Tax Equity vs Buying a Transferable Tax Credit: Which Fits a Corporate Buyer?

Published October 29, 2026. Both let a company with federal tax liability use clean energy tax benefits it did not earn. They are different transactions. In a transfer you buy a credit for cash. In tax equity you invest in the project's partnership and share its tax items.

Side by side

	Credit transfer (§6418)	Tax equity
What you hold	A tax credit. No ownership of the project.	A partnership interest in the project entity.
Tax benefits	The credit only, within your §38(c) limit. The cash price is not deductible and the discount is not income (§6418(b); Treas. Reg. §1.6418-2(f)(2)).	Allocations of credits and, commonly, depreciation and other partnership items, per the partnership agreement and §704(b).
Recapture and basis	For §§48, 48C and 48E credits, the buyer bears recapture if the property is disposed of or stops qualifying (§6418(g)(3)). Production credits such as §45, §45X and §45Z do not carry §50 recapture.	Partners bear investment credit recapture as provided in the partnership and §50 rules.
Diligence	Credit amount, eligibility, registration number, indemnity, insurance. See the diligence guide.	All of that plus partnership structure, sponsor, allocation mechanics and exit terms.
Complexity and speed	A purchase and sale agreement, a registration number and an election statement (reporting guide).	A partnership agreement, often a flip structure, and a longer relationship.
Accounting	Generally income tax accounting for the credit; see ASC 740 for purchased credits.	Depends on the structure. Some tax credit investments may qualify for the proportional amortization method; confirm with your auditors.

How to choose

• Choose a transfer when you want a defined credit amount, no partnership reporting, and you do not need depreciation deductions.
• Consider tax equity when you have substantial taxable income to absorb losses and credits, want the depreciation, and can manage a multi-year partnership position.
• Know the limit either way. Credits are capped by the §38(c) limit. See the tax equity overview, tax equity investors and the model to size a structure.

What the market is doing (third-party estimates)

Crux estimates that tax equity and preferred equity will total about $46.3 billion in 2026 and that hybrid tax equity structures will account for about $28.8 billion of that. Crux also reported that credit transfers reached about $21 billion in the first half of 2026. These are market estimates, not predictions for your deal. Crux notes that some large tax equity providers are cautious about §48E projects because of foreign-entity uncertainty, which has pushed some developers toward transfers and preferred equity.

Not sure which fits? Ask for a quote and we will tell you honestly if a transfer is the better route, or if you should speak to a tax equity adviser instead.

Educational information only, not tax, legal or investment advice, and no outcome is promised. Figures and rules were checked against the cited sources on October 29, 2026; confirm with your CPA and counsel before acting. See our disclaimer.