Federal Funding Opportunities

The Inflation Reduction Act, passed in 2022, included a historic $369 billion investment in climate and energy provisions, signifying the largest climate investment in U.S. history. These investments can support the K–12 education sector in adopting clean energy and creating healthier, more sustainable learning environments.

Additionally, the Infrastructure Investment and Jobs Act provided billions of dollars that schools can use to address climate change.

2025 Changes to Federal Clean Energy Tax Credits

The July 2025 federal budget reconciliation law made significant changes to certain clean energy tax credits created under the Inflation Reduction Act (IRA). While opportunities remain, schools should be aware that certain credits now have new timelines and requirements. Below is an overview of how these changes affect technologies most relevant to schools: 

Changes Affecting Solar Energy Projects

• Accelerated phase-out: Solar projects must now be placed into service by December 31, 2027 to receive a tax credit.

• New restrictions: Projects are subject to Prohibited Foreign Entity (PFE) rules, which cover not only material sourcing but also transactions like municipal debt issuances and licensing agreements.

• New construction guidelines: Updated “Beginning of Construction” (BOC) rules apply to projects greater than 1.5 MW. These are unlikely to affect most schools, but districts should confirm with a qualified tax professional.

Changes Affecting Energy Storage & Thermal Storage Projects

• Phase-out schedule unchanged:

  • 100% credit available through CY 2033

  • 75% credit in CY 2034

  • 50% credit in CY 2035

  • 0% after CY 2036

• New restrictions: Storage projects are also subject to PFE rules governing both sourcing and financial transactions.

• Safe-harbor option: Schools that begin construction before December 31, 2025 and place systems into service before June 30, 2026 (for fiscal years ending June 30) can receive the full credit and avoid many of the new rules.

• New “payments” rule: Any solar or storage projects beginning after January 1, 2025 must comply with additional payment-related requirements.

Changes Affecting Electric School Buses & Charging Infrastructure

• Accelerated phase-out (Section 45W): The Commercial Clean Vehicle Credit, which applies to electric school buses and similar vehicles, is not available for vehicles acquired after September 30, 2025.

• Accelerated phase-out (Section 30C): The EV Charging Infrastructure Credit, which covers installations of chargers for school buses and other vehicles, is eliminated for property placed in service after June 30, 2026.

• No safe-harbor option: Unlike storage projects, these credits have no extensions or exceptions. Schools must meet the acquisition or service deadlines to qualify.

Additional Resources

• Schools and Federal Energy Tax Credits: UndauntedK-12, working with organizational partners, has curated the Energy Tax Credits for Schools Hub, which provides up-to-date information to help education leaders understand and navigate federal clean energy funding. The hub explains how schools can leverage available tax credits, highlights changes under the July 2025 federal budget reconciliation, and offers resources to support student health and learning, enhance resilience, reduce infrastructure costs, and advance equity and environmental justice. Learn more →
• Updates to Certain Elective Pay Eligible Credits under H.R. 1: Lawyers for Good Government (L4GG) provides a detailed brief explaining the changes made to clean energy tax credits by the July 2025 federal budget reconciliation law (H.R. 1, the “One Big Beautiful Bill Act”). The resource outlines how Elective Pay works for tax-exempt entities like schools, summarizes key changes for solar, wind, storage, geothermal, and electric vehicles, and includes a table of important deadlines and eligibility requirements. The brief also highlights new Prohibited Foreign Entity (PFE) restrictions that schools must consider before claiming credits. Read the guidance brief →
• All About Electric School Bus Tax Credits: This resource explains how federal tax credits can reduce the cost of electric school buses and charging infrastructure for school districts. It details the Commercial Clean Vehicle Credit (45W) and the Refueling Property Credit (30C), how elective pay works, and how credits can be combined with grants and loans. Notably, under the July 2025 law, the 45W credit ends for vehicles acquired after Sept. 30, 2025, and the 30C credit ends for charging infrastructure placed in service after June 30, 2026. Learn more →
• Education and Climate Provisions in the Infrastructure Investment and Jobs Act: From The Aspen Institute’s This Is Planet Ed and the World Resources Institute’s Electric School Bus Initiative, this resource outlines how the IIJA can support schools in addressing climate change, from funding for buses and buildings to resilience and efficiency upgrades. It details provisions school districts can use to create healthier, more sustainable learning environments. Access the resource →
• Public and Nonprofit Sector Buildings Provisions in the Inflation Reduction Act and Infrastructure Investment and Jobs Act: This resource explains how schools and other public or nonprofit buildings can combine federal tax incentives, grants, and financing to fund clean energy upgrades. It includes a sample school project and highlights key programs such as the permanent 179D deduction, direct pay ITC for geothermal and storage, and competitive grants under IIJA and EPA’s Greenhouse Gas Reduction Fund. Read more →
• Fact Sheet: Inflation Reduction Act Tax Credits Can Fund School Facilities Upgrades and Reduce School District Energy Bills*: The U.S. Department of Treasury provides K-12–specific guidance on how schools can use elective pay (“direct pay”) to claim federal clean energy tax credits. The fact sheet explains which projects may qualify—such as solar, geothermal, microgrids, EVs, and charging infrastructure—and outlines the pre-filing and filing process for school districts. Read more →
• Making Clean Energy Tax Credits Deliver for the Public: A User Guide for Governments, Schools, and Nonprofits*: From the Blue Green Alliance, this user guide details how governments, schools, and nonprofits can use direct pay to access clean energy tax credits. It covers eligibility, the pre-filing process, and strategies for maximizing credit value through labor standards, domestic content, and location-based bonuses. The guide also outlines how projects like solar, storage, geothermal, EVs, and clean vehicles can combine tax credits with other funding sources. Read more →
• IRS Guidance on Clean Energy Tax Credits for State and Local Government Entities*: This IRS resource explains how state and local governments, school districts, and other tax-exempt entities can use elective pay (“direct pay”) to claim clean energy tax credits. It covers eligibility, pre-filing registration, filing requirements, and documentation for projects like solar, geothermal, storage, EVs, and charging infrastructure. Read more →
• Inflation Reduction Act Tracker: This tracker records federal agency actions related to the implementation—and rollback—of IRA climate provisions. Users can filter by section, agency, eligible entity, or action type, and click through to source documents for details. The tracker provides historical context and insight into how provisions have evolved. Read more →
• Geothermal Tax Credit Guide*: This guide provides an overview of federal incentives for installing geothermal heat pumps in commercial and public buildings. It explains how the Investment Tax Credit (ITC) and elective pay can reduce project costs, and covers bonus credits for labor standards, domestic content, and energy communities. It also details depreciation benefits and eligibility requirements for schools and nonprofits.  Read more →
• Inflation Reduction Act: Solar Energy and Energy Storage Provisions: From the Solar Energy Industries Association (SEIA), this resource provides a quick overview of the key provisions in the IRA, including solar energy and energy storage technologies.  Read more →

Resources marked with an asterisk (*) were published prior to the July 2025 federal budget reconciliation law. While still useful for understanding elective pay and project eligibility, some details—such as credit timelines or restrictions—may have changed. For the most up-to-date guidance, consult UndauntedK-12’s Energy Tax Credits for Schools Hub and L4GG’s Guidance Brief.