Understanding transferable tax credit carrybacks

Introduction

The Treasury’s final transferability regulations allow corporations to carry transferable tax credits back up to three years, with the ability to offset up to 75% of prior-year tax liabilities. 

Although carrybacks and carryforwards have been available for clean energy tax credits since the introduction of transferability under the Inflation Reduction Act (IRA), as detailed in Section 39(a)(4) of the Internal Revenue Code (IRC), only in the past six months has Reunion seen a meaningful increase in companies exploring and modeling carrybacks.

In our view, this emerging interest in carrybacks reflects market maturity, as both experienced and first-time buyers seek to maximize the value and flexibility of their tax credit investments. By leveraging carrybacks, purchasers can expand the total credit volume under consideration, unlocking more favorable deal terms and better overall returns.

How does a tax credit carryback work?

Tax credit buyers can carry credits back three years, and then apply credits forward to subsequent years. A company who purchases 2025 tax credits for a carryback, for instance, would first have to max out their 2025 capacity and then apply any unused amount to 2022, then 2023, and then to 2024. For each year, the company would apply credits up to the statutory cap (75% of total tax liability) before moving on to subsequent years. Buyers do not have the discretion to pick and choose which years to apply carryback credits.

It’s worth reiterating that a company may only carry back credits after they have exhausted their ability to apply those credits to the tax year of the credits. In other words, a company may only carry back 2025 credits once they have hit the 75% statutory cap for 2025. 

Taxpayers may also carry applicable IRA tax credits forward up to 22 years. However, the carryforward is 22 years from the three-year carryback, meaning a taxpayer may effectively carry unused tax credits forward 20 years from their current tax year.

Assume a taxpayer purchases $75 million of 2025 tax credits and is expected to have a gross tax liability of $100 million from 2022 through 2028. The tax credit deduction would follow the below structure:

What types of companies should consider a carryback?

A carryback generally makes sense for companies who have a significant tax liability across one or more of their three prior tax years. A common use case is a sizable tax event, like a strategic divestiture, within the three-year carryback window. This holds true for public and private companies, both of whom Reunion has supported in carryback transactions.

When and how do you apply for a carryback refund request?

If a company is requesting a carryback refund via IRS Form 1139, Corporate Application for Tentative Refund, the tax team would typically submit Form 1139 at the same time as, but not in the same package with, their income tax return for the year of the credits they purchased for a carryback. 

From Instructions for Form 1139:

• “When to File: Generally, the corporation must file Form 1139 within 12 months of the end of the tax year in which an NOL, net capital loss, unused credit, or claim of right adjustment arose. The corporation must file its income tax return for the tax year no later than the date it files Form 1139.
• Where to File: File Form 1139 with the Internal Revenue Service Center where the corporation files its income tax return. Do not file Form 1139 with the corporation's income tax return.”

Because a company effectively files their refund request at the same time as their income tax return, they will have a concrete understanding of how many credits are unused from the current tax year. 

How long should it take to process a carryback refund request?

The IRS has 90 days to process a Form 1139 carryback refund request 

The Instructions for Form 1139 states, “The IRS will process this application within 90 days of the later of:

• The date the corporation files the complete application, or
• The last day of the month that includes the due date (including extensions) for filing the corporation's income tax return for the year in which the loss or credit arose (or, for a claim of right adjustment, the date of the overpayment under section 1341(b)(1))”

Importantly, receiving a refund doesn't validate the application. The IRS may later assess penalties and interest for overvalued property, negligence, rule disregard, or substantial income tax understatement if deductions or credits are found incorrect.

Current refund processing times are around 90 days

The IRS publishes processing statuses for various tax forms online. As of the publication date of this note (October 2025), the IRS is processing Form 1139s from June 2025 – that is, generally within the prescribed 90-day window.

Reunion accessed the IRS processing status webpage on October 29. The footer stated that the page was last reviewed or updated on October 24.

Some companies are assuming more than 90 days for modeling purposes

Reunion has supported several corporate tax leaders who are baking additional time into their carryback modeling assumptions. These are generally larger C corporations who are requesting refunds over $5 million, which are subject to another level of review through the Joint Committee on Taxation (JCT).

Most of these companies consider 90 days their best-case scenario and anticipate that a refund could take longer.

The IRS pays interest on refunds that take longer than 45 days

For financial modeling purposes, it’s worth bearing in mind that the IRS pays interest on refund requests that take longer than 45 calendar days (from the point at which the IRS deems the application complete).

Tax credits with wider discounts or delayed payments are most suitable

Generally speaking, due to the time-value-of-money implications of the refund process, tax credits with wider discounts are most suitable for a carryback. As shown in Reunion’s market monitor, Section 48 ITCs are prime candidates.

However, all transferable tax credits, irrespective of discount, can be suitable candidates for a carryback as long as they are “applicable credits” – see exhaustive list below.  

At the same time, a buyer can achieve the same time-value-of-money benefit with delayed payments. Reunion supported a publicly traded buyer, for instance, who purchased 2025 Section 45 PTCs for a carryback from a seller who was willing to accept payment in June 2026.

"Applicable credits" that are eligible for a carryback

The following transferable tax credits are “applicable credits” that are eligible for three-year carrybacks (per Section 39(a)(4) and Section 6417(b)): 

• Section 48 ITCs
• Section 48E ITCs
• Section 45 PTCs attributable to qualified facilities which are originally placed in service after December 31, 2022
• Section 45Y PTCs
• Section 45X advanced manufcaturing production credits
• Section 45U zero-emission nuclear power production credits
• Section 45Z clean fuel production credits
• Section 48C qualifying advanced energy project credits
• Section 45V clean hydrogen production credits attributable to qualified facilities which are originally placed in service after December 31, 2012
• Section 45Q carbon oxide sequestration credits attributable to carbon capture equipment which is originally placed in service after December 31, 2022
• Section 30C alternative fuel vehicle refueling property credits which, pursuant to subsection (d)(1) of such section, are treated as a credit listed in Section 38(b)

Reunion's webinar on tax credit carrybacks and carryforwards

Reunion is hosting a webinar, The Role of Carrybacks & Carryforwards in Clean Energy Tax Credit Transactions, on Wednesday, November 12 at 11am PT/2pm ET. 

A panel of tax and legal experts from CLA, Orrick, and McDermott will explore how carryback and carryforward provisions work and what they mean for corporate tax credit purchasers. 

The panel will discuss:

• How carryback and carryforward provisions apply to transferred credits under the IRA
• Key considerations for timing, documentation, and compliance
• How purchasers can plan for credit utilization across multiple tax years
• IRS guidance updates and emerging best practices from prior filing cycles
• Practical insights from recent transactions

Please register here.

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The rush to close out 2024 tax credits is finally coming to an end, with the October 15 tax filing deadline approaching. Read on for highlights on what the Reunion team has been seeing in the tax credit market, along with recent deal highlights.

What we’re seeing in the market:

More buyers are looking to delay payments for 2025 credits until 2026

• Due to the OBBBA, some corporations overpaid their estimated quarterly taxes relative to what they will end up owing for 2025. Therefore, they prefer delaying payments for tax credits until 2026, because they do not anticipate realizing the benefit of the credits until April 15, 2026
• We have observed more buyers looking to pursue carrybacks to offset prior year taxes; carryback buyers typically seek delayed payment terms, given uncertainty around when they will receive tax refunds from the IRS
• In general, we have seen an increasing share of transactions occurring well into the following calendar year, and expect this seasonal trend to continue. For example, Reunion closed approximately 15 transactions for the 2024 tax year, totaling over $550M in credit volume, in the weeks leading up to October 15, 2025

Sellers are showing flexibility in pricing for investment-grade buyers that are willing to forward commit to ITCs that will be generated in 2026 or 2027

• Sellers are unable to get high advance rates from lenders for tax credit transfer bridge loans without a committed buyer. The net advance rate is typically <70% of the face value of the tax credits
• Sellers are showing flexibility in pricing to secure commitments from investment-grade buyers to purchase credits generated in 2026 or 2027
• Reunion has also partnered with a major financial institution to offer forward ITC and 45X commitments for 2026 or 2027 credits with at least $50M in volume; please contact us for pricing and further details

Buyers are demanding §45U credits, and pricing remains high

• A number of large Reunion clients are focused specifically on identifying §45U credits, which are production-based credits generated by nuclear power facilities. Buyers are drawn to the relatively straightforward diligence process, lack of §50 recapture risk, and the current administration’s general support of nuclear power
• Spot 2025 pricing for credits remains elevated due to the fairly small universe of §45U credit sellers; as with other credits, buyers willing to enter into a multi-year agreement can achieve a 1 to 2.5 cent discount on pricing, depending on the length of commitment

Highlights from Recently Closed Transactions

Project Wind River | $150M+ in §45U nuclear credits transacted on a very short closing timeline due to high demand

Credit type: §45U

Overview: Reunion brought two highly motivated, publicly traded companies together to transact on §45U nuclear credits, going from a signed term sheet to closing in two weeks.

Highlights: Looming deadlines meant both buyer and seller needed to lean on legal and advisory resources, including Reunion, to negotiate terms and move quickly through due diligence and approvals.

Project Ginkgo | $75M+ in §48 credits from battery storage project with deferred payment schedule

Credit type: §48

Overview: Reunion worked with a repeat client to sell tax credits from a battery storage project to a publicly-traded buyer.

Highlights:The purchaser was able to offer a premium price in exchange for deferred payment, which was attractive given the seller’s access to low-cost capital. Resulting payment will take place over a year after the project was placed in service.

Reunion's Compliance Software: Tracking Prevailing Wage and Apprenticeship compliance for a large solar developer

Credit type: §48E

Overview: Reunion is under contract with a major solar developer to manage PWA compliance for their entire 2025-2026 portfolio. Reunion's report is a key piece of documentation for the developer's tax equity partner, which is a leading bank.

Highlights: The tax equity partner will receive frequent and thorough PWA updates via Reunion's software throughout the construction and O&M phases. It was critical for the tax equity partner to gain comfort with Reunion's PWA compliance process prior to closing the transaction.

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Economics

What do transferable tax credits typically cost?

Tax credits generally range in price from $0.90 to $0.96. These prices are “all in,” meaning that the cost of tax credit insurance and any broker or intermediary cost is typically borne by the seller. The seller will also typically reimburse buyers for a capped amount of third party legal and diligence fees.

§48 investment tax credits from large, reputable sellers have historically traded in the $0.93 to $0.95 range. In late 2024 and early 2025, we observed sizable ($75M+) credits from investment-grade sellers for the 2024 tax year trading in the $0.95 range. Factors that impact pricing include:

• Financial strength of seller: Buyers pay a premium when seller has a strong balance sheet or investment-grade credit rating
• Credit type: There is more buyer demand for large utility scale projects versus distributed portfolios. Additionally, advanced manufacturing, solar, wind, storage and nuclear have more demand than renewable natural gas or carbon capture technologies
• Volume of opportunity: Buyers pay a premium for larger opportunities ($75M to $100M+). Very small opportunities (<$10 or $15M) have a larger discount due to relatively low absolute savings amount
• Payment terms and timing: Buyers pay a premium for delayed payment terms. Pricing also tends to increase the later a transaction occurs, as project supply dwindles and more last-minute buyers come into the market. Conversely, pricing tends to decrease for forward commitments, especially for those with longer time horizons into future tax years 

Leading project developers often have lofty expectations on the pricing they expect to receive on their credits, and as a result there is often a robust back and forth before settling on a price.

Who pays for tax credit insurance?

Sellers typically purchase tax credit insurance, with the buyer listed as an “additional insured” on the policy. Buyers occasionally elect to purchase tax credit insurance instead of the seller, but this scenario is far less common.

Who pays for legal and diligence fees?

To minimize “above-the-line” expenses, buyers typically negotiate for sellers to pay a capped reimbursement amount for documented third party legal and / or diligence fees. The reimbursement is generally an absolute dollar amount (versus a percentage of the credit amount), and generally increases based on the complexity of the transaction. For example, a portfolio with many projects is likely to have a larger expense reimbursement compared to a single utility-scale asset.

Is the benefit — the difference between the face value of the credits and the purchase price — taxable?

The benefit is not subject to federal tax. While many states have rolling conformity to federal taxation rules, we recommend checking with your tax advisor on state-level taxation issues.

Markets

What other corporations are active in purchasing transferable tax credits?

Although public disclosures are very rare, Fortune 500 companies from nearly every sector are actively purchasing clean energy credits. Examples of publicly disclosed transactions include: 

• Visa: $870M tax credit purchase from First Solar
• Fiserv: $700M tax credit purchase from First Solar
• MarketAxess: $16M tax credit purchase from Broadwind

What is a typical tax credit purchase amount?

Reunion maintains a database that monitors over $25B of tax credit transactions. We observe that a majority of transactions are in the $15M to $200M range, though we have worked on multiple individual transactions in the $1 billion range.

Corporate taxpayers can offset up to 75% of their federal tax liability with general business credits, which include transferable tax credits. According to a 2024 Reunion survey, 85% of surveyed tax credit buyers plan to offset at least 50% of their tax liability using transferable tax credits.

Risks

What are the primary risks associated with purchasing a tax credit?

§48 ITCs are subject to several primary areas of risk, which buyers should thoroughly diligence:

• Qualification: Validate that the underlying project qualifies as energy property, the proper cost basis is used, and the project was placed in service in the appropriate tax year. If applicable, validate qualification for bonus credit adders such as energy community and domestic content. If applicable, the buyer should also validate that the project complies with Prevailing Wage and Apprenticeship requirements (for projects above 1 MW that began construction on or after January 29, 2023) and Foreign Entity of Concern restrictions (see below for more commentary on FEOC).
• Structure: Validate that seller is an eligible transferor, and that the seller’s underlying legal structure will be respected by the IRS.
• Recapture: ITCs are subject to the recapture provisions of §50. The ITC carries a five-year compliance period, in which the potential amount of credit that can be recaptured starts at 100% for the first year and steps down 20% per year. Practically speaking, recapture can occur in the following scenarios: (1) the property ceases to be a qualified energy facility or (2) there is a change in ownership of the property.
• Counterparty: Buyers should understand the corporate structure of the seller, and identify and diligence any disregarded entities between the project company and the seller. Doing so will ensure proper chain of title of tax credits to the seller. Additionally, buyers should understand the financial strength of the seller and, by extension, the “value” of the seller’s indemnity and / or guaranty

How do I ensure that the tax credits apply to the appropriate tax year?

The placed in service (PIS) date determines the tax year to which the credits can be applied. A project that is placed in service in 2026, for instance, generates ITCs that can be applied to a company’s 2026 tax liability (for calendar-year filers). As part of due diligence, the buyer should review documentation substantiating when the project was placed in service; the IRS employs a five-factor test to determine when a project is PIS for tax purposes.

There is a risk that a PIS date “slips” into a subsequent tax year, and the buyer is unable to apply the credits to a given tax year as planned. To mitigate this risk, buyers will often negotiate a two-tiered pricing approach, in which the price per credit is reduced if the credits slip from one year to the following (we have seen this discount commonly range from 1.5 to 3 cents).

Have other tax credit buyers been subject to audit activity?

There are many tax credit buyers that are in the Compliance Assurance Process (CAP) program; CAP buyers assume that the IRS will audit their tax credit purchase activity at some point. These buyers typically prioritize ensuring that they have all necessary documentation prepared in advance, in the event of an IRS information document request (IDR). 

Reunion has worked with several companies in the CAP program that have satisfactorily responded to audit activity, including responding to IDRs.

We have not yet heard of buyers outside the CAP program subject to audit activity from tax credit transfers, but we do expect that it will happen.

Describe how the process works if the IRS does challenge a credit?

Tax proceedings are one of the heavily negotiated points in a tax credit transfer agreement (TCTA).

If the IRS performs an audit of the tax credit buyer and determines that the credits are excessive or invalid, the buyer will typically request an appeal with the IRS Independent Office of Appeals.

If the IRS Independent Office of Appeals upholds the decision, the buyer or the tax credit insurer may choose to proceed to litigation, typically in U.S. District Court or in U.S. Tax Court. The obligation to proceed to litigation, and how far to take the litigation (instead of triggering an indemnity payment from the seller) is a point of negotiation between buyers and sellers. 

Tax credit insurers typically will include the right to litigate as part of the terms and conditions of the tax credit insurance policy, as the insurer will want the opportunity to litigate before needing to pay out a claim.

If there is a successful challenge or disallowance of the credit by the IRS, will I be made whole? 

In case there is a loss event, a well-negotiated Tax Credit Purchase Agreement will ensure that the buyer will be made whole through the indemnity and / or tax credit insurance. The protections are designed to cover all potential losses, including penalties, interest, taxes, contest costs, and fees.

What are common negotiation points related to tax credit insurance?

One common point of negotiation between buyers and sellers is defining the scope of the tax credit insurance policy, and ensuring that the buyer is comfortable with the covered tax positions as well as any potential exclusions to the policy. 

The other primary point is to define the limit of liability on the policy, to ensure that the buyer will be fully covered in the event of a loss. Buyers sometimes agree to a lower limit of liability in exchange for better pricing on the credit, or in cases where they see other factors that reduce risk on the transaction (e.g., strong seller balance sheet).

Legislative

Under what conditions are credits subject to new OBBBA provisions, such as foreign entity of concern (FEOC)?

Projects that began construction before the end of 2024 have the option to qualify for §48 credits rather than §48E credits. §48 credits are not subject to FEOC restrictions.

§48E credits that begin construction before the end of 2025 are not subject to the FEOC material assistance restrictions, which limit the amount manufactured products that can originate from restricted countries (China, Iran, North Korea, and Russia).

What happens if there’s another change in law between when execution of a tax credit transfer agreement, and funding of the transaction?

The tax credit transfer is not officially consummated until the transfer election statement is filed when the buyer and seller file their tax returns. Buyers typically negotiate TCTAs to include “no change in law” as a condition precedent (CP) to funding. Therefore, if there is a significant change in law between signing the TCTA but before funding, the buyer would have the option to walk away from the transaction.

Starting in August, we have observed a wave of 2024 deals rushing to close, as buyers and sellers approach their final tax filing deadlines. We have been surprised by the volume of last-minute deals; Reunion is currently working to complete over $500M in transactions across more than a dozen deals with a 9/15 or 10/15 filing deadline.

Please reach out if you have credit opportunities that you would like to place with our pool of corporate buyers for the 2024, 2025, or 2026 tax years. We are seeing particular demand for:

• Last-minute 2024 tax credit opportunities of any size
• Large ($150M+) opportunities for the 2025 or 2026 tax year

Read on below for our September Market Digest series, which highlights Reunion’s market observations and recent deal highlights.

What we’re seeing in the market:

More buyers are coming to the table with specific pricing and terms in mind.

We view this as a sign of market maturity, as buyers have a clearer sense of terms they believe are fair. We have also observed more buyers who have successfully lined up internal approvals in advance and have a mandate to identify credits that meet certain criteria. Some examples of buyers with specific requirements on pricing and terms:

• Investment-grade buyer looking to pay $0.92 for 10-year PTC strips at a volume of up to $50M / year.
• Investment-grade buyer looking to pay in the low $0.90s for a forward commitment for 2026 ITCs, with transaction sizes of $175M and above. Requires tax credit insurance.
• Experienced buyer looking to pay $0.95 or better for “lowest risk” PTCs or AMPCs, with transaction sizes around $100M. Requires a seller with an investment-grade rating or a creditworthy balance sheet.

More buyers are willing to forward commit to credits for 2026 and beyond.

• While forward commitments for ITCs have been sparse in the past, we are seeing more taxpayers interested in committing now to get better deals for the 2026 or 2027 tax year.
• Buyers looking to forward commit to ITCs tend to be larger taxpayers who are comfortable making investments in advance, given their predictable annual tax liability. We find that taxpayers looking for ITCs below ~$15 or $20M tend to be more “opportunistic,” and look for tax credits as the year progresses or as their tax payments come due.
• We are also seeing buyers of various sizes look to lock in 10-year PTC strips at a discount.

The Treasury Department released new beginning of construction (BoC) rules for purposes of determining the timing of credit eligibility for wind and solar projects. We anticipate an uptick in developers that will need to find ways to use on-site physical work to establish beginning of construction.‍

• The Treasury Department released new BoC guidance that came into effect on Sept 2, 2025, that requires wind and solar projects to establish beginning of construction by starting physical work. The 5% safe harbor, which has widely been used in the past, now only applies to solar projects below 1.5MW.
• Many larger developers had planned to use transformer procurement as their BoC strategy, which qualifies as physical work and will continue to be respected under the new rules.
• Developers that did not plan to use a transformer or other off-site physical work strategy may not find it easy to procure transformers on short notice or favorable terms. We anticipate developers will increasingly use on-site physical work to establish BoC.
• Reunion offers a compliance product that helps developers establish and substantiate on-site physical work BoC.

Highlights from Recently Closed Transactions

Project Pinnacles | $45M in 2024, §48, §30C, Portfolio of onsite solar, storage and EV charging

Reunion efficiently structured this transaction between two publicly traded companies. The transaction involved the transfer of credits from three different technologies and two different credit types across many discrete projects.

What was interesting about this transaction:

• Portfolios of distributed generation assets have been traditionally the most challenging to transact on;
• Reunion’s efficient but comprehensive due diligence process was instrumental to a streamlined execution.

Project Cascades | $9M in 2024, §48, Portfolio of residential solar systems

Reunion arranged the sale of a portfolio of residential systems between a privately-held equipment manufacturer and a residential solar developer, inclusive of energy community and low-income community bonus adders.

What was interesting about this transaction:

• There is still a steep learning curve for tax credit buyers around residential solar tax credits;
• Reunion helped a buyer evaluate the key risks unique to resi and execute its third credit transfer transaction.

Project Acadia | $18M in 2025, §45, Onshore wind

Reunion facilitated this sale between a publicly traded Fortune 500 company and a diversified multinational company. This transaction represented the second sale of credits from this wind portfolio, each to a different buyer.

What was interesting about this transaction:

• These credits represented PTCs generated in the tenth year of operation, so Reunion conducted due diligence on the placed-in-service dates of the facilities based on documentation from 2015.

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Recording

Key topics

0:00 - 1:40 Introduction and Agenda:
1:41 - 5:25 Meeting the Speakers
5:26 - 13:38 New Tax Law's Impact
13:39 - 25:48 Company Approval Process
25:49 - 33:40 Finding the Right Credits
33:41 - 38:16 Negotiation Challenges
38:17 - 43:38 Pricing Strategies
43:39 - 49:24 The Role of Intermediaries
49:25 - 57:00 Future Market Predictions
57:01 - 59:36 Q&A

Joined by: Domenic Macioce, SVP of Tax at Wesco, and Pete Scudder, FVP and Financial Reporting Manager at Mercantile Bank

Reunion hosted a buyer-focused webinar with Domenic and Pete as they share practical insights on approaching tax credit transfers in a post "One Big Beautiful Bill Act" (OBBBA) landscape.

Insights from your peers:

1. Impact of Tax Legislation: New tax laws like OBBBA significantly impact the market by forcing companies to re-evaluate their tax capacity. This leads to a temporary slowdown as buyers adjust their financial models, highlighting the critical need for companies to monitor and respond to policy changes.

2. The Acquisition Process: The process for buying tax credits is formal and requires approval from top executives and a cross-functional team. Companies meticulously review each deal, often using a detailed package that outlines economics and risks, and they've learned that despite a structured approach, the timeline can be unpredictable due to administrative hurdles.

3. Economic and Risk Evaluation: Buyers now look beyond a simple price discount, focusing on the overall Return on Investment (ROI) and the net value after considering payment terms and the time value of money. They mitigate risk by diversifying their portfolio, carefully vetting counterparties, and ensuring strong legal protections like indemnification and insurance.

4. The Role of Intermediaries: Intermediaries like Reunion are crucial for managing the complex due diligence process, particularly by ensuring sellers are prepared with the necessary documentation. This helps streamline the transaction and build trust, which is highly valued by buyers.

Below is our first Monthly Market Digest, which provides a look at market trends and insights, along with some highlights from recent Reunion transactions. To recieve this monthly, or add any friends or colleagues, subscribe here.

What we’re seeing in the market

Some buyers have lower tax liability due to the OBBBA, impacting their ability to purchase credits

‍Several corporate clients are expecting to have lower tax liability in 2025 due to provisions in the OBBBA, including 100% bonus depreciation, domestic research & experimental expensing, and higher interest deductibility. We have particularly noted this trend with capital-intensive (e.g., oil and gas, datacenter) and research-heavy companies (e.g., pharmaceutical). While some anticipated this liability decrease early in the year, many taxpayers are only now coming to this determination. On the other hand, taxpayers who were holding off on making purchases due to legislative uncertainty are now actively seeking 2025 credits, given that the OBBBA has provided clarity on tax planning.

Insurance costs have been on the rise

‍While sellers have been modeling insurance costs between 2 to 3% based on pricing in 2024, we have seen costs increase to a range of 3% to 4.5% or even more. Checks with insurance brokers suggest there is growing demand but limited capacity for insurance coverage, and requests for specific covered tax positions can add incremental premiums to a policy.

Tax credit sellers have had success selling 2024 vintage credits in 2025

‍We have regularly seen new 2024 credit opportunities emerge in Q1 and Q2 of 2025. Given the relative scarcity of prior year credits, tax credits sellers have been able to quickly find buyers and sell credits near the top of the tax credit price range in Reunion's Market Monitor. Many of these buyers are fiscal year tax filers, who require credits that were placed in service in 2024 from calendar year sellers to offset taxes in their fiscal years that end in 2025.

A majority of Reunion’s transactions are coming in under the capped reimbursement amount

‍Typically, sellers will negotiate a capped reimbursement for the buyer’s third-party legal and diligence costs, with the expectation that they will need to pay the full amount. In nearly a dozen of Reunion's recently closed transactions, the actual costs have come in less than the negotiated cap. This is largely due to Reunion’s due diligence and execution effort, where we provide a comprehensive diligence memo to both parties typically within 10 days of a term sheet being executed, to identify and tackle any issues upfront and avoid 11th-hour surprises.

Other initiatives: Forward commitment facility

We have partnered with a large, investment-grade taxpayer to enter into forward commitments for ITCs ($50+ million) that will be generated in 2026, 2027, and 2028. Our forward commitment facility will allow developers to maximize proceeds under their transfer bridge loans, as lenders will advance much higher amounts at lower costs when sponsors have executed a creditworthy tax credit agreement. The tax credit purchase commitment will ultimately be substituted with another purchaser upon closing, in a way that does not expose the lender to a less creditworthy balance sheet.

Highlights from recently closed transactions

Project Sequoia | $35M in 2025 ITCs, Utility-Scale Solar

A tax equity investor approached Reunion for assistance in selling $35 million in §48 investment tax credits from a tax equity partnership. The seller provided a guaranty from the parent company of the class B member, along with tax credit insurance. Reunion introduced the seller to a large corporate buyer with whom we have completed multiple transactions.

What was interesting about this transaction

• The transaction moved from term sheet to close in under 45 days, with funding occurring six months after close when the project is placed in service.
• Negotiations included the developer, the tax equity investor, the lender, and the tax credit purchaser. Despite the number of counterparties, Reunion was able to facilitate an efficient process, due largely to our rigorous due diligence and transaction support.

Project Olympic | $45M in 2025 AMPCs, Critical Minerals Production

A critical minerals producer worked with Reunion to execute a tax credit transfer agreement with a Fortune 500 taxpayer for $45 million of 2025 credits. Reunion was deeply involved in helping the buyer navigate contract negotiation, understand tax credit insurance, and gain internal approvals.

What was interesting about this transaction

• This transaction represented the fourth transaction that Reunion has facilitated with this particular seller, across three large taxpayers for the 2023, 2024, and 2025 tax years.
• By negotiating quarterly payments in arrears, the seller can benefit from ongoing cash flows throughout the year, supporting their corporate expansion plans.

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This is a snapshot of Q2 2025 data. For a real time look at transaction data, access the full dashboard here.

In June, Reunion released Market Monitor, a comprehensive view of transferable tax credit pricing, deal terms, and market dynamics. Based on over 300 transactions and $25B of deal volume, Market Monitor represents a 360-degree view of the clean energy tax credit market. You can watch our release webinar.

Alongside the platform, we are also publishing a quarterly analysis to bring key trends and observations to life.

Key trends

1. In the first half of 2025, pricing has softened for 2025 credits relative to last-minute 2024 credits
2. Seasonality of tax credit pricing has persisted into 2025
3. Pricing dispersion reflects deal- and counterparty-specific nuances
4. Premium on Investment Grade Tax Credit Sellers amounts to 1 to 2 cents more per credit
5. Increased standardization among key commercial terms
6. Buyers of all stripes are in the market
7. Nearly 20% of 2024 vintage credits closed in early 2025, driven by fiscal-year filers
8. Most Section 48 ITC transactions now include at least one bonus adder
9. Domestic content remains limited for Section 45 PTCs
10. A growing share of credits, 62% of 2025 ITCs, require PWA compliance

Pricing

Pricing for 2025 credits, relative to 2024 credits, has softened

Pricing for 2024 vintage credits generally trended up and remained elevated through Q1 and Q2 of 2025, reflecting a large number of buyers chasing a relatively small number of opportunities (especially for larger Section 48 ITCs). Conversely, 2025 vintage credits saw some softening in price in early 2025.

Seasonality of tax credit pricing has persisted into 2025

The market exhibits annual seasonality driven by supply-demand imbalances. A relatively small share of buyers were ready to purchase credits earlier in the year without knowing their tax liability; this was exacerbated in 2025 due to early-year uncertainty on how tax laws would change as a result of the reconciliation bill (now known as the OBBBA). In general, buyers willing to enter the market earlier in the year may find more deals to choose from and more advantageous terms and pricing.

Pricing dispersion reflects deal- and counterparty-specific nuances

Median pricing doesn't tell the whole story. Reunion's data shows pricing dispersion, where factors such as delayed payment timing or indemnities from investment-grade entities can lead to higher prices. Section 48 ITCs tend to have greater dispersion due to a broader mix of technologies and counterparties, while Section 45 PTCs trade in narrower bands.

The Premium on Investment Grade Tax Credit Sellers amounts to 1 to 2 cents more per credit

A selection of corporate buyers, many of whom tend to be larger, require an investment-grade counterparty. This translates into higher pricing for tax credits from investment-grade sellers, with  tax credits trading for 1 to 2 cents more per credit compared to similar projects that might carry tax credit insurance.

With a finite supply of credits from investment grade sellers. Essentially, these credits are "priced to perfection" due to their scarcity and the perceived lower risk associated with the seller.

Commercial terms

Increased standardization among key commercial terms

Reunion continues to see standardization around key commercial terms — in particular, the buyer fee reimbursement (often $50K-$150K) and exclusivity period (commonly 30-60 days). We believe this is emblematic of a maturing market with increasing efficiency in deal closing.

Markets

Buyers of all stripes are in the market

The transferable tax credit market demonstrates wide adoption across various buyer industries and supports a diverse range of deal sizes, from a concentration of $20 to $50M transactions, to a notable volume of $250 million+ deals.

Nearly 20% of 2024 vintage credits closed in early 2025

A significant portion of 2024 vintage credits (nearly 20%) and their associated term sheets closed in early 2025, largely driven by fiscal year-end buyers. This sustained demand, even for prior-year credits, reinforces the importance to buyers of entering the market early.

Credit values

Most Section 48 ITC transactions now include at least one bonus adder

When weighed by dollar value, the average credit value for 2025 Section 48 ITCs is 38.1%. At nearly 40%, the increasing average credit percentage for ITCs implies that most opportunities include at least one bonus credit adder — most commonly energy community, followed by domestic content.

Domestic content remains limited for Section 45 PTCs

Only 2.9% of 2025 Section 45 PTCs — when weighted by dollar value — are claiming the domestic content bonus credit.

Although the elective safe harbor meaningfully increased domestic content adoption for Section 48 ITCs, we have not observed the same flow-through to Section 45 PTCs. This largely stems from “legacy” PTCs that were placed in service before the IRA.

PWA compliance

A growing share of credits, 62% of 2025 ITCs, require PWA compliance

PWA compliance is becoming increasingly commonplace for 2025 Section 48 ITCs. However, 25% of 2025 ITCs — Sections 48 and 48E — are exempt from prevailing wage and apprenticeship requirements because of the 1MW exemption. The overwhelming majority of exempt projects are rooftop solar, whether residential (”resi”) or commercial and industrial (”C&I”).

29% of 2025 Section 45 PTCs are PWA exempt — although these credits tend to trade at an “IG-like” premium and clear the market quickly

Approximately 30% of 2025 PTCs by dollar volume are exempt from PWA requirements per the beginning of construction exemption — that is, the projects began construction before January 29, 2023.

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Reunion’s breadth of experience includes working with both new and seasoned tax credit market participants. Since the ability to transfer tax credits was only enacted through the Inflation Reduction Act in 2022, some buyers are still getting introduced to the advantages of transferable tax credits as it is written in the Internal Revenue Code §6418 (the Code). Therefore, it is essential for buyers to be aware of the negotiable terms in the transaction, as no two tax credit transfers are the same. Each party (and the underlying asset) involved in the transaction may require bespoke terms and conditions to make the deal close, as is exemplified in this case study of a $200m PTC transfer that met the “audit-ready” diligence requirements of the buyer. 

Below are 10 terms that Reunion helps buyers consider when negotiating a tax credit transfer agreement (TCTA). These are not ordered by importance since each buyer’s priorities are particular to them, however, each of the following should be considered when negotiating a transaction:

Payment Terms

The payment terms are primarily composed of the purchase price and payment timing. 

• Purchase Price: The purchase price is calculated as a dollar value for every $1.00 tax credit transferred – for instance, $0.935. Buyers and sellers negotiate this term based on the economics of the transaction and key risk factors, such as whether the counterparty is investment grade, what kinds of tax credits are involved, and the total expected volume of the transaction. Read more about the buyer’s perspective for these transactions and how to set the appropriate price. 
• Payment Timing: When a transaction closes can significantly influence the negotiated purchase price. Transactions with earlier payments, such as a simultaneous sign and close, are often favored by the seller due to the time value of money. Therefore, the seller may be more open to a lower purchase price. Sometimes the buyer is inelastic on this term and requires that transfer payments align with their quarterly estimated tax payment dates to minimize out-of-pocket spend.

Transaction Cost Reimbursement

Most buyers opt to include a transaction cost reimbursement provision in their tax credit bids. It is common for buyers to ask sellers to reimburse some or all of the transaction costs they incur. This request is often driven by accounting considerations, as most buyers do not want to incur an “above the line” expense to generate a “below the line” tax benefit.

Buyers should first identify the expenses they will incur, such as legal fees for outside counsel or costs for accounting firms providing third-party diligence support. For transfers with subsequent funding milestones (e.g. multiple closing dates), buyers should consider the timing of expenses as well as the amount needed to support subsequent fundings.Buyers must weigh what other impacts this provision could have on the transaction. A reimbursement provision will ultimately decrease the amount of proceeds to the seller, so it could impact the overall economics of the transaction (e.g., smaller tax credit transfers may not support large transaction cost reimbursements) or make the bid less competitive when a seller considers their net proceeds.

Exclusivity

Most of Reunion’s tax credit transfers move from term sheet execution to TCTA signing in under 45 calendar days. During the exclusivity period, both parties are generally incurring costs related to definitive documentation and due diligence. To protect their investment of time, effort, and money, buyers typically request an exclusive right to purchase the credits. 

Buyers can negotiate for a fixed exclusivity period when drafting the term sheet and will typically request an extension if the exclusivity period has expired and all parties are working in good faith to close the transaction. Reunion has seen exclusivity periods range from zero to 60 days following execution of the term sheet. A period beyond 60 days is not typical and could signal to the seller that the buyer is not able to close the transaction in a timely manner.

Indemnity Scope

In every tax credit transfer agreement, a buyer will require the seller to indemnify them for the disallowance or recapture of tax credits. Indemnities can be structured in two ways:

• Breach-Based Indemnity: Indemnification for a loss is triggered by a specific breach of a representation, warranty, or covenant.
• No-Fault Indemnity: Indemnification for a loss occurs regardless of whether a contractual breach has happened. 

Most indemnities will cover any tax gross-up, interest, penalties, and fees incurred in connection with the loss. For ITC transactions, as further described in the Section 48 ITC Due Diligence Guide, buyers negotiate for indemnity in the case of a recapture event.

Indemnity Seller Cap

Sellers may negotiate for a cap to the amount recoverable through the indemnity clause. Stipulated limitations of liability are often required by larger, institutional sellers. If the seller makes this request, buyers should analyze whether the indemnity limit is sufficient enough to recoup any losses incurred on an after-tax basis (including anticipated damages such as interest, penalties, taxes, and additional expenses needed to enforce the claim). 

Reunion has supported transactions with no caps, as well as transactions with caps expressed as a percentage of the face value of the credits or the purchase price of the credits. The former is more common.

IRS Contest Process

In the case of an IRS contest, Reunion sees most transactions include language in the TCTA that dictates which party will be responsible for working through, and leading, the process with the IRS and what rights each party will hold. Buyers should consider how they want this to be managed while reviewing the TCTA. In most cases, the party that is directly involved in the contest with the IRS controls the process at that party’s expense and notifies the other party as needed. 

Buyers and sellers may also be required to adhere to any requirements under the insurance policy (where applicable) to preserve and pursue a claim to minimize the amount of tax credits lost. 

Change in Law

Due to the uncertain political climate, most buyers have asked for provisions to be included in the TCTA that protect them from any future changes in the Code, or regulations that could impact their ability to utilize any purchased tax credits. A recent focus for buyers has been on language that specifically indemnifies the buyer against changes in law that are retroactive in effect (e.g., tax credits for projects placed in service on or before a retroactive change in law). Buyers may also seek the ability to terminate an agreement if there are changes in law that have a material adverse effect between signing and closing.

Credit Enhancements

When the seller is not investment grade or there are other unique risks in the transaction, the buyer can negotiate for further credit support. 

• Guarantor: The primary option is a guarantee from the seller's parent company or another affiliated party. Securing protection from an investment-grade guarantor may result in a higher net credit price if the seller does not have to obtain tax credit insurance.‍
• Tax Credit Insurance: If the seller cannot provide a suitable guarantor, tax credit insurance is an alternative. The policy limit of liability is typically based on a negotiated percentage of the tax credits' face value. However, all policies have specific exclusions to coverage, including material misrepresentations, inaccuracies or omissions, breaches of transaction documents, recapture that is caused by the seller, fraudulent or criminal conduct, any position taken in tax returns that is materially inconsistent with the covered tax position, and change in law. Additional exclusions may also apply depending on specific circumstances relating to the underwriting of the tax credit.

Step-up Limit

For investment tax credit transactions, project developers commonly sell a project into a partnership where the purchase price is “stepped up” to a fair market value (FMV) that exceeds the developer’s total capital expenditure. These FMVs should be supported by underlying documentation and assessed by a third-party appraiser. Some buyers and insurers have requested a limit to the step-up percentage as a higher step-up may have additional risk in the event of an IRS contest if the step-up is partially or fully disallowed. Recent transactions have allowed for at least a 20% step-up when supported by the facts and circumstances of the applicable transaction.

Diligence Requirements

After the buyer and seller have executed a term sheet, they work alongside their respective counsel and any other third-party assistance, to mitigate concerns around the transaction and underlying tax credits. Most transactions require a standard set of diligence items, which typically extends beyond the minimum documentation requirements under Treas. Reg. Section 1.6418-2(b)(5)(iv). Diligence may include, but is not limited to, third party reports, legal memoranda, and original project documents. 

Standard diligence items include:

• Third Party Consultant Reports: Examples include a cost segregation report, fair market value appraisal, independent engineer report, 80/20 analysis, and tax memo, depending on the type of tax credit.
• Legal Memoranda: In some instances, a third-party legal analysis may be required to address specific risks in a transaction, including qualification as eligible technology or qualification for credit adders.
• Original Project Documents: Sellers should anticipate requests to substantiate the tax credits and analyze any potential for recapture. For §48 ITCs and §45 PTCs, this may include executed site control and interconnection documents, as well as offtake, EPC, asset management, and O&M agreements. Photographs or satellite imagery is often used in diligence as well. In instances where a portfolio of distributed generation assets is involved, buyers can request a sampling size that is reasonable given the terms of the transaction. For §45X AMPCs, the documentation involves proof of sales contracts and underlying costs for the eligible technology. 

Buyers should consider which diligence items are non-negotiable given the details of the transaction and parties involved. We have seen in recent transactions, buyers and sellers collaborating on mandatory diligence requests and finding a path to resolution. On items that are not imperative, flexibility from buyers has helped transactions be executed within the exclusivity period. 

More details can be found in the Transferable Tax Credit Handbook.

Summary

Reunion has seen many recent transactions accommodate the pain points of both the buyer and the seller - especially when backed with well-reasoned requirements. Ultimately, both parties benefit from these transactions moving forward de-risked and well positioned in the market. 

If you are interested in buying credits, thinking through which of these terms is important to you will help get ahead of negotiations in your tax credit transfer deal. Then as an informed and prepared buyer, you can move quickly and take advantage of quality tax credits as they become available in the market.

Recording

Key topics

0:00 Agenda Overview
01:41  Introductions
07:45  Impact of House Tax Bill
14:35  Gaining Internal Buy-in
25:53  Origination and Sourcing Investments
31:35  Structuring and Negotiations
45:00  Due Diligence and Closing
52:00  Final Questions and Advice

Joined by: Jim Fleming of Hormel and Adam Fritz of Gallup

Reunion hosted a buyer-focused webinar with Jim and Adam, who shared important lessons they've learned in the transfer process, including getting internal buy-in, origination and sourcing investments, deal structure negotiations, and due diligence.

Insights from your peers:

• Secure Internal Buy-In Up Front: Align with relevant stakeholders (which often include the CFO, legal, and treasury teams) early on to establish your company's goals and risk tolerance. This internal alignment is crucial for moving quickly and decisively on potential deals.
• Negotiate Beyond Price: While price is top of mind for most buyers, other terms such as a strong seller indemnity and favorable payment timing can be equally important. Buyers also often negotiate for sellers to cover a capped amount of legal and diligence fees.
• Key Buyer Metrics Include Cash Savings, Timing of Payment and Strength of Seller: Buyers noted that the amount of cash savings and resulting impact on ETR was their primary consideration. Timing of payment is also significant to ensure there isn't too large of a "prepayment" on taxes. Finally, partnering with a strong seller is critical in the event there is an IRS challenge down the road.
• Conduct Thorough Due Diligence: Even with a strong seller guarantee, buyers must conduct comprehensive due diligence. Experienced legal counsel, and the right broker / advisor can help streamline the due diligence process and ensure proper risk mitigation.
• Monitor Legislative Changes: Tax credit transfer activity has picked up since the proposed reconciliation bill passed in the House, which gave the market confidence that there will not be a retroactive repeal of credits. However, the proposed bill will also lower tax liability for many buyers, which will impact the volume of credits a buyer can purchase.