The Infrastructure Investment and Jobs Act (IIJA) was signed into law on November 15, 2021, and the Inflation Reduction Act (IRA) was passed on August 16, 2022, just nine months later. Tme flies and we are nearing the end of IIJA and the closing out of many IRA grant programs. For local governments, that means that the window to apply for many IIJA and IRA grant programs is closing quickly and, in many cases, has closed. However, there are still many opportunities for local governments to take advantage of the funding (and tax incentives) provided by these laws. 

Also known as the Bipartisan Infrastructure Law (BIL), IIJA provided $1.2 billion over five years for a wide array of infrastructure, ranging from highways and transit to broadband and sewers. Indeed, the breadth of IIJA is illustrated by the long list of federal agencies implementing it. That list ranges from almost all the modal administrations at the Department of Transportation to the National Telecommunications and Information Administration, Economic Development Administration, and National Oceanic and Atmospheric Administration at the Department of Commerce, with the Environmental Protection Agency, the Department of Energy, the Bureau of Reclamation, the Forest Service, the National Park Service, and many others in between.

IIJA, which includes 11 divisions spread over 1,039 pages, is best understood as four laws in one:

• Divisions A through C are a five-year reauthorization of federal surface transportation programs (highways, highway safety, transit, and intercity passenger rail), with many of those programs funded over five years from the Highway Trust Fund.
• Divisions D through I authorize a wide array of other infrastructure investments. 
• Division J provides advance, five-year (FY 2022-FY 2026) appropriations for many of the programs authorized in Divisions D through I as well as for non-Highway Trust Fund surface transportation programs.
• Division K is a reauthorization of the Minority Business Development Agency (which hitched a ride on IIJA as Congress neared the end of the 2021 session).

Division J is an especially important part of IIJA. Those five-year advance appropriations mean that IIJA did not just authorize all those programs, it provided funding for them. However, advance appropriations also means that the Administration can put out funding notices that combine several years of funding. As a result, the opportunity to apply for many IIJA programs has passed or will soon pass.

For example, USDOT earlier this year issued a combined FY 2025/FY 2026 Notice of Funding Opportunity for the Multimodal Project Discretionary Grant Program (MPDG), which combines the MEGA, INFRA, and RURAL Programs. FY 2026 is the last year that those three programs are authorized and funded, meaning that there will not be an opportunity to apply for an MPDG grant until FY 2027, and then only if Congress reauthorizes and funds it. Similarly, applications are due September 30 for the last round of funding for the Reconnecting Communities Pilot Grant Program. The Notice of Funding Opportunity that USDOT issued earlier this year is for FY 2024, FY 2025, and FY 2026 funding. 

Nevertheless, there are still opportunities to receive IIJA funding. USDOT must still issue FY 2025 and FY 2026 funding notices for the $1.5 billion per year RAISE Grant Program, there will be another round of funding for the $1 billion per year Airport Terminal Grant Program, and FY 2023/FY 2024 applications for the $600 million per year  Railroad Crossing Elimination Grant Program are due September 23, with two more years of funding still to come.

In addition, it is important to remember that a lot of IIJA funding went to the states, and many states are still working on allocating those funds to projects. Most notably, almost all states are still in the process of finalizing their plans for the $42.5 billion Broadband Equity Access and Deployment Program (BEAD). (The National Telecommunications and Information Administration has a handy website that shows where states are in the BEAD process and how local governments can engage.) Similarly, almost all the IIJA tens of billions of dollars for water and sewer infrastructure was allocated to the states via the Clean Water and Drinking Water State Revolving Loan Funds, and most states are still working their way through that influx of funding. 

The IRA is a more complicated bill than IIJA, covering everything from health care and taxes to climate and manufacturing. Unlike a lot of the grant funding provided IIJA, most IRA grants are one-time grants, and many of them have been awarded. For example, the Forest Service has awarded the $1 billion that IRA provided for Urban and Community Forestry, the Environmental Protection Agency (EPA) recently announced the recipients of $4.3 billion that IRA appropriated for Climate Pollution Reduction Grants, and National Oceanic and Atmospheric Administration awarded much of IRA’s $3.6 billion for Climate Ready Coasts and Communities, and the application window for the EPA Clean Heavy Duty Vehicles Grant Program just closed. 

However, as with IIJA, some IRA funding is still available, especially funding for programs that will be administered by the states or sub-granted by other entities. For example, EPA has chosen the recipients of the IRA’s $27 billion Greenhouse Gas Reduction Fund, but those recipients will now have to decide how to invest those funds. 

Similarly, it is up to the states to implement the IRA’s two rebate programs for home energy efficiency, the $4.3 billion Home Energy Performance-Based Whole House Rebate Program for whole house energy retrofits and the $4.5 billion High-Efficiency Electric Home Rebate Program to help homeowners upgrade HVAC systems and appliances. The Department of Energy map tracking the status of state efforts shows that so far, rebates are only available in New York, eight states have had their applications approved, 11 states and the District of Columbia have submitted applications, while 30 states and five territories are still preparing their applications. So, it will be some time before homeowners in many states can receive those rebates. 

Perhaps most importantly, the Inflation Reduction Act created an array of clean energy tax incentives and included language allowing tax exempt entities to claim 13 of those credits. The thirteen tax incentives that the Inflation Reduction Act makes available to tax exempt entities are the (section of the tax code) (applicable IRS form):

1. Production Credit for Electricity from Renewables (pre-2025).
2. Clean Electricity Production Credit (post-2025).
3. Investment Credit for Renewable Energy Property (pre-2025).
4. Clean Electricity Investment Credit (post-2025).
5. Low-Income Communities Bonus Credit.
6. Carbon Dioxide Sequestration Credit.
7. Zero-Emission Nuclear Power Production.
8. Advanced Energy Project Credit.
9. Advanced Manufacturing Production Credit.
10. Qualified Clean Commercial Vehicles Credit.
11. Alternative Fuel Refueling Property Credit.
12. Clean Hydrogen Production Credit.
13. Clean Fuel Production Credit.

The IRS website on elective pay includes additional information about them, including guidance, links to forms, and FAQ.  It is important to note that for most of the tax credits eligible for elective pay, claimants must meet domestic content, prevailing wage, and apprenticeship requirements to claim the full tax credit. The IRS has issued separate regulations covering those requirements here and here.