What public sector leaders need to know about OBBBA’s impact on direct pay options

Editor's note: Earlier in this article series, we discussed how the One Big Beautiful Bill Act (OBBBA) is ending tax credits for solar projects and preserving them for battery energy storage systems. Here, we explore impacts on direct pay strategy for facilities in the MUSH sector. 

In July 2025, the Trump administration’s One Big Beautiful Bill Act (OBBBA) reshaped much of the nation’s clean energy policy. For MUSH-sector facility leaders—those overseeing facility and energy strategy in municipalities, public universities and schools, and hospitals—one of the biggest implications lies in how the law affects direct pay, the Inflation Reduction Act (IRA) mechanism that allowed tax-exempt organizations to benefit from federal clean energy tax credits.

Under the IRA, direct pay (also called elective pay) made it possible for public, tax-exempt entities to receive a cash payment from the IRS for credits earned through eligible clean energy projects. Instead of using tax credits they couldn’t claim because of their tax-exempt status, organizations could apply them as refundable payments — helping fund projects like solar installations, EV fleets, and battery storage^[1].  

OBBBA preserves this option, but changes the rules of timing, eligibility, and sourcing, creating new urgency for facilities leaders to plan carefully if they want to capture remaining incentives.

Immediate guidance for MUSH facility leaders

Direct pay and tax credit transferability are still in force under OBBBA, but the new law accelerates phaseouts of several clean energy tax credits, adds stricter eligibility and sourcing standards, and limits transfers to prohibited foreign entities. For MUSH organizations, this means direct pay can still provide major budget relief, but only for projects that meet the new deadlines and compliance requirements.

Making sure you navigate this new landscape smartly—and nimbly, when ticking clock deadlines are in play—is crucial to ensure keeping your organization out of an unfavorable spot.

Here’s a breakdown of key deadlines to watch per clean tech category^[2]:

• Solar and wind projects. OBBBA is putting an end to 48E credits for solar projects, including both behind-the-meter, onsite solar like rooftop, carport, or ground mount, as well as power purchase agreements for off-site utility-scale solar and/or wind energy. Projects that begin construction before December 31, 2025, are still fully eligible for credits under the Investment Tax Credit (48E) or Production Tax Credit (45Y). Those beginning between January 1 and July 4, 2026, can still qualify but must meet new domestic supply chain sourcing rules. Projects starting after July 4, 2026, must be placed in service by the end of 2027 and meet these same sourcing requirements to stay eligible. For local leaders, moving fast in 2025 offers the best opportunity to secure full benefits.
• Battery storage, geothermal, and other long-term technologies. These projects retain longer eligibility under the Investment Tax Credit (48E) or Production Tax Credit (45Y). Projects that begin construction by December 31, 2033, qualify for the full credit. Those starting in 2034 receive 75% of the value, and those in 2035 receive 50%, with credits ending after that year. As with other technologies, projects beginning after December 31, 2025, must meet the new supply chain sourcing standards.
• Electric vehicles (EVs) and charging infrastructure. For organizations working to green their fleets and meet rising demand for EV charging solutions, the Clean Commercial Vehicle Credit (45W) ended for vehicles acquired after September 30, 2025. Meanwhile, the Alternative Fuel Infrastructure Credit (30C)—covering EV charging stations—ends June 30, 2026, applying only to property in low-income or non-urban census tracts.

Navigating this changing landscape will take even closer alignment between sustainability teams, procurement officers, and finance leads to ensure all eligibility benchmarks are met.

Why strategic coordination matters now

For MUSH facility managers, the OBBBA shifts clean energy planning from a long runway to a tighter window. Projects once expected to benefit from years of stable support must now meet accelerated schedules and stricter sourcing rules. This can feel like a setback—but it also underscores the importance of getting the right projects moving forward sooner rather than later.

That’s where Mantis comes in. Tapping available tax credit incentives in today’s post-OBBBA world can help MUSH sector leaders make the most of lean facilities budgets. Acting early preserves access to these credits while positioning your facilities to capture the long-term savings that come from cleaner, more efficient energy systems.