How does clean energy tax credit transferability work under IRA Section 6418?

Section 6418 allows project developers to sell federal clean energy tax credits (ITC/PTC) directly to unrelated corporate buyers for cash without complex tax equity partnership flip structures.

What is the typical market discount rate on transferable clean energy credits?

Market pricing generally ranges from $0.88 to $0.94 per dollar of tax credit, depending on project technology, sponsor indemnification, and tax insurance coverage.

Are cash proceeds from selling Section 6418 tax credits subject to federal income tax?

No. Cash payments received by the transferor are excluded from gross income, and the buyer cannot deduct the cash purchase price, preserving tax neutrality.

ToolsVault > Solar & Storage > Tax Credit Transferability

Find Commercial EPC →

IRA Section 6418 Transferability Market Model

IRA Section 6418 Tax Credit Transferability & Discount Calculator

Under the Inflation Reduction Act (IRA), clean energy developers and commercial property owners can sell Section 48 ITC and Section 45 PTC tax credits for cash without complex tax equity partnership flips. Model market transfer discounts (typically 90¢ to 94¢ on the dollar), calculate net cash proceeds to project sponsors, and quantify the corporate buyer's after-tax cash return.

Project Scale Preset:

Transaction Parameters

Eligible Project Basis ($) $750,000

$150k $4.0M $8.0M+

IRA Federal Tax Credit Rate (ITC)

Market Cash Transfer Price 92.0¢ on the Dollar

86.0¢ (Dispersed/Small) 92.0¢ (Market Avg) 96.0¢ (Tier-1 Large)

Brokerage, Escrow & Diligence Fee (%) 2.5%

1.0% Low 2.5% Typical 4.5% Complex/Small

IRS Section 6418 Rules:

• All-Cash Requirement: Transfer payment must be paid 100% in cash within the statutory window.
• Non-Taxable Proceeds: Cash received by the seller is non-taxable income under IRC §6418(b).
• Single Transfer Rule: Transferred credits cannot be resold or re-transferred by the buyer.

Net Cash Received by Developer $201,825 Non-taxable cash proceeds after all fees

Corporate Buyer Profit Yield 8.7% Cash Return Immediate tax liability reduction ROI

Transaction Waterfall Breakdown Total Credit: $225,000

Gross Credit Value $225,000

Gross Sale Proceeds $207,000

Broker/Diligence Fee -$5,175

Section 6418 Transfer vs. Traditional Tax Equity:

Dimension	IRC §6418 Direct Transfer	Traditional Partnership Flip
Closing Timeline	2 to 4 weeks (Purchase Agreement)	4 to 9 months (Complex LLC negotiations)
Legal & Diligence Fees	1.5%–2.5% platform/escrow fee	$200,000–$450,000 fixed legal legal fees
Minimum Deal Threshold	Viable down to $150,000 credit size	Typically requires $15M+ minimum CapEx
Ownership Retention	100% Sponsor Ownership Retained	Tax equity owns 99% of project profits