Finance

The Inflation Reduction Act introduced and expanded tax credits for clean energy technologies over the next decade. The Act included new provisions enabling tax-exempt and governmental entities to access some of the tax credits. Vermont’s municipalities – and agencies and instrumentalities of state and local government, such as fire, utility, and solid waste districts and transportation and public safety authorities – are eligible to file a claim for one or more eligible projects. This resource helps you understand the claims process.

What is Elective Pay (Direct Pay)?

The mechanism to claim these tax credits is called “Elective Pay” (sometimes referred to as “Direct Pay”). Municipalities can receive a payment equal to the full value of tax credits for building qualifying clean energy projects. Unlike competitive grant and loan programs, in which applicants may not receive an award, elective pay allows municipalities to get their payment if they meet the requirements for both elective pay and the underlying tax credit. The municipality implements its eligible project, notifies the Internal Revenue Service (IRS) of its intent to claim the credit, and files an annual tax return to claim elective pay for the full value of the credit. The IRS then pays the municipality the value of the credit. Several Vermont municipalities have used elective pay successfully.

Of the 12 elective pay tax credits, Vermont’s municipalities likely would use the ones for generating clean electricity through solar, wind, and geothermal and for battery storage projects (§ 48; § 48E); installing electric vehicle (EV) charging infrastructure (§ 30C); and purchasing clean vehicles for their vehicle fleets (§ 45W).

For more information about using elective pay on projects that are receiving grants and forgivable loans, see Q41 on the Internal Revenue Service’s Elective pay and transferability frequently asked questions webpage.

Why Apply for Elective Pay?

Elective pay can make it easier for local governments to invest in clean energy and can potentially allow them to take on bigger projects faster. Deploying more clean energy into local communities helps save residents money, cuts harmful pollution, and improves public health.

Example.  The Town of Sheffield installed a 10-kW solar array and battery backup system with the help of Elective Pay and several grants. It filed for its Elective Pay reimbursement when paper filing was the only option. In December 2024, Sheffield received an Elective Pay refund of $32,868. The Town also received an interest payment because its refund took longer than 45 days.

Example. The Town of Walden installed a 17.46 KW system with 36 ground mounted 485-watt panels at its town garage site using local funds and Elective Pay. The project cost was $54,713. The Town filed electronically for an Elective Pay refund in early 2025. In late May 2025, Walden received its Elective Pay refund of $16,414.

How Does My Municipality Apply for Elective Pay?

Municipalities wishing to claim elective pay need to complete the following steps. Please consult the IRS website for the latest information on incentives for:

• clean vehicles (§ 45W),
• EV charging, a.k.a. Alternative Fuel Vehicle Refueling Property Credit (§ 30C), and
• clean electricity (§ 48 for pre-2025 and § 48E for 2025 onwards).

The IRS summary of the clean electricity credit can be useful.

Sample Timeline for Claiming Elective Pay for Most Organizations with a Calendar Tax Year

This example timeline is for projects that were placed into service in 2024.

On July 4, 2025, the One Big Beautiful Bill Act (OBBBA) was signed into law, significantly reshaping the landscape of federal energy tax credits. Several provisions in the Act directly affect local governments and municipal energy initiatives. See VLCT's web resource, Key Changes to Tax Incentives for Municipal Energy Projects, for key changes, deadlines, and eligibility modifications relevant to municipalities.

Have Additional Questions?

To learn more about elective pay and how to claim a tax credit for a municipal project, visit:

• Tax Incentives Municipalities Can Use to Further Their Energy Goals - Vermont League of Cities and Towns – Basic overview of available credits.
• Key Changes to Tax Incentives for Municipal Energy Projects | Vermont League of Cities and Towns - Outlines key changes, deadlines, and eligibility modifications made in the One Big Beautiful Bill Act (OBBBA) that are relevant to municipal clean energy projects. (July 2025)
• IRS Tightens Timeline for Energy Tax Incentive Eligibility: What Municipal Leaders Need to Know | Vermont League of Cities and Towns - IRS guidance on the "beginning of construction" requirements for wind and solar facilities. (August 2025)
• Detailed Overview of Elective Pay Credit - Lawyers for Good Government – This recording from the Vermont Bond Bank’s 2024 Capital Planning Forum provides more detail about elective pay, the filing process, and documentation.
• 5 Steps Toward Successfully Filing for the IRA Elective Pay Provision for Local Clean Energy Projects – National League of Cities and GFOA - Summarizes the key steps in the filing process and provides information that may help you approach and eventually successfully execute your municipality’s Inflation Reduction Act elective payment.
• Elective Pay & IRA Tax Incentives - Lawyers for Good Government – Fact sheets for first-time tax credit claimants, annotated forms that help you understand and complete IRS forms, webinars, and searchable Frequently Asked Questions. You can submit questions that L4GG will answer through its Frequently Asked Questions.
• Elective pay and transferability - Internal Revenue Service – Main IRS webpage about elective pay for official information.
• Elective pay and transferability frequently asked questions - Internal Revenue Service – Good for exploring the most common questions about elective pay and pre-filing registration.

Disclaimer:  This summary provides information about tax credits and deductions available to municipalities through the Inflation Reduction Act of 2022. Information was drawn from information previously posted on the Biden Administration whitehouse.gov Direct Pay Through the Inflation Reduction Act webpage, the IRS’s Elective pay and transferability frequently asked questions webpage, and Lawyers for Good Government’s Elective Pay & IRA Tax Incentives webpage. Links to sites offered in this document are provided to assist municipalities. The inclusion of a link does not imply endorsement or approval of the linked site. The content of this document does not constitute legal or other professional advice. Municipalities are advised to consult tax, legal and other professionals regarding use of these credits. If a municipality intends to use elective pay for a clean energy project, the municipality is advised to monitor potential Congressional changes before proceeding with project development.

The sheer volume of paperwork being filed and stored in municipal offices has filled municipal vaults to capacity. Municipalities can digitize records to enhance public access, but original documents still need to be retained and stored. Below are funding opportunities we've identified to support your efforts to expand vault space.

Consult program-specific guidance for additional information. Links to other sites offered in this document are provided to assist municipalities: the inclusion of a link does not imply endorsement or approval of the linked site or product.

Funding Opportunities

Municipal Restoration and Preservation Reserve Fund - Vermont Statute (32 V.S.A. § 1671) discusses the fees a Town Clerk can collect for recording documents. In 2019, the Legislature made it mandatory for legislative bodies to create a Restoration and Preservation Reserve Fund for restoration, preservation, digitization, storage, and conservation of municipal records (32 V.S.A. § 1671(8)(c)(1)). The law requires that no less than $4.00 per page from the per page recording fees established under Vermont law are required to be deposited into the fund unless the Town Clerk certifies annually to the House Committee on Government Operations that the municipality has sufficient dedicated reserve funds to address the requirements of the Restoration and Preservation Reserve. The fee is higher for certain types of documents. Unspent funds carry over to subsequent fiscal years and must be used for records restoration and preservation.

If your municipality has not established a fund, we advise you to calculate the fees owed to the Fund and either set aside the cash to build the Fund or create a plan to fund it. Document storage, including a new vault, is an eligible activity for Fund use.

USDA Rural Development Community Facilities Direct Loan and Grant Program – Provides affordable funding to develop essential community facilities in rural areas, which is defined as a community of 20,000 or less population. Examples of essential community facilities include health care facilities; public facilities; community support services; public safety services; educational services such as museums, libraries; private schools; utility services such as telemedicine or distance learning equipment; and local food systems. Check your community’s grant eligibility, which can range from 0% to 75%. We recommend discussing the project with USDA staff prior to initiating an application.

National Endowment for the Humanities (NEH) Preservation Assistance Grants for Smaller Institutions - Municipal records offices are eligible. The grant improves the applicant’s ability to preserve and care for their significant humanities collections. Applicants must draw on the knowledge of consultants whose preservation skills and experience are related to the types of collection and the nature of the activities on which their project focuses. This grant could be used for professional services to assess preservation needs and to purchase preservation supplies, storage furniture or environmental monitoring equipment. A recorded webinar about this grant is available on NEH’s website.

National Historical Publications & Records Commission Access to Historical Records - This grant supports projects that ensure online public discovery and use of historical records collections. All types of historical records are eligible, including documents, photographs, born-digital records, and analog audio and moving images. Grants have gone to local government archives, colleges and universities, and other nonprofit institutions. It may be helpful to discuss this grant with the State Archivist prior to pursuing an application as the Vermont State Archives and Records Administration has received several awards.

Congressional Appropriation - Congressional appropriations were formerly known as Earmarks and are currently known as Congressionally Directed Spending for the Senate and Community Project Funding for the House of Representatives. Projects are nominated by Members of Congress for funding through the appropriations bill. The Senate and House have different rules for these requests. Projects benefit from advanced discussion with Congressional staff. If selected, funds pass through a federal agency with that agency’s associated grant terms and conditions. Funds may not be available for 1-4 years based on agency capacity. Information is available on websites of Senator Sanders, Senator Welch, and Representative Balint. Projects are usually submitted in late February through mid-March annually.

Other Grant Opportunities

Portions of projects may be eligible for other grants based on standalone components of the project. For example:

• Sites with stormwater challenges or along streams may be eligible for grants from the Vermont Department of Environmental Conservation.
• Structures that need accessibility modifications to comply with the Americans with Disabilities Act may be eligible for grants from the Vermont Community Development Program.
• Sites that have experienced flooding may qualify for hazard mitigation grants through Vermont Emergency Management or FEMA.

Capital Planning

Municipal budgets often include capital costs – constructing a new fire station or garage, repairing or replacing the town office, purchasing a new vehicle, water or wastewater system replacement, repairing or replacing recreation facilities, etc. A capital plan looks at annual costs for capital projects for the next five to ten years and then proposes a means of paying for them. Municipalities use capital planning to prepare for the cost of capital projects, which helps stabilize tax rates. VLCT recommends that municipalities adopt a capital plan or, at minimum, establish a capital planning schedule.

The Two Rivers-Ottauquechee Regional Commission has a presentation and resources on its website that are useful for capital budgeting. Municipal Planning Grants can be used to develop a capital plan. The Vermont Bond Bank has a capital planning resource page with videos and sample templates, policies, and plans. The Bond Bank assists municipalities with determining their debt capacity. Contact Ken Linge at ken@vtbondagency.org for assistance. Marguerite Ladd, VLCT’s Government Finance Specialist, is a wealth of knowledge. She provides best practice advice for getting started and building your capital plan. Contact her at mladd@vlct.org.

Where to Find Help

The Vermont State Archives and Records Administration has a link to national standards for vault specifications. There are different costs associated with each records storage environment and the tolerance scale can be used to determine what best meets a public agency's needs and budget.

Municipalities are welcome to use VLCT’s Ask a Project Pro to discuss potential funding sources for a project or for project development advice. Through this service, VLCT narrows funding opportunities to those most pertinent to a project, saving municipalities time and resources. We also provide coaching for project development and grant management.

Many municipalities lack capacity for grant writing and administration. VLCT published a resource, Increasing Municipal Writing Capacity for Grants, that offers ideas for assistance with grants.

If your SAM (System for Award Management) registration becomes inactive, it must be reactivated. An inactive status can affect your eligibility for federal funding, such as FEMA Public Assistance and some transportation and community development grants and loans.

Below are the steps you can take to reactivate the account.

Log In to your SAM account.

• If you are an authorized user, access your municipality’s SAM account using the email address and password associated with your login.gov account. If you’ve forgotten your login credentials:
  • Email Address: If you don’t know what email is associated with your municipality’s SAM account, contact the Federal Service Desk (see Need Help? below) for free assistance.
  • Password: If you don’t have your password, use the “Sign In” function on the SAM homepage then the “Forgot your password?” function on the Sign In page.
• If you are not an authorized user, you can request that the Entity Administrator for your municipality assign you a role. If the municipality’s Entity Administrator is no longer with the municipality, the municipality can request a new Entity Administrator be appointed.

Verify why your SAM account is inactive.

The first step to reactivating your SAM registration is to verify why it is inactive. Once you are logged in, SAM will provide information about the specific actions required to reactivate your registration. The most common reasons for inactive registrations are:

• The municipality did not renew its registration in the past year by validating information in SAM. SAM accounts must be renewed each year or they become inactive. There is no fee to renew SAM accounts. It is a free process provided by the federal government. It can be helpful to set a calendar reminder to renew the registration at least one month prior to expiration. This allows sufficient time to work out any challenges during the renewal process.
• The municipality renewed its registration, but something was missed during the update process. If this is the case and you login to your account, SAM will provide information about the specific actions required to reactivate your registration.

Complete required actions.

SAM will typically provide a list of actions you need to complete to reactivate your registration. These actions may include updating your registration information, renewing your registration, or resolving any outstanding issues.

• Submit Necessary Updates. If your municipality’s registration requires updates or changes to its information, complete the necessary fields and provide any required documentation. Ensure that all information is accurate and up to date. Inaccurate information may lead to delays in processing grant agreements.
• Follow the Renewal Process. If your registration has expired (was not renewed in the past year), you will need to go through the renewal process. This typically involves reviewing and updating your information, confirming your eligibility, and verifying your tax identification numbers (TINs). SAM may require you to submit specific documentation to verify your municipality’s identity. Ensure that you provide all requested documents in a timely manner. A common error is to miss using the Submit button after updates are completed and before exiting SAM. If you do not receive a confirmation email, login and check for additional missed items.
• Verify Your Status. After completing all required actions, log back into your SAM account after a few days to verify your SAM registration status has been reactivated. Ensure that there are no outstanding issues or alerts related to your registration.

Need Help?

Contact the Federal Service Desk through the following methods:

• Create an Incident (login required)
• Live Chat (login required)
• Phone: 866-606-8220 (toll-free)

You also can submit your question through VLCT’s Ask A Question webpage. We are happy to help you.

What if I have other SAM questions?

VLCT published a resource on our website that provides Answers to SAM.gov Frequently Asked Questions. These are the questions we receive most often from municipalities.

Are you having difficulties with your SAM.gov registration? Is your registration inactive? Has the person with administrative privileges for your account left municipal service? 

This resource assists municipalities with finding answers to their most frequently asked questions about SAM.gov (a.k.a. SAM). In most cases, the questions below link directly to SAM's Frequently Asked Question (FAQ). If you have a question that is not included below, you can search SAM's FAQs or submit your question on our Ask A Question webpage. We are happy to help you find an answer.

What Is SAM.gov?

SAM.gov, the System for Award Management or SAM, collects data from suppliers and funding awardees who want to do business with the federal government. Municipalities interact with SAM.gov in multiple ways.

• Municipalities that are awarded federal funding are required to register with SAM and to maintain that registration through the life of their funding agreement.
• Municipalities that pass federal funds to other entities (contractors, grant sub-recipients) are required to search for and retain the other entity's registration and exclusion records.
• Municipalities that use federal funds for construction projects must use wage determinations listed on SAM to meet their obligations under the Davis Bacon Act.

VLCT encourages municipalities to maintain their SAM registration regardless of whether the municipality has current federal funding. Maintaining the registration through annual updates helps ensure federal funding, like FEMA Public Assistance and infrastructure and community development funding, will flow smoothly to the municipality.

Does It Cost Money to Register or Renew a Registration in SAM.gov?

No. Registering in SAM is free. There are private businesses who charge a fee to help you register in SAM. While it is a business decision as to whether the municipality wants to pay a fee to have a third party register them in SAM, there is no cost to register or to renew a registration directly on SAM. 

Registering on SAM generally can be done in less than hour, and registration renewal generally can be done in less than five minutes. The official SAM site is www.sam.gov.

Frequently Asked Questions

General

• What is the difference between Login.gov and SAM.gov?

Confirming Entity Registration and Status

• How can I find out if an entity is registered in SAM.gov?
• How can I view my Unique Entity ID or entity registration record?
• What do the different registration statuses mean?

Account Roles

• How can I view a complete list of users and their roles for my non-federal entity?
• Why am I unable to request a role?
• What is an Entity Administrator in SAM.gov?
• How can I become the administrator for my non-federal entity registration?
• How do I invite or assign a role to users in SAM.gov?

Updating and Renewing a Registration

• How do I update/renew an existing entity registration in SAM.gov?
• Is there a Quick Start Guide for updating entity registrations?
• How do I update the banking information on my SAM.gov entity registration?
• How do I update the Points of Contact (POCs) on my SAM.gov entity registration?
• How do I change whether my entity is shown in public search results on SAM.gov?

SAM recommends entities opt in to public display. No sensitive information is available via SAM’s public search. Public display allows the municipality's information to be found easily by granting agencies and so information can be located if employees leave without transferring the Entity Administrator role. Registrations that opted in to public display remain searchable and viewable by authenticated users in SAM. Inactive Registrations that opted out of public display are only searchable and viewable by authenticated federal users and authenticated public users with roles with the entity in SAM. 

• What documentation can I use to validate my entity?
• What happens to my SAM.gov access if I change my email address on login.gov?
• What is the NAICS Code for local government?
• How do I delete a partially complete registration renewal if I’ve made a mistake?
• What should I do if my SAM registration has become inactive?

Getting Help

• How do I initiate a live chat with an agent through the FSD.gov portal?
• How can I receive training for SAM.gov?
• You can submit your question through VLCT’s Ask A Question webpage. We are happy to help you find an answer.

VLCT offers a variety of trainings throughout the year. This listing is an overview that is subject to change. For details of currently available trainings and to register, please visit vlct.org/events. Most events are posted on the events calendar four or more weeks before they take place. 

Sponsored by Acrisure, VLCT’s exclusive broker partner in providing life and disability insurance and health insurance advisory services to participating VLCT members.

 January