals, and houses of worship.
• State and Local governments (including D.C.), Territorial governments, Federally Recognized Tribes, and Alaska Native Corporations.
• Agencies and instrumentalities of State, Local, Tribal, and Territorial governments. Examples include water districts, school districts, economic development agencies, certain public universities and hospitals, and energy or natural resource agencies.

Public power utilities, including municipal electric utilities and rural electric cooperatives.

Elective Pay commonly qualifying projects include:

• Solar energy systems
• Battery backup
• Electric vehicle (EV) infrastructure
• Wind energy projects
• Geothermal systems

For more information on Elective Pay, eligible entities and projects, and federal guidance changes, please visit the MI Infrastructure Office Technical Assistance Center website.

Learn how to apply! 

MI Infrastructure Office Technical Assistance Center (MIO TAC) Free Accounting Support for 2025 Elective Pay Projects

MIO TAC still has funding available to provide free accounting support to eligible 2025 projects.

• Submit a short application to access this support!