The IRA provides a unique opportunity for not-for-profit entities to access funding that 1) supports efforts to reduce greenhouse gas emissions and 2) aligns with health equity goals. The first step is to assess needs at the operational level and begin to plan how to take full advantage of the bill’s incentives.

The Health Care Without Harm’s blog post on the IRA’s investment tax credit opportunities includes a visual breakdown of the tax credits available. Accordingly, a relatively small, new project that meets labor and domestic requirements, and is built in a low-income energy community, for example, could qualify for an ITC as high as 70% of the project cost. Larger projects, which don’t qualify for the low-income community bonus, could still be eligible for a full 50% maximum credit.

Healthcare organizations can monetize applicable credits by electing to receive direct pay. The Act allows tax-exempt entities like healthcare facilities to take direct pay equal to the amount of specified credits. The direct pay option is only available, however, for projects placed in service after December 31, 2022. The election to receive direct pay must be made no later than the due date for the tax return of the year in which the election is made (or a date yet to be determined by the Treasury if the eligible entity is not required to file a return). In the case of the production tax credits, direct pay election must be made during the 10-year period beginning on the date the qualifying facility is placed in service. It is important to note that tax-exempt entities eligible for direct pay are not permitted to transfer tax credits.

The direct pay credit monetization option is available for credits found in the following sections of the IRA: 30C – Alternative Fuel Refueling Property Credit; 45(a) – Renewable Electricity Production Credit; 45Y – Clean Electricity Production Credit; 48 – Energy Credit; 48E – Clean Energy Investment Credit; 45Z – Clean Fuel Production Credit; 48C -Advanced Energy Project Credit; 45Q – Carbon Dioxide Sequestration Credit; 45U – Zero-emission Nuclear Power Production Credit; 45V – Clean Hydrogen Production Credit; 45X – Advanced Manufacturing Production Credit; and 45W – Qualified Commercial Clean Vehicles Credit.

The following credits in the bill can be leveraged by healthcare institutions: 

• Alternative Fuel Refueling Property Credit 
• Clean Electricity Production Tax Credit  
• Clean Electricity Investment Tax Credit 
• Qualified Commercial Clean Vehicles Credit