---
kind: "section"
citation: "26 U.S.C. § 6417"
title: "26"
title_heading: "Internal Revenue Code"
number: "6417"
heading: "Elective payment of applicable credits"
release: "119-102"
date: "2026-07-12"
url: "https://uscodex.org/usc/26/6417"
units:
  - "Subtitle F — Procedure and Administration"
  - "Chapter 65 — Abatements, Credits, and Refunds"
  - "Subchapter B — Rules of Special Application"
---

# §6417. Elective payment of applicable credits

- (a) **In general—** In the case of an applicable entity making an election (at such time and in such manner as the [Secretary](/usc/26/7701.md?p=a-11-B) may provide) under this section with respect to any applicable credit determined with respect to such entity, such entity shall be treated as making a payment against the tax imposed by subtitle A (for the [taxable year](/usc/26/7701.md?p=a-23) with respect to which such credit was determined) equal to the amount of such credit.
- (b) **Applicable credit—** The term “applicable credit” means each of the following:
  - (1) So much of the credit for alternative fuel vehicle refueling property allowed under [section 30C](/usc/26/30C.md) which, pursuant to [subsection (d)(1)](/usc/26/30C.md?p=d-1) of such section, is treated as a credit listed in [section 38(b)](/usc/26/38.md?p=b).
  - (2) So much of the renewable electricity production credit determined under [section 45(a)](/usc/26/45.md?p=a) as is attributable to [qualified facilities](/usc/26/7701.md?p=a-51-I-v) which are originally placed in service after December 31, 2022.
  - (3) So much of the credit for carbon oxide sequestration determined under [section 45Q(a)](/usc/26/45Q.md?p=a) as is attributable to carbon capture equipment which is originally placed in service after December 31, 2022.
  - (4) The zero-emission nuclear power production credit determined under [section 45U(a)](/usc/26/45U.md?p=a).
  - (5) So much of the credit for production of clean hydrogen determined under [section 45V(a)](/usc/26/45V.md?p=a) as is attributable to qualified clean hydrogen production facilities which are originally placed in service after December 31, 2012.
  - (6) In the case of a tax-exempt entity described in clause [(i)](/usc/26/168.md?p=h-2-A-i), [(ii)](/usc/26/168.md?p=h-2-A-ii), or [(iv)](/usc/26/168.md?p=h-2-A-iv) of section 168(h)(2)(A), the credit for qualified commercial vehicles determined under [section 45W](/usc/26/45W.md) by reason of [subsection (d)(3)](#d-3) thereof.
  - (7) The credit for advanced manufacturing production under [section 45X(a)](/usc/26/45X.md?p=a).
  - (8) The clean electricity production credit determined under [section 45Y(a)](/usc/26/45Y.md?p=a).
  - (9) The clean fuel production credit determined under [section 45Z(a)](/usc/26/45Z.md?p=a).
  - (10) The energy credit determined under section 48.
  - (11) The qualifying advanced energy project credit determined under section 48C.
  - (12) The clean electricity investment credit determined under section 48E.
- (c) **Application to partnerships and S corporations—**
  - (1) **In general—** In the case of any applicable credit determined with respect to any facility or property held directly by a [partnership](/usc/26/7701.md?p=a-2) or S [corporation](/usc/26/7701.md?p=a-3), any election under [subsection (a)](#a) shall be made by such [partnership](/usc/26/7701.md?p=a-2) or S [corporation](/usc/26/7701.md?p=a-3). If such [partnership](/usc/26/7701.md?p=a-2) or S [corporation](/usc/26/7701.md?p=a-3) makes an election under such subsection (in such manner as the [Secretary](/usc/26/7701.md?p=a-11-B) may provide) with respect to such credit—
    - (A) the [Secretary](/usc/26/7701.md?p=a-11-B) shall make a payment to such [partnership](/usc/26/7701.md?p=a-2) or S [corporation](/usc/26/7701.md?p=a-3) equal to the amount of such credit,
    - (B) [subsection (e)](#e) shall be applied with respect to such credit before determining any [partner](/usc/26/7701.md?p=a-2)’s distributive share, or [shareholder](/usc/26/7701.md?p=a-8)’s pro rata share, of such credit,
    - (C) any amount with respect to which the election in [subsection (a)](#a) is made shall be treated as tax exempt income for purposes of sections [705](/usc/26/705.md) and [1366](/usc/26/1366.md), and
    - (D) a [partner](/usc/26/7701.md?p=a-2)’s distributive share of such tax exempt income shall be based on such [partner](/usc/26/7701.md?p=a-2)’s distributive share of the otherwise applicable credit for each [taxable year](/usc/26/7701.md?p=a-23).
  - (2) **Coordination with application at partner or shareholder level—** In the case of any facility or property held directly by a [partnership](/usc/26/7701.md?p=a-2) or S [corporation](/usc/26/7701.md?p=a-3), no election by any [partner](/usc/26/7701.md?p=a-2) or [shareholder](/usc/26/7701.md?p=a-8) shall be allowed under [subsection (a)](#a) with respect to any applicable credit determined with respect to such facility or property.
  - (3) **Treatment of payments to partnerships and S corporations—** For purposes of [section 1324 of title 31](/usc/31/1324.md), United States Code, the payments under [paragraph (1)(A)](#c-1-A) shall be treated in the same manner as a refund due from a credit provision referred to in [subsection (b)(2)](/usc/31/1324.md?p=b-2) of such section.
- (d) **Special rules—** For purposes of this section—
  - (1) **Applicable entity—**
    - (A) **In general—** The term “applicable entity” means—
      - (i) any organization exempt from the tax imposed by subtitle A,
      - (ii) any [State](/usc/26/7701.md?p=a-10) or political subdivision thereof,
      - (iii) the Tennessee Valley Authority,
      - (iv) an [Indian tribal government](/usc/26/7701.md?p=a-40-A) (as defined in [section 30D(g)(9)](/usc/26/30D.md?p=g-9)),
      - (v) any Alaska Native [Corporation](/usc/26/7701.md?p=a-3) (as defined in section 3 of the Alaska Native Claims Settlement Act ([43 U.S.C. 1602(m)](/usc/43/1602.md?p=m)), or
      - (vi) any [corporation](/usc/26/7701.md?p=a-3) operating on a cooperative basis which is engaged in furnishing electric energy to [persons](/usc/26/7701.md?p=a-1) in rural areas.
    - (B) **Election with respect to credit for production of clean hydrogen—** If a [taxpayer](/usc/26/7701.md?p=a-14) other than an entity described in [subparagraph (A)](#d-1-A) makes an election under this subparagraph with respect to any [taxable year](/usc/26/7701.md?p=a-23) in which such [taxpayer](/usc/26/7701.md?p=a-14) has placed in service a qualified clean hydrogen production facility (as defined in [section 45V(c)(3)](/usc/26/45V.md?p=c-3)), such [taxpayer](/usc/26/7701.md?p=a-14) shall be treated as an applicable entity for purposes of this section for such [taxable year](/usc/26/7701.md?p=a-23), but only with respect to the credit described in [subsection (b)(5)](#b-5).
    - (C) **Election with respect to credit for carbon oxide sequestration—** If a [taxpayer](/usc/26/7701.md?p=a-14) other than an entity described in [subparagraph (A)](#d-1-A) makes an election under this subparagraph with respect to any [taxable year](/usc/26/7701.md?p=a-23) in which such [taxpayer](/usc/26/7701.md?p=a-14) has, after December 31, 2022, placed in service carbon capture equipment at a [qualified facility](/usc/26/7701.md?p=a-51-I-v) (as defined in [section 45Q(d)](/usc/26/45Q.md?p=d)), such [taxpayer](/usc/26/7701.md?p=a-14) shall be treated as an applicable entity for purposes of this section for such [taxable year](/usc/26/7701.md?p=a-23), but only with respect to the credit described in [subsection (b)(3)](#b-3).
    - (D) **Election with respect to advanced manufacturing production credit—**
      - (i) **In general—** If a [taxpayer](/usc/26/7701.md?p=a-14) other than an entity described in [subparagraph (A)](#d-1-A) makes an election under this subparagraph with respect to any [taxable year](/usc/26/7701.md?p=a-23) in which such [taxpayer](/usc/26/7701.md?p=a-14) has, after December 31, 2022, produced [eligible components](/usc/26/7701.md?p=a-51-I-iii) (as defined in [section 45X(c)(1)](/usc/26/45X.md?p=c-1)), such [taxpayer](/usc/26/7701.md?p=a-14) shall be treated as an applicable entity for purposes of this section for such [taxable year](/usc/26/7701.md?p=a-23), but only with respect to the credit described in [subsection (b)(7)](#b-7).
      - (ii) **Limitation—**
        - (I) **In general—** Except as provided in [subclause (II)](#d-1-D-ii-II), if a [taxpayer](/usc/26/7701.md?p=a-14) makes an election under this subparagraph with respect to any [taxable year](/usc/26/7701.md?p=a-23), such [taxpayer](/usc/26/7701.md?p=a-14) shall be treated as having made such election for each of the 4 succeeding [taxable years](/usc/26/7701.md?p=a-23) ending before January 1, 2033.
        - (II) **Exception—** A [taxpayer](/usc/26/7701.md?p=a-14) may elect to revoke the application of the election made under this subparagraph to any [taxable year](/usc/26/7701.md?p=a-23) described in [subclause (I)](#d-1-D-ii-I). Any such election, if made, shall apply to the applicable year specified in such election and each subsequent [taxable year](/usc/26/7701.md?p=a-23) within the period described in [subclause (I)](#d-1-D-ii-I). Any election under this subclause may not be subsequently revoked.
      - (iii) **Prohibition on transfer—** For any [taxable year](/usc/26/7701.md?p=a-23) described in [clause (ii)(I)](#d-1-D-ii-I), no election may be made by the [taxpayer](/usc/26/7701.md?p=a-14) under [section 6418(a)](/usc/26/6418.md?p=a) for such [taxable year](/usc/26/7701.md?p=a-23) with respect to [eligible components](/usc/26/7701.md?p=a-51-I-iii) for purposes of the credit described in [subsection (b)(7)](#b-7).
    - (E) **Other rules—**
      - (i) **In general—** An election made under subparagraph [(B)](#d-1-B), [(C)](#d-1-C), or [(D)](#d-1-D) shall be made at such time and in such manner as the [Secretary](/usc/26/7701.md?p=a-11-B) may provide.
      - (ii) **Limitation—** No election may be made under subparagraph [(B)](#d-1-B), [(C)](#d-1-C), or [(D)](#d-1-D) with respect to any [taxable year](/usc/26/7701.md?p=a-23) beginning after December 31, 2032.
  - (2) **Application—** In the case of any applicable entity which makes the election described in [subsection (a)](#a), any applicable credit shall be determined—
    - (A) without regard to paragraphs [(3)](/usc/26/50.md?p=b-3) and [(4)(A)(i)](/usc/26/50.md?p=b-4-A-i) of section 50(b), and
    - (B) by treating any property with respect to which such credit is determined as used in a [trade or business](/usc/26/7701.md?p=a-26) of the applicable entity.
  - (3) **Elections—**
    - (A) **In general—**
      - (i) **Due date—** Any election under [subsection (a)](#a) shall be made not later than—
        - (I) in the case of any government, or political subdivision, described in [paragraph (1)](#d-1) and for which no return is required under section [6011](/usc/26/6011.md) or [6033(a)](/usc/26/6033.md?p=a), such date as is determined appropriate by the [Secretary](/usc/26/7701.md?p=a-11-B), or
        - (II) in any other case, the due date ([including](/usc/26/7701.md?p=c) extensions of time) for the return of tax for the [taxable year](/usc/26/7701.md?p=a-23) for which the election is made, but in no event earlier than 180 days after the date of the enactment of this section.
      - (ii) **Additional rules—** Any election under [subsection (a)](#a), once made, shall be irrevocable and shall apply (except as otherwise provided in this paragraph) with respect to any credit for the [taxable year](/usc/26/7701.md?p=a-23) for which the election is made.
    - (B) **Renewable electricity production credit—** In the case of the credit described in [subsection (b)(2)](#b-2), any election under [subsection (a)](#a) shall—
      - (i) apply separately with respect to each [qualified facility](/usc/26/7701.md?p=a-51-I-v),
      - (ii) be made for the [taxable year](/usc/26/7701.md?p=a-23) in which such [qualified facility](/usc/26/7701.md?p=a-51-I-v) is originally placed in service, and
      - (iii) shall apply to such [taxable year](/usc/26/7701.md?p=a-23) and to any subsequent [taxable year](/usc/26/7701.md?p=a-23) which is within the period described in [subsection (a)(2)(A)(ii)](/usc/26/45.md?p=a-2-A-ii) of section 45 with respect to such [qualified facility](/usc/26/7701.md?p=a-51-I-v).
    - (C) **Credit for carbon oxide sequestration—**
      - (i) **In general—** In the case of the credit described in [subsection (b)(3)](#b-3), any election under [subsection (a)](#a) shall—
        - (I) apply separately with respect to the carbon capture equipment originally placed in service by the applicable entity during a [taxable year](/usc/26/7701.md?p=a-23), and
        - (II)
          - (aa) in the case of a [taxpayer](/usc/26/7701.md?p=a-14) who makes an election described in [paragraph (1)(C)](#d-1-C), apply to the [taxable year](/usc/26/7701.md?p=a-23) in which such equipment is placed in service and the 4 subsequent [taxable years](/usc/26/7701.md?p=a-23) with respect to such equipment which end before January 1, 2033, and
          - (bb) in any other case, apply to such [taxable year](/usc/26/7701.md?p=a-23) and to any subsequent [taxable year](/usc/26/7701.md?p=a-23) which is within the period described in [section 45Q(a)(3)(A)](/usc/26/45Q.md?p=a-3-A) with respect to such equipment.
      - (ii) **Prohibition on transfer—** For any [taxable year](/usc/26/7701.md?p=a-23) described in [clause (i)(II)(aa)](#d-3-C-i-II-aa) with respect to carbon capture equipment, no election may be made by the [taxpayer](/usc/26/7701.md?p=a-14) under [section 6418(a)](/usc/26/6418.md?p=a) for such [taxable year](/usc/26/7701.md?p=a-23) with respect to such equipment for purposes of the credit described in [subsection (b)(3)](#b-3).
      - (iii) **Revocation of election—** In the case of a [taxpayer](/usc/26/7701.md?p=a-14) who makes an election described in [paragraph (1)(C)](#d-1-C) with respect to carbon capture equipment, such [taxpayer](/usc/26/7701.md?p=a-14) may, at any time during the period described in [clause (i)(II)(aa)](#d-3-C-i-II-aa), revoke the application of such election with respect to such equipment for any subsequent [taxable years](/usc/26/7701.md?p=a-23) during such period. Any such election, if made, shall apply to the applicable year specified in such election and each subsequent [taxable year](/usc/26/7701.md?p=a-23) within the period described in [clause (i)(II)(aa)](#d-3-C-i-II-aa). Any election under this subclause may not be subsequently revoked.
    - (D) **Credit for production of clean hydrogen—**
      - (i) **In general—** In the case of the credit described in [subsection (b)(5)](#b-5), any election under [subsection (a)](#a) shall—
        - (I) apply separately with respect to each qualified clean hydrogen production facility,
        - (II) be made for the [taxable year](/usc/26/7701.md?p=a-23) in which such facility is placed in service (or within the 1-year period subsequent to the date of enactment of this section in the case of facilities placed in service before December 31, 2022), and
        - (III)
          - (aa) in the case of a [taxpayer](/usc/26/7701.md?p=a-14) who makes an election described in [paragraph (1)(B)](#d-1-B), apply to such [taxable year](/usc/26/7701.md?p=a-23) and the 4 subsequent [taxable years](/usc/26/7701.md?p=a-23) with respect to such facility which end before January 1, 2033, and
          - (bb) in any other case, apply to such [taxable year](/usc/26/7701.md?p=a-23) and all subsequent [taxable years](/usc/26/7701.md?p=a-23) with respect to such facility.
      - (ii) **Prohibition on transfer—** For any [taxable year](/usc/26/7701.md?p=a-23) described in [clause (i)(III)(aa)](#d-3-D-i-III-aa) with respect to a qualified clean hydrogen production facility, no election may be made by the [taxpayer](/usc/26/7701.md?p=a-14) under [section 6418(a)](/usc/26/6418.md?p=a) for such [taxable year](/usc/26/7701.md?p=a-23) with respect to such facility for purposes of the credit described in [subsection (b)(5)](#b-5).
      - (iii) **Revocation of election—** In the case of a [taxpayer](/usc/26/7701.md?p=a-14) who makes an election described in [paragraph (1)(B)](#d-1-B) with respect to a qualified clean hydrogen production facility, such [taxpayer](/usc/26/7701.md?p=a-14) may, at any time during the period described in [clause (i)(III)(aa)](#d-3-D-i-III-aa), revoke the application of such election with respect to such facility for any subsequent [taxable years](/usc/26/7701.md?p=a-23) during such period. Any such election, if made, shall apply to the applicable year specified in such election and each subsequent [taxable year](/usc/26/7701.md?p=a-23) within the period described in clause (i)(II)(aa). Any election under this subclause may not be subsequently revoked.
    - (E) **Clean electricity production credit—** In the case of the credit described in [subsection (b)(8)](#b-8), any election under [subsection (a)](#a) shall—
      - (i) apply separately with respect to each [qualified facility](/usc/26/7701.md?p=a-51-I-v),
      - (ii) be made for the [taxable year](/usc/26/7701.md?p=a-23) in which such facility is placed in service, and
      - (iii) shall apply to such [taxable year](/usc/26/7701.md?p=a-23) and to any subsequent [taxable year](/usc/26/7701.md?p=a-23) which is within the period described in [subsection (b)(1)(B)](/usc/26/45Y.md?p=b-1-B) of section 45Y with respect to such facility.
  - (4) **Timing—** The payment described in [subsection (a)](#a) shall be treated as made on—
    - (A) in the case of any government, or political subdivision, described in [paragraph (1)](#d-1) and for which no return is required under section [6011](/usc/26/6011.md) or [6033(a)](/usc/26/6033.md?p=a), the later of the date that a return would be due under [section 6033(a)](/usc/26/6033.md?p=a) if such government or subdivision were described in that section or the date on which such government or subdivision submits a claim for credit or refund (at such time and in such manner as the [Secretary](/usc/26/7701.md?p=a-11-B) shall provide), and
    - (B) in any other case, the later of the due date (determined without regard to extensions) of the return of tax for the [taxable year](/usc/26/7701.md?p=a-23) or the date on which such return is filed.
  - (5) **Additional information—** As a condition of, and prior to, any amount being treated as a payment which is made by an applicable entity under [subsection (a)](#a), the [Secretary](/usc/26/7701.md?p=a-11-B) may require such information or registration as the [Secretary](/usc/26/7701.md?p=a-11-B) deems necessary for purposes of preventing duplication, fraud, improper payments, or excessive payments under this section.
  - (6) **Excessive payment—**
    - (A) **In general—** In the case of any amount treated as a payment which is made by the applicable entity under [subsection (a)](#a), or the amount of the payment made pursuant to [subsection (c)](#c), which the [Secretary](/usc/26/7701.md?p=a-11-B) determines constitutes an excessive payment, the tax imposed on such entity by [chapter 1](/usc/26/chstA/ch1.md) (regardless of whether such entity would otherwise be subject to tax under such chapter) for the [taxable year](/usc/26/7701.md?p=a-23) in which such determination is made shall be increased by an amount equal to the sum of—
      - (i) the amount of such excessive payment, plus
      - (ii) an amount equal to 20 percent of such excessive payment.
    - (B) **Reasonable cause—** [Subparagraph (A)(ii)](#d-6-A-ii) shall not apply if the applicable entity demonstrates to the satisfaction of the [Secretary](/usc/26/7701.md?p=a-11-B) that the excessive payment resulted from reasonable cause.
    - (C) **Excessive payment defined—** For purposes of this paragraph, the term “excessive payment” means, with respect to a facility or property for which an election is made under this section for any [taxable year](/usc/26/7701.md?p=a-23), an amount equal to the excess of—
      - (i) the amount treated as a payment which is made by the applicable entity under [subsection (a)](#a), or the amount of the payment made pursuant to [subsection (c)](#c), with respect to such facility or property for such [taxable year](/usc/26/7701.md?p=a-23), over
      - (ii) the amount of the credit which, without application of this section, would be otherwise allowable (as determined pursuant to [paragraph (2)](#d-2) and without regard to [section 38(c)](/usc/26/38.md?p=c)) under this title with respect to such facility or property for such [taxable year](/usc/26/7701.md?p=a-23).
    - (D) **Disallowance of an applicable energy credit—** In the case of an applicable entity which made an election under [subsection (a)](#a) with respect to an applicable credit for which there is a disallowance described in [section 6662(m)(2)](/usc/26/6662.md?p=m-2), [subparagraph (A)](#d-6-A) shall apply with respect to any excessive payment resulting from such disallowance.
- (e) **Denial of double benefit—** In the case of an applicable entity making an election under this section with respect to an applicable credit, such credit shall be reduced to zero and shall, for any other purposes under this title, be deemed to have been allowed to such entity for such [taxable year](/usc/26/7701.md?p=a-23).
- (f) **Mirror code possessions—** In the case of any possession of the [United States](/usc/26/7701.md?p=a-9) with a mirror code tax system (as defined in [section 24(k)](/usc/26/24.md?p=k)), this section shall not be treated as part of the income tax laws of the [United States](/usc/26/7701.md?p=a-9) for purposes of determining the income tax law of such possession unless such possession elects to have this section be so treated.
- (g) **Basis reduction and recapture—** Except as otherwise provided in subsection (c)(2)(A), rules similar to the rules of [section 50](/usc/26/50.md) shall apply for purposes of this section.
- (h) **Regulations—** The [Secretary](/usc/26/7701.md?p=a-11-B) shall issue such regulations or other guidance as may be necessary to carry out the purposes of this section, [including](/usc/26/7701.md?p=c) guidance to ensure that the amount of the payment or deemed payment made under this section is commensurate with the amount of the credit that would be otherwise allowable (determined without regard to [section 38(c)](/usc/26/38.md?p=c)).

## Source credit

(Added Pub. L. 117–169, title I, § 13801(a), Aug. 16, 2022, 136 Stat. 2003; amended Pub. L. 119–21, title VII, §§ 70512(j)(2), 70522(c), July 4, 2025, 139 Stat. 268, 280.)

## Notes

### Editorial Notes

### References in Text

The date of the enactment of this section, referred to in subsec. (d)(3)(A)(i)(II), (D)(i)(II), is the date of enactment of Pub. L. 117–169, which was approved Aug. 16, 2022.

### Prior Provisions

A prior section 6417, act Aug. 16, 1954, ch. 736, 68A Stat. 801, related to a tax credit or refund to any person who has sold to a State, or a political subdivision thereof, any article containing any oil, combination, or mixture, upon the processing of which a tax has been paid under former section 4511, and to a refund to the exporter of the tax paid under former subchapter B of chapter 37, prior to repeal by Pub. L. 94–455, title XIX, § 1906(a)(25), (d)(1), Oct. 4, 1976, 90 Stat. 1827, 1835, effective on the first day of the first month beginning more than 90 days after Oct. 4, 1976.

### Amendments

2025—Subsec. (d)(3)(C)(i)(II)(bb). Pub. L. 119–21, § 70522(c), substituted “section 45Q(a)(3)(A)” for “paragraph (3)(A) or (4)(A) of section 45Q(a)”.

Subsec. (d)(6)(D). Pub. L. 119–21, § 70512(j)(2), added subpar. (D).

### Statutory Notes and Related Subsidiaries

### Effective Date of 2025 Amendment

Amendment by section 70512(j)(2) of Pub. L. 119–21 applicable to taxable years beginning after July 4, 2025, see section 70512(l)(1) of Pub. L. 119–21, set out in a note under section 45 of this title.

Amendment by section 70522(c) of Pub. L. 119–21 applicable to facilities or equipment placed in service after July 4, 2025, see section 70522(d)(2) of Pub. L. 119–21, set out in a note under section 45Q of this title.

### Effective Date

Pub. L. 117–169, title I, § 13801(g), Aug. 16, 2022, 136 Stat. 2013, provided that: “The amendments made by this section [enacting this section and section 6418 of this title and amending sections 39 and 50 of this title] shall apply to taxable years beginning after December 31, 2022.”

### Gross-Up of Direct Spending

Pub. L. 117–169, title I, § 13801(f), Aug. 16, 2022, 136 Stat. 2013, provided that: “Beginning in fiscal year 2023 and each fiscal year thereafter, the portion of any payment made to a taxpayer pursuant to an election under section 6417 of the Internal Revenue Code of 1986, or any amount treated as a payment which is made by the taxpayer under subsection (a) of such section, that is direct spending shall be increased by 6.0445 percent.”