December 16, 2024
FOR IMMEDIATE RELEASE
Dec. 16, 2024
Contact: Michiganinfrastructure@michigan.gov
Michigan Unveils New Elective Pay Resources to Help Communities Bring Home Federal Clean Energy Tax Credits
Resources Empower Communities to Create Good-Paying Jobs, Lower Costs for Families, and Reduce Carbon Footprint
LANSING, Mich.— Today, the Michigan Infrastructure Office’s (MIO) Technical Assistance Center (TAC), in partnership with the Michigan Infrastructure Council, announced the opening of an application window for Elective Pay Accounting and Support Services. Elective Pay (also known as Direct Pay) is a new IRS mechanism that allows tax-exempt entities to receive federal clean energy tax credits as reimbursements on investments they make in the transition to clean energy, such as installing solar or moving to electric vehicle fleets. Elective Pay, and the resources provided by the TAC, will make these projects more accessible than ever. Transitioning to clean energy technology will create good-paying jobs in communities, lower their energy costs, and reduce their carbon footprint.
Elective Pay requires tax-exempt entities, such as local and Tribal governments, school districts, non-profits, rural co-ops, and houses of worship, to file a tax return with the IRS—often for the first time. Because these tax credits result in direct payments to the filing entity, the MIO TAC will help communities navigate this process, ultimately resulting in a check from the Internal Revenue Service reimbursing 30% to 70% of the project costs.
“By providing expert accounting support and resources, the MIO TAC is empowering our communities to bring home clean energy that has the power to improve quality of life and economic opportunity,” said TAC Director Kris Brady. “If your organization has installed clean energy technologies like rooftop solar or purchased electric vehicles, you likely qualify for a federal tax credit. We encourage eligible entities to contact our office and apply for help because when our neighborhoods and residents thrive, Michigan becomes a stronger, more vibrant state for everyone.”
Elective Pay, created by the Inflation Reduction Act (IRA) in June 2023, gives these entities access to twelve federal clean energy tax credits for investments such as solar, geothermal, or energy storage projects and EV charger installation or plug-in hybrid/electric vehicle purchases. Through this program, entities will be guided through the filing process by accounting firm Rehmann to accurately file for Elective Pay and maintain proper documentation for eligible projects placed in service in 2024.
A new report from the U.S. Department of the Treasury highlights the importance of technical assistance for elective pay, especially for smaller local governments, and highlights the State of Michigan’s – and specifically the TAC’s – work to support these entities. Technical assistance is helpful for project awareness and education, development and financial planning, and tax advice including filing and returns. The report states more than 500 state and local government agencies have gone through the pre-filing registration process for the use of elective pay on clean energy projects.
“The Elective Pay provision is a powerful tool for local government and nonprofits to rapidly grow, scale, and expand their clean energy investments,” said Missy Stults, PhD., sustainability and innovations director for the City of Ann Arbor. “It’s a learning curve to figure out how to take advantage of this exciting provision, but once we figured it out, it’s sure to bring significant savings and investment opportunities for our communities.”
The TAC is committed to providing technical assistance and educational resources to help bring federal infrastructure money to Michigan's communities. In 2024, the TAC supported 40 communities and seven state agencies, helping seven of them win federal funding for infrastructure projects so far. In September, Detroit was awarded $10.3 million from a Safe Streets and Roads for All grant to implement safety techniques to reduce the number and severity of crashes occurring on Gratiot, one of the most dangerous roads in Wayne County. The TAC provided a matching grant of $2.2 million to make sure the project met federal criteria and aligned with safety and sustainability goals.
“The Elective Pay option offers municipalities the opportunity to be leaders in clean energy development,” said the City of Detroit’s Chief Strategy Officer Trisha Stein. “For the City of Detroit, we’re pleased to claim the full value of these tax credits as direct cash payments, eliminating the need to depend on multiple vendors to pass along only partial savings. The direct pay option presents the opportunity to maximize taxpayer savings while advancing a greener, more sustainable community for our residents.”
A report from Climate Power shows Michigan continues to be a national leader in clean energy and electric vehicle manufacturing. Bolstered by the IRA, Michigan is No. 1 in the nation for IRA projects, which have resulted in more than $26 billion in new investments across the state. This funding, in tandem with Governor Whitmer’s clean energy legislative package and bipartisan economic development tools, is growing the middle class, creating good-paying, in-demand manufacturing jobs, bringing supply chains home, and lowering energy costs for families.
Applications for eligible entities are open until January 24, 2025. Apply here for assistance. Learn more about the federal grant opportunities available in your community by visiting the MIO Technical Assistance Center website.
ABOUT THE MICHIGAN INFRASTRUCTURE OFFICE
The MIO is responsible for organizing and executing Governor Whitmer’s vision for infrastructure, coordinating across state government, marshaling resources, and partnering with local officials, federal partners, and outside stakeholders to ensure resources sent to Michigan through BIL, also known as the Infrastructure Investment and Jobs Act (IIJA), are used efficiently and effectively.
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