Article
What’s new with the Inflation Reduction Act (IRA)?
Aug. 22, 2025 · Authored by Doug Baldessari
The Inflation Reduction Act (IRA) continues to be the most sweeping climate and energy legislation in U.S. history. For public sector entities – including municipalities, school districts, housing authorities and transit agencies – it has unlocked new funding streams, tax credits and incentives aimed at accelerating clean energy adoption, infrastructure upgrades and sustainability initiatives.
But the IRA was never meant to be static. Regulations, guidance and follow-on legislation continue to shape how the law is applied and which opportunities are accessible. Most recently, the One Big Beautiful Bill Act (OBBBA) ushered in the most significant changes since the IRA’s original passage. From expanding eligibility to tightening compliance requirements, the OBBBA has reshaped the path forward for public sector projects in ways that demand immediate attention.
Put simply, if your organization is counting on IRA-related funding – or considering projects that could potentially qualify – now is the time to re-evaluate your approach. The rules have changed.
Understanding the latest changes in the IRA
The OBBBA, signed into law in July, was pitched as a way to “streamline and expand” the most impactful provisions of the IRA. In practice, it did both – clarifying certain aspects that had been murky or underutilized while also introducing new conditions that will require careful planning and documentation.
One of the most notable provisions of the original IRA, Elective Pay (also known as Direct Pay) has been left unchanged in the OBBBA. This mechanism allows tax-exempt entities to receive the value of clean energy tax credits as a direct cash payment from the IRS – an essential feature for governments and not-for-profits that don’t have tax liability.
Additionally, the domestic content bonus – which boosts credit values for projects that use U.S.-manufactured materials – continues to be 10%, along with an additional 10% for the energy community bonus (assuming
