Act Now: The Window for §45Z Tax Credit Monetization Is Wide Open
As the clean energy transition accelerates, corporate tax departments are finding a rare alignment between policy, profitability, and purpose. The Inflation Reduction Act (IRA) of 2022 and the One Big Beautiful Bill Act (OBBBA) have extended the transferability of key federal tax credits — notably the §45Z Clean Transportation Fuel Production Tax Credit — through 2029. This creates a five-year window for companies to generate meaningful cash-tax savings while supporting decarbonization.
A Booming Market
The transferable tax credit market has matured rapidly. In just the first half of 2025, more than $20 billion in credits were traded — compared with $30 billion during all of 2024 — as more corporations entered the market. Competition among buyers is driving deal sophistication. For those positioned to act, 2025 represents a pivotal entry point to lock in multi-year benefits and hedge against rising demand in later years.
Simpler, Faster, and More Flexible
Unlike traditional tax equity structures, transferable credits under the IRA can be sold through a straightforward Tax Credit Transfer Agreement (TCTA) — no long-term commitments or complex partnerships required. Credits can be transferred once, with payment and benefit realized in the same tax year. Buyers typically pay between $0.90 and $0.95 per $1 of credit, resulting in immediate earnings accretion and a lower effective tax rate. With transfer elections made directly on tax returns, companies can begin offsetting up to 75% of their federal tax liability right away.
The §45Z Advantage
Among all credit classes, §45Z stands out. Designed to reward the production of clean transportation fuels — including ethanol, biodiesel, and renewable natural gas — the §45Z Production Tax Credit provides recurring annual value from 2025 through 2029. It carries no five-year operating requirement, eliminating recapture risk, and functions as a repeatable annuity stream for buyers. The credit’s passive character also makes it particularly well-suited for C corporations, which can efficiently monetize it within their income tax expense line.
Smart Timing, Structured Diligence
Acting now enables taxpayers to defer 2025 estimated payments until closing and even capture refunds on prior-year liabilities. The process begins with assessing tax capacity and forecasted liabilities through 2029, followed by evaluating eligible deals that fit a company’s financial profile. A disciplined due diligence process — supported by CPAs, tax counsel, and experienced brokers — ensures compliance, eligibility, and appropriate indemnification. Tax credit insurance can further mitigate risk, while professional opinions and carbon-intensity verifications strengthen documentation.
Mickelson & Company: Trusted Advisors in a Rapidly Evolving Market
Founded in 2005 and staffed by attorneys and CPAs, Mickelson & Company, LLC, of Sioux Falls has structured over $370 million in renewable energy tax credit transactions, with another $250 million in term sheets executed. With a reputation built on precision, relationships, and responsiveness, the firm helps corporations “Monetize. Offset. Repeat.” — transforming tax liability into lasting financial and environmental value.
The Company should seek independent legal, tax, and accounting advice as part of this process. Mickelson & Company is not providing legal or accounting services.