Finance executives are seeking effective strategies to optimize tax spend, manage risk, and enhance financial outcomes. Federal tax law updates from the Inflation Reduction Act (IRA) and the One Big Beautiful Bill Act (OBBBA) allow select federal energy tax credits to be transferred (sold) between unrelated sellers and buyers. This high-level guide outlines how transferability can deliver immediate savings, reduce risk, and be implemented efficiently across public, private, banking, and insurance sectors.
Understanding Transferability
Under the IRA and OBBBA, eligible federal energy credits, including those for solar installations, battery storage, clean fuels, manufacturing, and other qualifying projects, can be sold by developers to unrelated buyers. Purchasers can use these credits to offset their federal income tax liabilities. Companies can now buy credits at a discount, typically 85 to 92 cents per dollar, converting tax payments into direct savings.Â
Another IRA provision extended the carryback period for energy credits from one to three tax years. This change allows a corporation to look back at the last three tax years and potentially receive, without interest, up to 75% of the tax refund, with the purchase and carryback of excess tax credits in the current year.Â
This mechanism is especially beneficial for C corporations, publicly traded companies, banks, and insurance firms with significant federal tax obligations. It also appeals to organizations with environmental, social, and governance (ESG) goals by enabling them to finance sustainable projects without direct asset ownership or operational involvement.
Who Should Consider Transferability?
Best suited for companies with a federal income tax liability of at least $1 million, transferability has gained traction across sectors, including manufacturing, retail, technology, financial services, and healthcare. Banks and insurers are especially active, given their large and predictable tax profiles. While some passive-income individuals may qualify, it’s essential to consult tax specialists to confirm eligibility.Â
Recent market activity indicates strong growth, with deal volumes rising from approximately $30-$40 billion in 2024 to an estimated $70 billion in 2025. As solutions for smaller buyers emerge, participation is becoming more accessible.
Financial Benefits and Pricing
Purchasing credits at a discount delivers immediate, measurable benefits. For example, buying $50 million in ethanol credits at $0.92 per dollar requires a $46 million investment, resulting in $4 million in direct savings and improving earnings per share and cash flow.
Pricing varies according to technology and perceived risk:
- Mainstream credits (solar, battery) generally trade at 90–92 cents per dollar
- Less familiar credits may see prices closer to 85 cents per dollar
- Production tax credits (PTCs) often result in prices in the low 90s
This enables buyers to recoup 8 to 15 cents for every dollar of credit acquired, with the savings reflected as a reduction in income tax expense.
Deal Process and Execution
Transferability is a one-time transaction. Once purchased, the credits belong to the buyer, provided compliance steps are followed and risks are managed. Insurance policies are available for transactions above $5 million, covering risks such as audit, qualification, recapture, and bonus credit issues. Some buyers may use developer guarantees or indemnities instead.
To maximize liquidity, buyers should align payments to developers with federal estimated tax deadlines. For solar credits, deferring most payments until the asset is operational helps minimize risk. Multi-year purchase agreements enable buyers to secure credits from the same provider for future tax years, supporting ongoing planning.
Each credit transfer requires the seller’s prefiling registration with the IRS. Both parties must report the IRS-issued registration number on their timely filed federal income tax returns (including extensions). The parties should plan their transaction timelines accordingly.
Managing Risks
Each credit type carries unique risks. PTCs are generally considered lower risk because they typically avoid recapture. Investment tax credits (ITCs), including those for solar and batteries, require careful attention to asset placement in service and domestic content rules, which can be managed through tailored payment schedules and insurance. Note also that the OBBBA places additional limitations on credit transfers to certain foreign-owned and foreign-influenced entities. These risks, and others, should be addressed in transaction due diligence.
Mainstream credits with established technology and processes generally carry less risk and command higher prices. Insurance wrappers are common and effective for audit protection and compliance.
ESG Value and Strategic Impact
In addition to direct savings, purchasing tax credits supports sustainability objectives and improves ESG scores by indirectly funding renewable energy and clean-fuel projects. Aligning financial and social goals enhances both reputation and reporting.
Working with the Right Partner
For seamless execution, intermediary firms with strong developer relationships and capacity for large-volume placements are essential. Such partners can source credits for both smaller deals and multibillion-dollar needs, ensuring alignment with buyers’ profiles and requirements.
CBIZ Capabilities
CBIZ acts as a trusted intermediary in the transfer market, with exclusive developer partnerships and the capacity to execute deals ranging from under $5 million to multi-billion-dollar transactions. Ready to see how transferability can benefit your organization? Schedule a consultation with CBIZ and get a straightforward checklist to assess your eligibility and next steps.
Contact us today to begin your transferability journey with confidence.
Peter Downing serves as Managing Director and National Leader of Federal Tax Credits & Incentives at CBIZ, a leading provider of professional services, dedicated to helping businesses navigate an increasingly complex and competitive landscape. Over his 30 year career, Peter has helped clients reduce federal tax liabilities by more than $50 million through strategic use of credits and incentives.
