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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.
Schools pre-register with the IRS, install the solar system, and file for Direct Pay with their annual tax return. The IRS sends a direct cash payment equal to the ITC amount (30% base + any bonuses). A $500K school solar project could receive $150K-$350K in direct cash.
Converts ITC from tax credit to direct cash payment
Available only to tax-exempt entities
Includes municipalities, school districts, nonprofits, tribal entities
Full ITC rate plus all applicable bonuses
Pre-registration with IRS required before filing
Payment received with tax return filing
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
Pre-register with IRS before filing for Direct Pay
File annual tax return with IRS Form 3468
Meet all standard ITC requirements (prevailing wage, etc.)
System must be placed in service during the tax year
IRS issues Direct Pay registration guidance
First Direct Pay claims processed
Streamlined registration process implemented
Begin construction before July 4 deadline
30% (6% without prevailing wage)
The Section 48E Investment Tax Credit provides a 30% credit on commercial solar installations that meet prevailing wage and apprenticeship requirements. This is the cornerstone federal incentive for commercial solar.
5-year depreciation + 20% bonus (2026)
Modified Accelerated Cost Recovery System (MACRS) allows businesses to depreciate commercial solar equipment over 5 years, with 20% bonus depreciation in 2026.
+10% bonus
An additional 10% ITC bonus for commercial solar projects that use US-manufactured components meeting specific domestic content thresholds.
Schools pre-register with the IRS, install the solar system, and file for Direct Pay with their annual tax return. The IRS sends a direct cash payment equal to the ITC amount (30% base + any bonuses). A $500K school solar project could receive $150K-$350K in direct cash.
Site-specific pricing with exact incentive calculations. No obligation.