Section 6418 Transferability: How Clean Energy Tax Credits Are Bought and Sold

Section 6418, added by the Inflation Reduction Act and kept by the 2025 OBBBA, lets an eligible taxpayer sell all or part of certain clean energy credits to an unrelated buyer for cash. The buyer claims the credit against its federal income tax. This is the market Veritas works in.

Which credits can be transferred?

Eligible credits include the §48E clean electricity investment credit, the §45Y clean electricity production credit, the legacy §48 and §45 credits, §45X advanced manufacturing, §45Q carbon oxide sequestration, §45U nuclear, §45V clean hydrogen, §45Z clean fuel production and §30C. Each credit carries its own placed-in-service and construction deadlines. See our OBBBA summary.

Key rules

• Cash only, not taxable. The buyer must pay in cash. The seller doesn't include the payment in income, and the buyer can't deduct it (§6418(b)).
• One transfer. A credit can be transferred only once. The buyer can't resell it (§6418(e)(2)).
• Registration. The seller must pre-register with the IRS and give the buyer a registration number. Both parties attach a transfer election statement to their returns (Form 3800).
• No transfers to specified foreign entities. Since OBBBA, §45Q, §45X, §45Y, §45Z and §48E credits can't be sold to a specified foreign entity (§6418(g)(5)).
• Recapture follows the buyer. If an ITC property is sold or stops qualifying during the five-year recapture period, the buyer may owe the recapture. That's why buyers look for indemnities and tax credit insurance.

Who can use purchased credits?

C corporations use transferred credits against regular income tax, subject to the general business credit limits in §38. Individuals, and owners of S corporations and partnerships, can buy credits too, but the passive activity rules of §469 generally limit their use to tax on passive income. See tax credits for individuals and passive activity rules. Always confirm with your CPA.

Pricing

Credits trade at a discount to face value. That discount is the buyer's economic benefit. Pricing depends on deal size, credit type (ITC or PTC), sponsor strength, insurance, and when the cash changes hands relative to the buyer's estimated tax payments. Veritas will quote real pricing for your situation; we don't promise a particular savings.

Timing

A buyer can purchase credits for the current tax year and apply them to quarterly estimated payments once a binding agreement is in place. Many buyers contract in the second half of the year once their liability is clearer. Read our step-by-step transaction process.