The Inflation Reduction Act (IRA), the most sweeping climate legislation in U.S. history, offers tax credits to incentivize organizations across multiple industries to deliver on sustainability and carbon-reduction commitments. Most credits are valid through 2032, the longest energy policy time frame ever.
With nearly $500 billion up for grabs in clean energy and climate provisions, the stakes are high and, as with most governmental tax credit programs, the rules are extremely complex.
“Our teams have already worked with numerous clients to apply for previous iterations of these credits,” said Partner Tom Unke, “but the incredible amount of funds available through the IRA is pouring gasoline on the fire. ”
The program allows recipients to transfer credits or receive direct payments from the IRS. With emphasis on jobs and earnings growth, sustainable commercial and housing projects, and environmental justice, IRA lands squarely in the environmental, social and governance (ESG) wheelhouse.
Baker Tilly has already worked with hundreds of clients to maximize their IRA opportunities, guiding them through the complex process of gathering information, submitting applications and engaging in the subsequent compliance process. Although the bulk of the funding applies to clean energy tax credits, these credits are spread across multiple economic sectors where Baker Tilly serves clients, including manufacturing, healthcare, real estate and construction, higher education, public sector and not-for-profit and tribes.
“The IRA is a significant enabler to incorporate ESG strategies that made sense from an environmental perspective but were not financially feasible. The IRA allows those projects to get off the ground much more quickly,” said Unke.