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:

• 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.

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)

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). 

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

Robust help with SAM.gov is available from the Federal Service Desk (FSD).

• Search for User Guides, FAQs, Videos, and Definitions using the Federal Service Desk (FSD). 
• Initiate a live chat with an agent through the FSD.gov portal.
• Create an Incident (a.k.a. ticket) through the FSD.gov portal. Tickets are closed after 5 days, so respond to inquiries immediately.

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. Many of our trainings are also available on demand in the VLCT Store. 

On Demand Training

Most training in 2026 remains free thanks to grants from PACIF and the USDA. Select trainings have a registration fee to help cover costs that aren’t eligible for grant funding. Please check the individual event page when registration opens for more information.

2026 Events

The U.S. Department of Treasury (Treasury) recognizes that due to the receipt of a State and Local Fiscal Recovery Funds (SLFRF)/ARPA award, many recipients may expend $750,000 or more in federal awards during their fiscal year and newly be required to complete a Single Audit or a Program-Specific Audit. Section IV of the SLFRF/ARPA Compliance Supplement describes an alternative approach for SLFRF/ARPA recipients that are required to undergo an audit pursuant to 2 CFR Part 200, Subpart F solely for the expenditures of SLFRF funds directly awarded by Treasury. An SLFRF/ARPA recipient may still elect to undergo a Single Audit or a Program-Specific Audit under 2 CFR Part 200, Subpart F. 

Eligibility Criteria 

SLFRF/ARPA recipients that expend $750,000 or more in federal awards during the recipient’s fiscal year and that meet both criteria listed below have the option to follow the Alternative Compliance Examination Engagement (ACEE) Report: 

1. The recipient’s total SLFRF/ARPA award received directly from Treasury or received (through states) as a non-entitlement unit (NEU) of local government is at or below $10 million; and
2. Other federal award funds the recipient expended (not including their SLFRF/ARPA award funds) are less than $750,000 during the recipient’s fiscal year.

Further details are included in:

• 21 SLFRF Compliance Supplement – Technical Update (see content beginning on page 9)
• 2022 SLFRF Compliance Supplement (see content beginning on page 10)
• 2023 SLFRF Compliance Supplement ( see content beginning on page 11)

Examination Guidance 

The alternative approach to a Single Audit or Program-Specific Audit under 2 CFR Part 200, Subpart F permits eligible recipients to engage a practitioner (professional auditor) to perform a compliance examination engagement in accordance with the Government Accountability Office (GAO) Government Auditing Standards. These standards direct practitioners to conduct these engagements in accordance with the American Institute of Certified Public Accountants (AICPA) Statements on Standards for Attestation Engagements. The AICPA attestation standards are codified in the AT-C section of the AICPA’s Professional Standards and AT-C Section 315, Compliance Attestation, which is the standard to be followed.

Some Additional Details to Remember about Local SLFRF/ARPA Awards

• Notice the name of the SLFRF/ARPA funding: STATE and LOCAL Fiscal Recovery Funds. The State of Vermont received state ARPA (~$1 billion) and municipalities received local ARPA (~$200 million).  
• The amount of your total local SLFRF/ARPA award can be found in the Local Fiscal Recovery Funds Allocations table provided by the state government.
• All recipients of local SLFRF/ARPA funds are direct recipients (not beneficiaries or subrecipients).
• All recipients of local SLFRF/ARPA funds have a grant agreement (Coronavirus Local Fiscal Recovery Funds form and Assurances of Compliance with Civil Rights Requirements form) directly with the U.S. Department of Treasury.
• If a municipality receives state SLFRF/ARPA from the State of Vermont, then the municipality is most likely considered a subrecipient of these funds. If you are unsure, look at the first section of the first page of your grant agreement. It should look like this State of Vermont Grant Agreement.
• Expenditures of local SLFRF/ARPA funds should be included on a municipality's Schedule of Expenditures of Federal Awards (SEFA).

Other Supporting Documents

• Alternative Compliance Examination Engagement (ACEE) Report User Guide
• National League of Cities: What You Need to Know About ARPA and the Single Audit Alternative

Is your municipality ready to invest in a solar array and/or energy storage to meet its energy goals, build climate change resilience, and save money? Below are funding opportunities we've identified to support your efforts.

Consult program-specific guidance for additional information. Links to other websites 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.

Municipally Owned Array | Developer Owned Array | Resources

Municipally Owned Array

Cash Purchase

Direct ownership of a solar system can be financed with cash through the municipal budget, using local ARPA funds, or with a municipality’s reserve fund.

Direct Solar Loan

The municipality can borrow money from a traditional lender and make monthly payments. EnergySage compiled a comprehensive list of lenders that finance solar projects in Vermont. VLCT is aware of these in-state lenders and programs marketing loans for energy projects.

EastRise Credit Union Green Loan – EastRise's green lending program supports solar installations.

Vermont Federal Credit Union (VFCU) Solar Loan - VFCU's solar loan supports solar installations.

Vermont Economic Development Authority (VEDA) Commercial Energy Loan Program - Municipalities are eligible for this program. It has variable rates and a low fixed rate option for five years.

Vermont Bond Bank Energy Efficiency and Renewable Energy Program - Provides low cost and flexible financing for energy efficiency and renewable energy projects to help drive down costs for all eligible Bond Bank borrowers from towns to school districts. Eligible loans must demonstrate a minimum of 5% savings of costs spent on energy and/or total energy use. Contact Vermont Bond Bank loan officer, Ken Linge, to start.

Vermont Buildings and General Services Municipal Energy Revolving Fund – The Vermont Legislature authorized a Municipal Energy Loan Program and a Municipal Energy Revolving Fund as part of Act 172 in 2022. Eligible activities are energy audits and energy efficiency improvements in municipal buildings. 

Establish A Municipal Revolving Loan Fund - The City of Montpelier established its own Net Zero Revolving Loan Fund using $20,000 from the City’s Reserve Fund, which Efficiency Vermont matched with $10,000. The fund finances municipal energy efficiency and renewable energy investments. Annual energy savings from funded projects are paid back into the fund so it grows over time.

Grants and Rebates

These funding opportunities can be used by a municipality for energy generation and/or storage.

Vermont Arts Council Cultural Facilities Grant - Supports projects that enhance, create, or expand the capacity of an existing building to provide cultural activities for the public. Applicants must own a facility that is at least 10 years old, and it must be physically located in Vermont. This grant will fund improvements to libraries, town halls, and other municipal buildings if they provide cultural activities for the public, including accessibility improvements, hazard mitigation efforts, and energy efficiency upgrades among other physical improvements. Energy efficiency projects, including renewable energy and battery storage, are eligible activities.

EBSCO Solar Grant Program – This annual grant funds solar installations at libraries with a goal of helping libraries offset their expenses by incorporating solar power. Optimal candidate libraries will have newer roofs that have a lifespan consistent with a new solar system or space for a ground installation. The library should be able to support an array large enough to offset a significant portion of the library’s electricity costs. The library must be a current EBSCO customer. A library in a small Vermont community has received an EBSCO grant.

Federal Investment Tax Credit - In the Inflation Reduction Act (IRA) of 2022, Congress authorized entities that don’t pay federal taxes, such as municipalities and municipal utilities, to use certain tax incentives. Based on their energy production capacity, most solar projects for municipal facilities will use the Investment Tax Credit. See VLCT’s Tax Incentives Municipalities Can Use to Further Their Energy Goals. For renewable energy generation and storage, municipalities can use the Energy Tax Credit (§ 48) for projects placed in service through December 31, 2024, and the Clean Electricity Investment Tax Credit (§ 48E) for projects placed in service beginning January 1, 2025. Requirements for this credit were updated in 2025. See Key Changes to Tax Incentives for Municipal Energy Projects and IRS Tightens Timeline for Energy Tax Incentive Eligibility: What Municipal Leaders Need to Know.

The tax credit is claimed through a process known as Elective Pay (a.k.a. Direct Pay). To receive a payment from the IRS, the municipality must complete a pre-filing registration for each eligible project and receive a project registration number. Other requirements include satisfying all eligibility requirements for the tax credit, substantiating them with documentation, and filing Form 990-T by a specified due date. Form 990-T is the Exempt Organization Business Income Tax Return. See Claiming Tax Incentives for Your Clean Energy Project.

The IRS’s webpage for Inflation Reduction Act tax incentives includes information, publications, and frequently asked questions about Elective Pay and Transferability. Publication 5817-G, Clean Energy Tax Incentives: Elective Pay-Eligible Tax Credits highlights tax credits available to tax exempt entities.

Green Mountain Power (GMP) Rebates & Programs – GMP has incentive programs for energy storage for its customers.

VNRC Small Grants for Smart Growth – Supports advocacy for better land use, advancing transportation choice, supporting housing choice and affordability, promoting downtown or village center revitalization, conservation and natural resources, public outreach and engagement. Awards can be useful for project planning, as well as outreach and education activities around community revitalization efforts. Awards cannot be used for capital improvements. Awards range from $500 to $1,500.

These funding opportunities require wrapping the solar project into a larger project, developing arrays that serve low- and moderate-income communities, or selling power.

USDA Powering Affordable Clean Energy PACE Program – Supports renewable energy projects that use wind, solar, hydropower, geothermal, or biomass, as well as for renewable energy storage projects. Applicants must generate electricity for resale to residents.  Projects must be based on bankable power purchase agreements (PPAs) or through a financial guarantee that ensures the financial feasibility of the project. Energy must be sold for resale to eligible off-takers which can include both utility and non-utility customers. 

Both rural and nonrural areas are eligible; however, at least 50 percent of the population served by your proposed renewable energy project must live in communities with populations of 20,000 or fewer. This is a loan program, but it provides loan forgiveness (grant component) if minimum standards are met (20% forgiveness) or if the project in or serves 50% or more of the population of a designated energy community, disadvantaged community, or distressed community (40% forgiveness). Award range is $1 million to $100 million. Loan term is up to 35 years. Federal investment and production tax credits can be used with this program.

USDA Rural Development Community Facilities Direct Loan and Grant Program - Funds solar as part of an award for other qualified projects, such as municipal and emergency services buildings, water and wastewater, and other community services. Communities with 20,000 people or fewer are eligible for the program. Communities with 5,000 people or fewer receive top priority for the grants.

Funding awards range from 75% grant and/or 25% loan to 0% grant and/or 100% loan depending on the community’s population and Median Household Income. The program website provides grant eligibility by municipality. This information will be updated for 2020 Census information in summer 2023. If your community’s grant eligibility is 15% or less, it may be more beneficial to pursue a traditional loan. New federal requirements may raise project costs sufficiently to offset the benefits of the grant funds. It is advisable to discuss projects with USDA staff prior to initiating an application.

Northern Borders Regional Commission Catalyst – Supports projects that address transportation, telecommunications, energy, and basic public infrastructure; business and workforce development; health care, nutrition and food security, and other public services; resource conservation; tourism; recreation; and open space preservation consistent with economic development. New in 2023, the grant funds basic public infrastructure, including public meeting spaces. Incorporating a project’s relationship to economic activity will increase application competitiveness. Solar arrays that sell power will be more competitive.

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.

Where to Find Help

Municipalities are welcome to use VLCT’s Ask a Project Pro service 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 Capacity for Grants, that offers ideas for assistance with grants.

Developer Owned Array

Municipalities can finance solar arrays through developer-financed solar loans, solar leases, and power purchase agreements (PPAs).

Solar Lease

With a solar lease, the municipality agrees to pay a fixed monthly lease payment to the solar developer. Ex. $XX every month through the life of the loan. Some lease agreements allow purchase of the panels at the end of the lease so the municipality can continue using the solar.

Power Purchase Agreement

With a power purchase agreement, the municipality agrees to purchase the power it uses for a set price per kilowatt-hour. This means the municipality’s monthly bill will vary based on power used.

With solar leases and PPAs, the solar developer pays upfront costs and owns the system when it is placed in service. Therefore, the developer would own any tax credit.

Municipalities can request cost estimates from solar developers for municipally owned and developer owned arrays to understand how the tax credit affects municipal costs under both options.

Resources

US Department of Energy Solar and Storage Blueprint – This step-by-step guide includes a high-level overview of the process and benefits of two approaches to going solar – power purchase agreements (PPAs) and direct government ownership of projects. The Blueprint showcases important tools and online resources, such as a sample Request for Proposals - and outlines Key Activities to help guide entities to success. A Blueprint Summary PDF is available for download. The Blueprint, along with Blueprints for other energy activities, was developed for recipients of the Energy Efficiency and Conservation Block Grant (EECBG) formula program. Vermont’s municipalities have access to these Blueprints even if they haven’t been awarded an EECBG grant.

Vermont Department of Service Renewable Energy Resources – This website includes links to publications and websites about solar, biomass, hydroelectric, and wind energy.

Vermont Energy and Climate Action Network (VECAN) Community Solar Toolbox – VECAN walks you through getting started, siting, and other important issues. It provides models, approaches, resources, other guides, and success stories.