Explore Your Tax Credit Transfer Options
Whether you are generating renewable energy credits or looking to reduce federal tax liability, Tri-Merit can help you evaluate tax credit opportunities.
Tax credit transfer is one of the most significant changes introduced under the Inflation Reduction Act, creating a new market for buying and selling energy tax credits.
The market for tax credit transfer continues to evolve as more credits hit the market, IRS guidance changes, and transaction structures mature. Pricing, documentation expectations, and buyer diligence standards can vary significantly across transactions.
Tri-Merit helps clients navigate the marketplace and evaluate:
- Current market pricing dynamics
- Documentation expectations from sophisticated buyers
- Structural risks that could affect pricing or transaction success
- Whether credit transfer is the best monetization strategy
Example Tax Credit Transfer
Consider the following simplified example.
A taxpayer installed a qualified renewable energy system and generated a $3,400,000 Investment Tax Credit (ITC).
The taxpayer does not have sufficient tax liability to utilize the credit and needs income to invest in future renewable energy projects. The taxpayer (Seller) decides to transfer the ITC.
Transaction Example
Credit Value
$3,400,000
Transfer Price
$0.85
Buyer Pays
$2,890,000 cash (not taxable income for seller)
Buyer Receives
$3,400,000 tax credit
Buyer Saved
$510,000 tax credit transfer allows both parties to benefit from the transaction while supporting renewable energy development.
Eligible Energy Tax Credits
Several federal energy incentives may be eligible for transfer under IRC §6418.
Production-Based Credits
- Section 45 Renewable Electricity Production Credit
- Section 45Y Clean Electricity Production Credit
- Section 45Q Carbon Capture Credit
- Section 45V Clean Hydrogen Production Credit
- Section 45X Advanced Manufacturing Production Credit
- Section 45Z Clean Fuel Production Credit
Investment-Based Credits
- Section 48 Investment Tax Credit (ITC)
- Section 48E Clean Electricity Investment Credit
- Section 48C Advanced Energy Project Credit
Infrastructure Credits
- Section 30C Alternative Fuel Vehicle Refueling Property Credit
Eligibility depends on compliance with applicable program requirements.
While every transaction is unique, most tax credit transfers follow a similar process.
The taxpayer generates an eligible energy tax credit through a qualifying project.
The taxpayer registers the credit property through the IRS portal and receives a registration number.
Tri-Merit may assist in reviewing project documentation, verifying credit calculations, and evaluating eligibility.
Buyers and sellers negotiate pricing and terms for the transfer.
The parties execute a Tax Credit Transfer Agreement and exchange funds.
The buyer and seller report the transaction on their respective federal tax returns.
Important Considerations
Tax credit transfer rules continue to evolve through IRS guidance and regulatory updates. Each transaction should be evaluated based on the specific project facts, credit type, and current law in effect at the time of transfer.
Tri-Merit’s Role in Tax Credit Transfer
Tax credit transfers require more than identifying a buyer and seller. The transaction must withstand IRS scrutiny, satisfy buyer diligence expectations, and align with the taxpayer’s broader tax strategy.
Tri-Merit helps clients:
- Confirm credit eligibility through a documentation-first analysis designed to withstand IRS examination
- Develop buyer‑ready technical support aligned with institutional diligence standards
- Structure transfer transactions in compliance with Section 6418 and related IRS guidance
- Integrate the transfer process with the client’s CPA and advisors to ensure consistency with overall tax reporting and planning
- Assess whether a credit transfer is the optimal monetization strategy relative to alternatives
Tri-Merit supports the transaction process but does not operate as a credit marketplace or broker.
Is Credit Transfer the Right Strategy?
Not every project is well‑suited for tax credit transfer. Depending on the project structure, ownership profile, and the taxpayer’s broader tax position, alternative monetization or utilization strategies may deliver a more favorable outcome.
Tri-Merit helps clients evaluate monetization strategies:
- Tax credit transfer
- Direct pay elections
- Tax equity financing
- Internal credit utilization
Tax credit transfer allows a taxpayer that generates eligible renewable energy tax credits the option to transfer those credits to an unrelated taxpayer in exchange for cash. For a buyer, a tax credit transfer allows them an opportunity to reduce their tax burden by purchasing a tax credit at a discount from an unrelated party.
Eligible buyers typically include C-corporations, financial institutions, REITs, and investors with passive income who have federal tax liability.
Many clean energy incentives are eligible for transfer, including the Investment Tax Credit (ITC), Production Tax Credit (PTC), Advanced Manufacturing Credit, Hydrogen Production Credit, and EV charging credits.
Pricing is negotiated between buyer and seller and varies based on credit type, size, diligence quality, market dynamics, etc.
Payments received for transferred credits are generally not treated as taxable income to the seller.
Yes, many credits carry some level of risk. In a transfer transaction, buyers typically evaluate project eligibility, compliance with statutory and regulatory requirements, potential recapture exposure, and the credibility of the credit seller. These risks can be mitigated through thorough documentation, technical analysis, and disciplined transaction structuring.
See our full FAQ Page for additional technical and compliance questions.
Tri-Merit supports a wide range of specialty tax incentives, including renewable energy credits, cost segregation, and R&D tax credits.