An Update on Energy Tax Provisions for Schools

Last update: July 3, 2025

The Key Takeaway

Both chambers of Congress have now passed a budget reconciliation bill that enacts significant changes to energy tax provisions.

Energy tax credits remain available by law for projects that have already commenced construction. 

Non-taxable entities continue to receive checks from the IRS for elective payments.

Detail on Changes to Energy Tax Provisions

The Table below contains the changes to the energy tax credits most commonly used by schools.

Managing Projects in Changing Environment

We will be providing updated tools and guidance to help school leaders and partners navigate the changing landscape for funding clean energy projects.

Here are three actions to take: 

• For the specific credits that your school district is pursuing, understand the effective dates for any policy changes. 

• Understand how your current construction timeline relates to those key dates. 

• Explore opportunities to meet the “commence construction” milestone for your projects with both your construction partners as well as your tax/accounting support. There is both a work test and an expenditure of funds test that is available to filers to establish that they have commenced construction on an eligible project.

There are other non-legal, but practical considerations such as IRS staffing which could delay or impact the availability of elective payments for schools.

This post represents our best understanding of certain tax provisions for general informational purposes only and is not itself tax guidance. Please consult qualified tax professionals about your specific circumstances and refer to guidance issued by the IRS for detailed information on the rules associated with energy tax credits, elective pay, and other relevant tax provisions.

Last update: July 3, 2025