The One Big Beautiful Bill Act (OBBBA), enacted July 4, 2025, introduces significant changes to federal energy tax credits, particularly those established or expanded by the Inflation Reduction Act (IRA). The OBBBA accelerates the expiration of many credits, imposes new restrictions, and modifies eligibility and compliance requirements.

Consumer-Focused Credits: Early Termination

1. Clean Vehicle Credits
   • The New Clean Vehicle Credit (§30D), Previously Owned Clean Vehicle Credit (§25E), and Qualified Commercial Clean Vehicle Credit (§45W) are unavailable for vehicles acquired after September 30, 2025. The IRS defines acquisition as a written binding contract plus a payment, which includes a nominal down payment or trade-in. Vehicles acquired by September 30, 2025, are eligible for the credit once placed in service, even if the placed in-service date is after September 30, 2025.
2. Home and Residential Energy Credits
   • The Energy Efficient Home Improvement Credit (§25C) is unavailable for property placed in service after December 31, 2025.
   • The Residential Clean Energy Credit (§25D) is unavailable for expenditures made after December 31, 2025. Expenditures are generally treated as made when the original installation of the item is completed. Construction and reconstruction projects must be completed, and the original use of the structure must begin prior to December 31, 2025, to be eligible for the credit.
   • The Alternative Fuel Vehicle Refueling Property Credit (§30C), for installing electric vehicle charging equipment at your home or business, is unavailable for property placed in service after June 30, 2026.
   • The New Energy Efficient Home Credit (§45L) is unavailable for homes acquired after June 30, 2026.
   • The Energy Efficient Commercial Buildings Deduction (§179D) is unavailable for property construction that begins after June 30, 2026.

Business and Power Sector Credits: Accelerated Phase-Outs and New Restrictions

1. Clean Electricity Production and Investment Credits
   • The Clean Electricity Production Credit (§45Y) and Investment Credit (§48E) for wind and solar are unavailable for facilities placed in service after December 31, 2027, unless construction began before July 5, 2026. For qualified facilities other than wind and solar, the OBBBA retains the original phaseout framework but fixes the “applicable year” at 2032, meaning the phaseout will start for projects that begin construction in 2034.
   • Leasing of small wind or solar water heating property to third parties disqualifies the property from credits.
   • The domestic content bonus threshold increases over time, requiring higher percentages of U.S.-sourced materials.
2. Advanced Manufacturing Production Credit (§45X)
   • Wind energy components produced and sold after December 31, 2027, are not eligible for a credit.
   • The credit for “critical minerals”, phases out beginning with those produced in 2031.
   • Metallurgical coal is newly eligible for a 2.5% credit through 2029.
   • For tax years after 2026, integrated component credits require U.S.-sourced materials and integration within the same facility.

Please contact your tax advisor at BCS with questions regarding changes to Energy Tax Credits or other provisions of the One Big Beautiful Bill Act (OBBBA).