Hours: Monday - Friday 8:00 am - 5:00 pm

Resources

Inflation Reduction Act could provide clean energy tax credits for health care organizations and investors

REAL ECONOMY BLOG | September 21, 2023

Authored by RSM US LLP


The Inflation Reduction Act, enacted on Aug. 16, 2022, is the largest public-sector investment in clean energy in United States history. It provides a wide range of tax credits and other incentives for businesses, including health care organizations, to invest in assets that promote decarbonization efforts. For the first time, tax-exempt health care organizations, including government entities, can monetize these tax credits through direct refunds from the Internal Revenue Service.

Some examples of how providers and health care organizations could earn tax credits from the IRA in terms of clean energy investments include:

  • Buying electric vehicles to reduce transportation costs and emissions
  • Installing solar panels to reduce electricity bills
  • Upgrading to geothermal heat systems to reduce reliance on fossil fuels

For-profit health care organizations that are planning to or are already investing in qualified clean energy projects will have the option to transfer (sell) tax credits earned with these investments to another taxpayer for cash.

According to the Congressional Budget Office, an estimated $213 billion of tax credits could be transferable for taxpaying entities, which may create a new demand from a variety of investors. As the cost of capital continues to rise with elevated interest rates, selling a tax break provides short-term liquidity which can be attractive for private equity investors in the health care space.

Below is a summary of the 12 major types of tax credits in the IRA, 11 of which are transferable.

The takeaway

Health care organizations, whether for-profit or tax-exempt, have significant financial incentives to capitalize on the tax credits available from the IRA when investing in clean energy assets. These efforts could improve the long-term health of physical assets used to enhance patient experience and promote decarbonization efforts.

Let's Talk!

Call us at (325) 677-6251 or fill out the form below and we'll contact you to discuss your specific situation.

  • Topic Name:
  • Should be Empty:

This article was written by Danny Schmidt, Michael Haas and originally appeared on 2023-09-21.
2022 RSM US LLP. All rights reserved.
https://realeconomy.rsmus.com/inflation-reduction-act-could-provide-clean-energy-tax-credits-for-health-care-organizations-and-investors/

The information contained herein is general in nature and based on authorities that are subject to change. RSM US LLP guarantees neither the accuracy nor completeness of any information and is not responsible for any errors or omissions, or for results obtained by others as a result of reliance upon such information. RSM US LLP assumes no obligation to inform the reader of any changes in tax laws or other factors that could affect information contained herein. This publication does not, and is not intended to, provide legal, tax or accounting advice, and readers should consult their tax advisors concerning the application of tax laws to their particular situations. This analysis is not tax advice and is not intended or written to be used, and cannot be used, for purposes of avoiding tax penalties that may be imposed on any taxpayer.

RSM US Alliance provides its members with access to resources of RSM US LLP. RSM US Alliance member firms are separate and independent businesses and legal entities that are responsible for their own acts and omissions, and each is separate and independent from RSM US LLP. RSM US LLP is the U.S. member firm of RSM International, a global network of independent audit, tax, and consulting firms. Members of RSM US Alliance have access to RSM International resources through RSM US LLP but are not member firms of RSM International. Visit rsmus.com/about us for more information regarding RSM US LLP and RSM International. The RSM logo is used under license by RSM US LLP. RSM US Alliance products and services are proprietary to RSM US LLP.

Condley and Company, LLP is a proud member of the RSM US Alliance, a premier affiliation of independent accounting and consulting firms in the United States. RSM US Alliance provides our firm with access to resources of RSM US LLP, the leading provider of audit, tax and consulting services focused on the middle market. RSM US LLP is a licensed CPA firm and the U.S. member of RSM International, a global network of independent audit, tax and consulting firms with more than 43,000 people in over 120 countries.

Our membership in RSM US Alliance has elevated our capabilities in the marketplace, helping to differentiate our firm from the competition while allowing us to maintain our independence and entrepreneurial culture. We have access to a valuable peer network of like-sized firms as well as a broad range of tools, expertise and technical resources.

For more information on how Condley and Company can assist you, please call (325) 677-6251.

Share This