Tribal leaders are running out of time to qualify for two clean energy tax incentives
- Tribal entities are frequently eligible for clean energy tax incentives like the wind and solar Investment Tax Credit (ITC) and Section 179D. However, these incentives are both sunsetting in summer 2026 — if you don’t meet certain beginning-of-construction requirements.
- Tribes can also claim the ITC low-income bonus credit, which has an initial application window date of March 3, 2026.
- Consult your tribal tax advisor immediately to determine how your tribe can benefit from these energy tax incentives before time runs out, as well as other incentives for geothermal, battery storage and microgrids that are not phasing out.
Tribal leaders — aware that key clean energy tax credits or incentives are sunsetting in 2026 — may assume time has run out to claim them. But if your tribe is investing in clean energy, you can still take advantage of two major incentives: the wind and solar Investment Tax Credit and Section 179D.
These incentives can make clean energy projects more profitable and strengthen your energy independence. However, you have to act swiftly here, as major deadlines arrive on June 30 and July 4, while a key bonus credit application closes on March 3.
Keep reading to learn more about how energy tax incentives are changing, what this means for tribal entities and how to avoid leaving money on the table.
How are clean energy tax incentives changing?
The federal One Big Beautiful Bill Act (OBBB), passed by Congress in 2025, phases out several clean energy tax incentives previously established under the 2022 Inflation Reduction Act (IRA). Key incentives now sunset by mid-2026, including the:
- Section 48E, the Clean Electricity Investment Tax Credit (ITC), specifically for wind and solar, has a sunset date of July 4, 2026, that can have a major impact on your projects.
- ITC low-income bonus credit, which has an initial application window deadline of March 3, 2026, and for which most tribal entities already qualify.
- Section 179D, the Energy-Efficient Commercial Buildings Deduction, has a sunset date of June 30, 2026, that can also have a major impact on your projects.
However, the sunset dates are not the whole story here.
Just because an incentive is sunsetting doesn’t mean it’s over
Although both the ITC and 179D begin to phase out over the summer, the implications for your tribe may not be entirely straightforward. You do have to meet certain beginning-of-construction requirements by the sunset dates to qualify for either the wind and solar ITC or 179D, but you can still claim either incentive for years to come, provided you satisfy those requirements.
Geothermal and other valuable energy tax incentives also remain unchanged
Other key energy tax incentives from the IRA, such as those affecting geothermal, battery storage and microgrids, are unchanged by the OBBB. These incentives, including the ITC as it applies to non-wind and solar energy projects, remain fully in place and available until at least 2033.
What should tribal leaders know about the ITC for wind and solar?
The ITC is a tax incentive that allows commercial operators to receive a 30% base credit on the cost of eligible clean energy projects. Because this incentive is a credit, it takes the form of a direct cash payment to your tribe.
- This credit can apply to any qualifying commercial wind or solar project (as previously noted, the ITC also applies to other clean energy projects like geothermal, which are unaffected by the July 4, 2026, sunset date for wind and solar).
- For projects over 1 megawatt, the 30% base credit hinges on meeting certain additional requirements, including paying project workers prevailing wages.
- The 30% base credit can also be expanded via additional bonus credits to cover a total of 70% of a project’s costs.
- Tribal entities and other organizations that qualify for the ITC receive the credit via IRS Direct Pay, with funds deposited into a designated bank account.
How to meet the July 4, 2026, deadline to qualify
To qualify for the wind and solar ITC by the deadline, you’ll typically need to satisfy one of two tests: the physical work test or the 5% safe harbor test. Broadly speaking:
- The physical work test means showing that you’ve broken ground on the project and made substantial, continuous progress by July 4, 2026.
- The 5% safe harbor test requires showing that you’ve already incurred 5% of the total project costs by July 4, 2026. However, this test can only be applied in certain circumstances, generally involving smaller projects.
Another key deadline for tribes: March 3, 2026
Tribal leaders should know that the initial deadline to apply for the ITC low-income bonus credit is March 3, 2026. This credit can add between 10-20% to the base 30% credit.
The low-income credit was specifically designed with tribal entities in mind, and most tribes already meet the qualifying benchmarks. However, time is almost out to claim it.
What should tribal leaders (including casino executives) know about Section 179D?
Section 179D is a tax incentive that allows commercial building owners to deduct some of the cost of making those buildings more energy efficient. Many tribal gaming entities qualify for this with any new build or significant renovations.
- Tribal organizations can take a deduction of up to $5.81 per square foot on qualifying commercial buildings.
- Qualifying improvements typically include modifications to interior lighting, HVAC, hot water systems and the building envelope.
- For tax-exempt projects, the deduction can be assigned to the builders or architects.
How to meet the June 30, 2026, deadline to qualify
To qualify for 179D, you need to pass either the physical work test or the 5% cost test by June 30, 2026. The physical work test involves showing that substantial on-site construction has begun, while the cost test requires you to incur at least 5% of project costs.
What should you do next?
Your tribe may already be eligible for either direct cash payments or tax incentives under the ITC or 179D. But you are almost out of time to document that eligibility and demonstrate it to the IRS.
Here’s what to do:
- ASAP: Speak with your tax advisor immediately. Your advisor can help you quickly assess whether your current clean energy projects can qualify for either the wind and solar ITC or 179D incentives, including the March 3 deadline to claim the ITC low-income bonus credit.
- Soon: Begin documenting your progress on eligible clean energy projects to prove that you meet physical work test or 5% cost test requirements.
- Also valuable: Work with your advisor to determine your eligibility for incentives for geothermal, battery storage and microgrids that remain in effect until the 2030s. Moving forward, these incentives can continue to make your clean energy projects more profitable and help your tribe become more energy independent.
How Wipfli can help
We advise organizations like tribal entities on how to claim valuable clean energy tax incentives. Let’s talk about your projects and what you need to do to qualify. Start a conversation.
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