WASHINGTON (JUNE 14, 2023) — Today, the Internal Revenue Service released proposed guidance on the elective payment provisions of the Inflation Reduction Act (IRA) of 2022, also referred to as “direct pay.” These direct pay provisions are extended to the Qualified Commercial Clean Vehicle Credit (45W) and Qualified Alternative Fuel Vehicle Refueling Property Credit (30C) under section 6417 of the IRA. The IRS will be accepting comments on the proposed guidance from stakeholders through August 14th.

Direct pay is essential to making these credits accessible to tax-exempt entities, including school districts, for electric school bus procurement and charging infrastructure. School districts will be able to receive direct payments of up to $40,000 per electric school bus under section 45W and up to $100,000 per charging infrastructure installation under section 30C.  

For more information on how these provisions work, please see our explainers on Section 45W and Section 30C of the Inflation Reduction Act.  

Following is a statement from Meredith Epstein, Manager of Federal Policy for Electric Transportation, World Resources Institute: 

“This is an important opportunity for school districts looking to electrify their school bus fleets and should not be overlooked. What’s especially promising is that these credits have been enacted in legislation through 2032, meaning school districts will have even more incentive to purchase electric school buses and invest in charging infrastructure as they seek to build a fleet that is healthier for their community and the environment.”