As tax reform continues to reshape financial decision-making, businesses are discovering novel strategies to improve their tax positions. Businesses with significant federal income tax liabilities can reduce their tax burden by purchasing transferable federal energy tax credits authorized by the Inflation Reduction Act (IRA) and implemented under Internal Revenue Code (IRC) Section 6418. These transfers allow companies to convert a portion of their tax payments into discounted credits sourced from qualifying projects, such as solar, battery storage, clean fuels, and certain manufacturing activities.
Purchasing Federal Tax Credits: A Strategic Opportunity
Corporations, including public and private companies, financial institutions, and insurers, can now purchase eligible tax credits from project developers rather than generate them through direct investment. Buyers purchase the credits for:
- Direct savings: As of 2026, these credits average 92.5 cents per dollar in the secondary market. For example, purchasing $10 million in credits typically costs just over $9.2 million, providing immediate savings of several hundred thousand dollars.
- Broader access: Transferability allows buyers to benefit from clean energy credits without owning or operating assets.
- Planning flexibility: The IRA expanded energy credit carrybacks from one to three years, allowing qualifying buyers to apply excess credits to prior years and typically generate refunds.
Participation Criteria and Key Considerations
There is no statutory minimum for amounts required to be purchased or buyers’ tax liabilities. However, market standards and insurance policies often set practical minimums, with many intermediaries and insurers preferring transactions of $1 million or more. Buyers seeking smaller deals may find opportunities as the market evolves, though coverage and partner options may be limited.
Compliance Framework
Eligible buyers must follow specific procedures to access these benefits. The selling party must coordinate with the IRS to validate and register the credits, securing a unique registration number for tax filings. Successful transactions require careful timing and thorough documentation.
Acquired credits can offset federal income taxes, and some offer carryback or carryforward options for added flexibility. Proper documentation, insurance, and due diligence are essential to mitigate risks such as recapture, qualification disputes, and regulatory changes.
How the OBBBA Affects Transfers
Policy changes in the One Big Beautiful Bill Act (OBBBA) impose additional guardrails on who can buy credits and under what circumstances:
Foreign‑ownership and influence limits
OBBBA adds restrictions on transferring credits to certain foreign‑owned or foreign‑influenced entities. Buyers and intermediaries should evaluate beneficial ownership, control, and influence to confirm eligibility.
Eligibility screening
Enhanced diligence could include certifications on ownership thresholds, control rights, and changes in control during the credit recapture period.
Deal documentation
Purchase agreements increasingly include representations, ongoing covenants, notice obligations, and termination or back‑to‑back indemnities related to OBBBA eligibility. Some buyers require sellers to maintain compliance throughout the relevant credit period.
Structuring considerations
Parties may need to adjust counterparty selection, syndication strategy, or payment timing to ensure deals comply with OBBBA. Where uncertainty exists, conservative structures or insurance can help limit exposure.
Coordination with Section 6418 and IRS procedures
OBBBA restrictions apply along with the existing 6418 framework and IRS prefiling registration requirements. Buyers should confirm that both statutory regimes and related guidance are satisfied before claiming credits.
Buyers should include OBBBA compliance checks into front‑end sourcing, legal diligence, and closing conditions, and ensure internal controls track eligibility during any relevant recapture or review periods.
Mitigating Risks and Ensuring Value
Market-tested credits, such as those from established solar or battery storage projects, generally command higher prices and carry lower risk. Tax credit insurance is common for deals over $5 million and protects against audit, recapture, and compliance issues. Larger buyers may also use seller guarantees.
Ongoing policy changes require close attention. Some credits may have restricted transferability for foreign-influenced or foreign-owned buyers, and specific terms can vary by project type and credit category.
Beyond Compliance: Strategic and ESG Considerations
For many organizations, purchasing transferable credits offers more than immediate savings. Supporting clean energy and sustainability initiatives can strengthen a company’s environmental, social, and governance (ESG) profile, which is increasingly important for reputation, stakeholder engagement, and corporate reporting.
Working With Experienced Partners
The complexity of this market underscores the need for experienced intermediaries. Advisors specializing in tax credit procurement connect buyers with credit providers, manage due diligence, and support the insurance process. Quality partners can handle transactions of all sizes, ensuring alignment with each company’s risk profile, tax situation, and sustainability goals.
Conclusion
Transferable federal tax credits under the IRA and IRC Section 6418 provide an effective tool for tax optimization and strategic impact. By working with qualified experts and following market standards, businesses can reduce federal tax obligations and advance broader organizational objectives.
To determine eligibility and explore tailored solutions, organizations should consult market intermediaries who can provide pathway checklists and detailed, context-specific guidance. CBIZ tax credit professionals can steer you through the tax credit transfer process. Contact us for more information.
Frequently Asked Questions
Transferable federal tax credits are clean energy tax credits that businesses can purchase from project developers to directly reduce their federal tax bills; eligible buyers include corporations, financial institutions, and insurers.
Companies can save money by buying credits at a discount, improve cash flow, and support sustainability initiatives without owning or operating clean energy projects.
While there’s no legal minimum, most transactions are $1 million or more due to market and insurance standards, and buyers must complete proper registration and documentation with the IRS.
The seller must coordinate with the IRS, register the credits, and maintain thorough records to ensure compliance and reduce risk.
Recent OBBBA rules have added additional eligibility and documentation requirements, especially for buyers with foreign ownership, making it important to work with knowledgeable advisors and conduct careful due diligence.
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