Legislative Affairs

The Inflation Reduction Act (IRA), passed in August 2022, includes several provisions that may be of interest to school business leaders who are seeking options to help finance energy efficiency and facility improvement projects in their school districts. Most of these provisions deal with expanding and creating new tax incentives for taxpayers and private and public entities (including school districts) to invest in clean energy projects that can help meet broader climate resiliency and environmental sustainability goals of the Biden Administration.

ASBO International posted a blog outlining how school districts and other tax-exempt entities are now eligible to benefit from these tax incentives for a variety of energy efficiency projects. Normally, tax credits aren't very helpful to entities that are already exempt from federal income tax, so the IRA "unlocks" a new option to opt for a cash refund in the equivalent amount of the credit the entity is eligible for, meaning a district could ask the IRS for a "direct payment" instead. This cash refund would effectively reduce the total cost of the project that the school district is carrying out.

There are various credits under the IRA that districts can elect for direct payment in lieu of a tax credit:

• Production Tax Credits (PTCs) for wind, biomass, solar, geothermal, municipal solid waste, hydropower, marine and hydrokinetic projects (Sections 45 and 45Y)
• Investment Tax Credits (ITCs) for solar, fiber-optic solar, fuel cells, geothermal, small wind energy, waste energy recovery, combined heat and power, heat pump, energy storage (batteries), biogas, and microgrid controller projects (Sections 48 and 48E)
• Other specialized tax credits for qualified commercial vehicles (Section 45W), alternative fuel vehicle refueling property (Section 30C), and other projects and purposes (all under Section 45).

ASBO International continues to work closely with our advocacy allies in the [Re]build America's School Infrastructure Coalition (BASIC) to share information to help address deferred maintenance in schools and provide healthier learning environments for students. Below are several upcoming webinars from BASIC member NAESCO, which will cover these and other IRA tax incentives.

• 179D Changes and Impact with the IRA: November 30, 2022 – 2:00 to 3:00 PM ET.
• Learn About the IRA and Changes to the ITC and PTC: December 5, 2022 – 2:00 to 3:00 PM ET.
• Ground Source Heat Pumps and Available Tax Incentives Under the IRA: December 8, 2022 – 2:00 to 3:00 PM ET.