The Inflation Reduction Act (IRA) provides new opportunities for state governments agencies to invest in energy projects, vehicles, building improvements, and other state infrastructure that can produce cost savings, sustainability improvements, and other benefits to the state government. This memo provides recommendations for state agencies to take advantage of the elective pay provision of the IRA, and best practices from states that have chosen to use this tool.

This memo is the result of collaboration between the Government Finance Officers Association (GFOA), Lawyers for Good Government (L4GG), and the State Support Center (SSC). Interviews with four states at the forefront of leveraging elective pay informed this memo. This memo is for general educational and informational purposes and should not be considered tax or legal advice. States are recommended to seek appropriate professional guidance for their specific circumstances. For questions, comments, suggestions, or assistance, please reach out to Melissa Cheatham at the State Support Center at melissa@s2strategies.org.