The Internal Revenue Service issued guidance in the form of answers to frequently asked questions about the soon-to-expire tax credits for clean energy sources such as solar and wind power, electric vehicles, and energy efficient buildings under the One Big Beautiful Bill Act.
The OBBBA reversed many of the green energy tax incentives offered under the Biden administration's Inflation Reduction Act and instead favored the fossil fuel industry. While not all of the clean energy tax credits were immediately curtailed under the bill, the Trump administration followed up with an executive order a few days after the bill was signed and further guidance last Friday from the Treasury Department that would end many of the clean energy tax breaks early by tightening the definition of "placed in service" for when a project was considered to have begun construction. Nevertheless, some wind and solar energy companies fared relatively well on the stock market earlier this week because the requirements were not quite as stringent as predicted.
To clear up some of the confusion, the IRS and the Treasury released frequently asked questions in Fact Sheet 2025-05 relating to the modification of sections 25C, 25D, 25E, 30C, 30D, 45L, 45W, and 179D under the One Big Beautiful Bill Act.
The FAQs provide guidance on several energy credits and deductions that are expiring under the OBBBA and their termination dates. They also offer clarification on the availability of the new clean vehicle credit, the energy efficient home improvement credit, and the residential clean energy credit, among others.
1.Which energy credits and deductions are expiring under OBBB, and what are their new termination dates?
OBBB accelerated the termination of several energy credit and deduction provisions. The following incentives expire the soonest:
Code Section
| Section Title
| Termination Date
|
25C
| Energy efficient home improvement credit
| The credit will not be allowed for any property placed in service after Dec. 31, 2025.
|
25D
| Residential clean energy credit
| The credit will not be allowed for any expenditures made after Dec. 31, 2025.
|
25E
| Previously-owned clean vehicles credit
| The credit will not be allowed with respect to any vehicle acquired after Sept. 30, 2025.
|
30C
| Alternative fuel vehicle refueling property credit
| The credit will not be allowed for any property placed in service after June 30, 2026.
|
30D
| New clean vehicle credit
| The credit will not be allowed for any vehicle acquired after Sept. 30, 2025.
|
45L
| New energy efficient home credit
| The credit will not be allowed for any qualified new energy efficient home acquired after June 30, 2026.
|
45W
| Qualified commercial clean vehicle credit
| The credit will not be allowed for any vehicle acquired after Sept. 30, 2025.
|
179D
| Energy efficient commercial buildings deduction
| The deduction will not be allowed with respect to any property the construction of which begins after June 30, 2026.
|
