Lately, elected representatives on both sides of the aisle have been displaying an appetite for expanding transferable tax credits to a broader variety of industries. This is evidenced by the recent profusion of proposed legislation that endeavors to subsidize emerging or important technologies with such valuable, transferable credits. This glut of proposed legislation—and the significant opportunities it may afford to the savvy buyer or seller—only promises to increase in importance with federal tax reform on the horizon.
Prior to the passage of Section 6418 of the Inflation Reduction Act of 2022 (IRA), transferring federal tax credits wasn’t really an option. Even now, transferability is only available for certain investment, rehabilitation, and energy credits codified in Sections 46 to 48 of the Internal Revenue Code. This particular provision of the IRA overcame a long-held taboo and firm Congressional reluctance to expand federal subsidy of various industries by way of salable credits. In the process, it eliminated the need for many of the costly and cumbersome intermediate steps which were previously necessary to alienate credits, such as using flip partnerships or sale-leaseback-style transactions. However, after overcoming initial difficulties in developing appropriate guidance and crafting a feasible regulatory framework—as well as in establishing a viable marketplace for these credits—a solid foundation was created, one that may now prove useful for facilitating tax credit transfers in other industries should parallel energy and investment tax credit provisions be included in future legislation.
The rollout of clean energy, investment, and production tax credits under the IRA has proven remarkably successful and offers a practical roadmap for taxpayers and regulators alike on how to proceed with potential transferable credits in other areas. Indeed, the market for tax credit transfers has exploded since its inception in 2023. After initial buyer hesitancy, 2024 saw some $25 billion in current-year credits change hands, according to a recent item in Tax Notes. After considering sales of future-year credits, this deal volume comes in even higher at around $30 billion.[1] This market is expected to continue growing in 2025 and beyond as parties become increasingly familiar with one another and transaction practices are standardized. Additionally, despite industry concerns over the permanence of certain renewable energy and investment tax credits established by the IRA, the transfer market appears poised to continue its rapid growth trajectory and high transaction volume this year as the U.S. Energy Information Administration projects that demand for electricity from credit-eligible renewable sources will rise in 2025 and 2026.[2] Consistent with this prediction, a report from Reunion characterized demand for these tax credits as “resilient” and noted that year-over-year first-quarter demand significantly increased, all of which is emblematic of a market which is projected to expand by an average of 10% to 15% per year until 2030. However, at this juncture, it is important to note that House Republicans are actively considering a bill, endorsed by President Trump, that would step down and repeal most of the clean energy tax credits created by the IRA. It would also, crucially, eliminate tax credit transferability (as currently embodied in Section 6418 of the Internal Revenue Code) for most clean energy credits after December 31, 2027. Such a development, should it come to pass, would drastically alter these growth projections and would virtually eliminate the entire market for renewable energy production and investment tax credits.
Although projecting the future of tax reform—and especially the expansion or recission transferable credit provisions, is an uncertain enterprise—particularly at a time when budgetary reductions dominate political discourse, we may at least pause to appreciate the IRA’s successes in this space and consider the wide variety of additional industries for which tax credits transferable under Section 6418 of the Code have lately been proposed. These range from advanced agricultural technologies and shipbuilding to the production of baby formula and even electric bicycles. It seems that there is no limit to the Congressional imagination in this regard.
Select Recently Proposed Legislation: 6418 Transfer-Eligible Credits
| Name of Bill | Description | Bill Number |
| The Historic Tax Credit Growth and Opportunity Act of 2025 | Expand and simplify the historic rehabilitation tax credit | SB 1459 |
| The Maintaining and Enhancing Hydroelectricity and River Restoration Act of 2025 | Establish a tax credit for maintaining and improving hydroelectric facilities, equal to 30 percent of the basis of any hydropower improvement property placed in service that year | SB 1183 |
| Revitalizing Downtowns and Main Streets Act | Create a 20 percent investment credit for converting eligible nonresidential buildings to affordable housing; | HR 2410 |
| The Supporting Innovation in Agriculture Act of 2025 | Create a 30 percent credit for investments in qualified property that is part of an innovative agricultural technology project | HR 1705 |
| The Supply Chain Security and Growth Act of 2024 | Add a new critical supply chains reshoring investment credit to the Code as Section 48F and make it transferable, and would equal 40 percent of the investment in any critical supply chain facility | HR 8504 |
| The Rural Historic Tax Credit Improvement Act | Change Section 47 of the Code to expand the existing rehabilitation credit | SB 5607 |
Although these potentially forthcoming credits are not limited to energy and production activities (as under the IRA), most proposals seeking to expand transferability to additional industries do so by creating a new investment tax credit in Section 48F of the Code. But not all proposals are created equal, and it appears that some currently have significantly more traction than others. For instance, Senator Mark Kelly’s proposed Shipbuilding and Harbor Infrastructure for Prosperity and Security for America Act of 2025 (the “SHIPS Act”), which would establish a 25 percent investment tax credit for certain qualified shipbuilding and shipyard investments, was floated (and seemingly endorsed) by President Trump during his address to Congress on March 3. The SHIPS Act, purportedly spurred by national security and supply chain concerns, aims to increase U.S. shipbuilding and shipyard investment by employing tax credits that are both transferable and subject to elective payment provisions—provisions that broaden the class of taxpayers eligible to claim the credit by allowing certain tax-exempt entities that would otherwise be ineligible or unable to claim such credits to receive them.
What This Means for You
Proposals that address the emerging nexus of national security, critical infrastructure, international trade, and U.S. industrial expansion seem best positioned to advance through the legislative process, cobbling together strong constituencies with the potential to cross political and regional lines. Among other areas, enterprises engaged in agricultural technology, the mining and/or processing of natural resources, and community development and revitalization could benefit greatly from Washington’s renewed appetite for salable tax credits.
We will continue to follow this area as items move through the legislative process and as the Trump administration uses executive actions and agency rulemakings to signal support for a broader use of tax credits.
Contact Us
If you have questions about how pending or prospective legislation involving transferable tax credits could impact your business, contact Doug Jones, Sean Kelly, or your Husch Blackwell attorney.
[1] Crux Report https://app-na1.hubspotdocuments.com/documents/24439257/view/1052858521?accessId=636bb4.
[2] Crux Report https://app-na1.hubspotdocuments.com/documents/24439257/view/1052858521?accessId=636bb4.