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Use the free estimator for a preliminary layout, or share your preferred response method with the commercial team. Final feasibility still requires site, utility, and engineering review.
Direct Pay allows tax-exempt entities including schools, municipalities, nonprofits, and tribal entities to receive the ITC as a direct cash payment from the IRS.
Section 48E rate
6% base; 30% if qualified, before bonuses
Before anything else: the timing
The Section 48E begin-construction window closed July 4, 2026: projects that began construction on or before that date may use the longer continuity pathway. Commercial solar projects starting now generally must be placed in service by December 31, 2027. The statutory credit is 6%; it can increase to 30% when the applicable prevailing-wage and registered-apprenticeship requirements are met.
Energy storage technology is not subject to the December 31, 2027 placed-in-service deadline or the July 4, 2026 begin-construction trigger — both apply to applicable wind and solar facilities only, and Section 48E(e)(4)(C) expressly excepts energy storage technology (IRS Notice 2025-42, section 2.02). A standalone commercial battery remains eligible for the statutory 6% Section 48E credit, increased to 30% when the applicable wage and apprenticeship requirements are met, under the standard clean-electricity phase-out that starts at the later of 2032 or when U.S. greenhouse gas emissions from electricity are 25% of 2022 emissions or lower.
Direct Pay changes only how a tax-exempt owner receives the credit, not when the project has to be placed in service.
An eligible school that owns the solar project places it in service, obtains an IRS pre-filing registration number, then makes the elective-pay election on its timely annual return. Section 48E starts at 6% of qualified investment; 30% requires prevailing-wage and apprenticeship compliance or an applicable exception. Bonuses and the final payment depend on project-specific eligibility; a project price alone does not establish the refund.
Converts ITC from tax credit to direct cash payment
Solar elective pay is for applicable entities, not ordinary taxable businesses
Includes municipalities, school districts, nonprofits, tribal entities
Credit and bonus eligibility must be substantiated; domestic-content rules can reduce elective pay
Pre-registration with IRS required before filing
Payment follows return processing, not filing itself
State and local governments
Public school districts and state universities
501(c)(3) nonprofit organizations
Tribal entities and Alaska Native corporations
Rural electric cooperatives
Tennessee Valley Authority
Place the system in service, then complete IRS pre-filing registration before filing
Timely file the appropriate annual return (often Form 990-T), Form 3468, Form 3800, and required attachments
Substantiate credit eligibility, any prevailing-wage/apprenticeship compliance or exception, and bonuses
The eligible owner must claim the credit for the correct tax year; registration alone does not establish eligibility
IRS issues Direct Pay registration guidance
First Direct Pay claims processed
Section 48E applies to qualifying facilities and storage placed in service after December 31, 2024
For solar: the begin-construction window for the full §48E timing pathway closed July 4, 2026; later solar starts must be placed in service by December 31, 2027
An eligible school that owns the solar project places it in service, obtains an IRS pre-filing registration number, then makes the elective-pay election on its timely annual return. Section 48E starts at 6% of qualified investment; 30% requires prevailing-wage and apprenticeship compliance or an applicable exception. Bonuses and the final payment depend on project-specific eligibility; a project price alone does not establish the refund.
Site-specific pricing with exact incentive calculations. No obligation.