Tax Update Blog

Biden Administration assists Tribal Nations claim IRA Benefits

April 4, 2023 | Blog
By Jay Heflin

The White House released a Guidebook on April 4th aimed at helping Tribal Nations take advantage of the climate and clean energy incentives in the Inflation Reduction Act (IRA).

The White House contends that climate change has negatively impacted the country’s tribes.

“Tribal Nations are on the frontlines of climate change, which threatens Tribal homelands, food sources, cultural resources, and sacred ways of life. Native communities have faced chronic underinvestment for generations, and climate impacts—including drought, wildfires, rising sea levels, and extreme weather events—have exacerbated pre-existing challenges and inequities,” the White House stated.

The Guidebook, which is here, seeks to reverse this trajectory. It offers information for how Tribal communities can use new and expanded clean energy tax credits to reduce pollution and energy costs on Tribal lands.

A large majority of the new law’s relief goes through the U.S. tax code.

“More than two-thirds of the law’s benefits will pass through the tax code, creating significant opportunities for Tribes, despite their tax-exempt status. In general, the tax incentives created or modified by the Inflation Reduction Act went into effect in 2023,” the White House stated.

These tax provisions include:

  • Production Tax Credit for Electricity from Renewables
  • Investment Tax Credit for Energy Property
  • Low-Income Communities Bonus Credit
  • Clean Electricity Production Tax Credit
  • Clean Electricity Investment Tax Credit
  • Alternative Fuel Vehicle Refueling Property Credit
  • Clean Commercial Vehicles Credit

Tribes that do not pay income taxes can take advantage of these credit through Direct Pay. This means that Tribal communities can benefit from income tax credits even if they do not owe federal income taxes.

From the White House’s Guidebook:

Essentially, after first building clean energy projects or purchasing qualifying clean energy vehicles for nonpersonal use, an applicable entity may qualify for an elective payment, often referred to as a direct payment, in lieu of claiming the credit to offset any income taxes.

A White House summary of the tax provisions in the IRA is here.

For more information about how Tribes can receive this relief, please contact Eide Bailly's Mark Rogers.


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