Transferability (Tax Credit)
The IRA provision allowing entities to sell clean energy tax credits to unrelated taxpayers for cash. Enables project developers without sufficient tax liability to monetize credits.
Why It Matters
Transferability increases the pool of capital for clean energy projects. Some residential solar installers use this mechanism to reduce system costs for customers.
Related Terms
Federal Tax Credit (ITC)
Investment Tax Credit allowing homeowners to deduct a percentage of solar installation costs from federal taxes. Currently 30% through 2032.
IRA (Inflation Reduction Act)
Landmark 2022 federal legislation that extended and expanded clean energy tax credits, including the 30% solar ITC through 2032, and added new incentives for batteries, heat pumps, and EVs.
Tax Credit Carryforward
When a tax credit exceeds your tax liability in a given year, the unused portion can be carried forward and applied to future tax years. The 25D clean energy credit allows unlimited carryforward.