Unlock savings: Tax credits available to businesses, nonprofits for clean energy upgrades

Federal clean energy tax credits and incentives are still available for Michigan businesses and tax-exempt entities considering investments for energy efficiency – and now is the time to take advantage of some that will phase out in the coming months.

Deadlines are as soon as June 30, 2026, and every dollar in credits that can be claimed before these cuts fully take effect amounts to real money saved.

Federal clean energy tax credits – and the new elective pay (aka direct pay) mechanism that provides tax-exempt entities the equivalent of these credits – play a critical role in making clean energy sources more affordable. They cover 30% or more of costs connected to solar panels; geothermal heating, ventilation, and cooling (HVAC) systems; and battery storage.

Credits can support Michigan businesses that produce clean energy or manufacture clean energy components in the state. Energy efficiency building improvements help Michigan business owners and nonprofits lower their monthly utility bills and save money over the long term.

Not only have these incentives saved working families and businesses thousands of dollars, they also have helped advance goals in the MI Healthy Climate Plan, supported jobs in Michigan, and ensured reliable energy as demand for electricity continues to grow.

Michigan business owners and tax-exempt organizations such as municipalities, school districts, nonprofits, and houses of worship are encouraged to explore and use these cost-saving programs before they expire.

Below is a list of commercial credits. Those eligible to be claimed by tax-exempt entities using elective pay are marked with an asterisk (*).

Tax credit	Description	Eligibility timeline
Commercial Clean Vehicle Credit (45W)*	Available to businesses and tax-exempt organizations that have purchased electric, hybrid, or fuel cell vehicles.	Vehicles must have been acquired before Sept. 30, 2025, but may be placed in service at a later date. The credit is claimed on the tax return for the tax year in which the vehicle was placed in service.
Alternative Fuel Vehicle Refueling Property Credit (Section 30C )*	Available to businesses and tax-exempt organizations that install qualified refueling or recharging property, including electric vehicle (EV) charging equipment, in an eligible location.	Property placed in service before June 30, 2026, is eligible.
Clean Electricity Investment Tax Credit (Section 48E)*	Available to businesses and tax-exempt organizations that install eligible clean electricity projects and energy storage technologies. The credit is based on the cost of qualified investments including construction and installation costs, qualified equipment purchases, and direct labor and engineering costs. Eligible projects are any facilities that produce electricity with zero or net-zero greenhouse gas emissions, including solar, wind, geothermal, hydropower, and energy storage.	Wind and solar projects that start construction by July 4, 2026, are eligible. Projects that start construction later must be placed in service by Dec. 31, 2027. Zero-emission energy technology other than solar or wind (geothermal, hydropower, energy storage, etc.) that start construction by 2033 are eligible. The program phases down afterward under current law. Many projects will have to comply with new Prohibited Foreign Entity (PFE) restrictions.
Clean Electricity Production Tax Credit (Section 45Y)*	Available to businesses and tax-exempt organizations that install eligible clean electricity projects and energy storage technologies. The credit is based on the amount of electricity produced and sold to the grid. Eligible projects are any facilities that produce electricity with zero or net-zero greenhouse gas emissions, including solar, wind, geothermal, hydropower, and energy storage.	Wind and solar projects that start construction by July 4, 2026, are eligible. Wind and solar projects that start construction later must be placed in service by Dec. 31, 2027. Zero-emission energy technology other than solar or wind (geothermal, hydropower, energy storage, etc.) that start construction by 2033 are eligible. The program phases down afterward under current law. Many projects will have to comply with new PFE restrictions.
Advanced Manufacturing Production Credit (Section 45X )*	Available to businesses that manufacture eligible clean energy components in the U.S. Eligible manufacturers must produce eligible components in the U.S. or its territories and substantially transform these components as part of a trade or business. They also must sell the components to either an unrelated party, a related party that then sells to an unrelated party, or a related party but treating that party as unrelated for purposes of the credit. Businesses that claim the 48C Advanced Energy Project investment credit for the same facility are ineligible. Eligible products include solar and wind energy components (including offshore wind vessels), inverters, battery materials, qualifying battery parts, and critical minerals. The credit amount is based on the type and quantity of components produced and sold.	Wind components produced and sold by Dec. 31, 2027, are eligible. Other technologies can take advantage of this credit on a longer timeline with phase-out beginning in 2030.
Credit for Production of Clean Hydrogen (Section 45V) *	Available to businesses and tax-exempt organizations for each kilogram of qualified clean hydrogen produced at a qualified clean hydrogen production facility. The credit amount depends on the emissions intensity of the hydrogen production process and the taxpayer's compliance with prevailing wage and apprenticeship requirements during facility construction, alteration, and repair.	Facilities that start construction by Dec. 31, 2027, are eligible.
Clean Fuel Production Credit (Section 45Z )*	Available to businesses and tax-exempt entities that produce clean transportation fuel, divided into two categories: sustainable aviation fuel (SAF) and non-SAF transportation fuel. The credit is based on the quantity produced by the taxpayer at a qualified facility during the taxable year, sold by the taxpayer in a qualifying sale, and the code-determined emissions factor for such fuel.	Transportation fuel sold by Dec. 31, 2029, is eligible. Enhanced rates for SAF are terminated for fuel sold after Dec. 31, 2025. For the purpose of this credit, transportation fuel means a fuel that is suitable for use in a highway vehicle or aircraft, has an emissions rate not greater than 50 kilograms of CO2e per million BTU, and is not derived from co-processing an applicable material or materials derived from an applicable material with a feedstock that is not biomass. This includes non-SAF transportation fuel and SAF.
Energy Efficient Commercial Buildings Tax Deduction (179D)	Available to businesses that place in service eligible energy efficient property in commercial buildings.	Construction of eligible energy efficient property in commercial buildings beginning before June 30, 2026, is eligible.

As noted above, certain tax credits will need to comply with PFE guidelines beginning Jan. 1, 2026.