On July 4, 2025, President Donald Trump signed H.R. 1, known as the One Big Beautiful Bill Act (OBBBA), which made significant changes to many clean energy credits found in the Inflation Reduction Act of 2022 (IRA). Among other things, OBBBA fully repeals many credits, accelerates the phase-outs to other credits, and adds provisions to disallow credits for taxpayers with certain foreign ownership or influence.
The following credits and deductions were repealed by OBBBA:
- Sections 25E, 30D, and 45W – Clean vehicle credits for personal or commercial use will be terminated for vehicles acquired after September 30, 2025.
- 30C – The Alternative Fuel Vehicle Refueling Property Credit for property like charging stations will be terminated for property placed in service after June 30, 2026.
- 25C and 25D – Home energy efficiency credits, including residential solar property, will be terminated for property placed in service after December 31, 2025.
- 179D – The Energy-Efficient Commercial Building Tax Deduction will be terminated for projects starting construction after June 30, 2026.
While the above credits and deductions are being terminated, the future repeal dates may allow a taxpayer to still take advantage of them before they are no longer available.
OBBBA made significant changes to two of the most popular IRA credits: the §45Y Clean Electricity Production Tax Credit (PTC) and the §48E Clean Electricity Investment Tax Credit (ITC), especially for solar and wind energy projects. The following are some of the changes made to the PTC and ITC for solar and wind property:
- Facilities that begin construction by July 4, 2026, must be placed in service at the latest December 31, 2030, to claim the credit based on the current four-year continuity of construction safe harbor requirement.
- For facilities that begin construction more than 12 months from the date of enactment of OBBBA, e., after July 4, 2026, taxpayers must place the property in service by December 31, 2027, to claim the credit.
- Rules were included to address involvement of certain foreign entities. This generally includes limitations on where components of the facility are sourced. Ownership structures, contracts, and debt agreements may also affect the ability for an entity to take a credit.
- The above changes do not apply to the 45 and 48 versions of the PTC and ITC.
Below is a list of other relevant changes to IRA credits from OBBBA (not all inclusive):
- Other PTC/ITC projects besides solar and wind, g., battery storage, geothermal heat pumps, etc., must begin construction by 2034 to claim the full credit, which will phase out completely by 2036.
- The ability to transfer or sell IRA credits was unchanged in OBBBA, except for prohibiting the transfer of credits to a prohibited foreign entity.
Even though there were significant changes by OBBBA to IRA-related clean energy credits, there are still significant opportunities to invest in clean energy projects that could qualify for IRA credits with proper planning. Speak to your trusted tax advisor about any clean energy project related plans you may have, and consider the following tips:
- Consider accelerating plans for any clean energy vehicle purchases before September 30, 2025, or charging station installations before June 30, 2026.
- Consider accelerating plans for solar and wind projects to begin construction by July 4, 2026, if project completion is expected to be completed after December 31, 2027.
- If a PTC/ITC project cannot begin construction by the end of 2025 to avoid the prohibited foreign entity rules, consider sourcing the equipment/materials from a U.S. manufacturer to try to qualify to claim the additional 10% domestic content bonus credit.
- With the acceleration of credit deadlines, consider working with your trusted tax advisor to understand the beginning of construction rules to help make sure a clean energy project meets the stated deadline.
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