Clean Energy Tax Provisions: What’s Changing Under the New Tax Law

New Clean Energy Tax Provisions and What Laws are Changing

See what’s extended, what’s ending, and where foreign ownership or sourcing could impact your project under the new clean energy tax provisions.

The new tax law, also known as the One Big Beautiful Bill, introduces significant changes to clean energy tax incentives that will directly affect credit eligibility, project planning, and compliance requirements.

From solar and wind and energy storage to tax credit transfer restrictions and advanced manufacturing credit rules, the energy landscape is shifting fast. Here’s a look at how the new law could impact your energy credit strategy.

Provision	Section	What changed	Observation
Section 179D, energy-efficient commercial building deduction	70507	Terminates Section 179D deduction for energy- efficient commercial buildings. Effective for property that begins construction after June 30, 2026.	Beginning-of-construction (BOC) guidance will apply. Current safe harbors include 5% of construction costs and physical work of a significant nature (PWSN) per IRS Notice 2018-59.
Section 25C, energy-efficient home improvement credit	70505	Terminates for property placed in service after Dec. 31, 2025.	Moves termination date from Dec. 31, 2032, to the end of 2025. Law uses date-in-service criteria and not BOC guidance. The property will need to pass the placed-in-service test of being “ready and available” for use.
Section 25D, residential clean energy credit	70506	Section 25D was amended by replacing the termination language for the credit relating to property placed in service after Dec. 31, 2034, and inserting ‘‘with respect to any expenditures made after Dec. 31, 2025.’’	The new law refers to expenditures made after Dec. 31, 2025, versus BOC guidance or placed-in-service date.
Section 45L, energy efficient home credit	70508	Terminates for property acquired after June 30, 2026.	Moves termination date from Dec. 31, 2032, to end of June 2026. Law uses property-acquired criteria, not BOC guidance.
Section 25E, previously owned clean vehicle credit	70501	Terminates for expenditures made after Sept. 30, 2025.	Moves termination date from Dec. 31, 2032, to the end of Sept. 2025. Eligible purchases must be made by Sept. 30, 2025.
Section 30C, alternative fuel refueling property credit	70504	Terminates for property placed in service after June 30, 2026.	Moves termination date from Dec. 31, 2032, to the end of June 2026. Law uses date-in-service criteria and not beginning of construction. The property will need to pass the placed-in-service test of being “ready and available” for use.
Section 30D, clean vehicle credit	70502	Terminates for vehicles acquired after Sept. 30, 2025.	Moves termination date from Dec. 31, 2032, to the end of Sept. 2025. Eligible purchases must be made by Sept. 30, 2025.
Section 45W, commercial clean vehicle credit	70503	Terminates for vehicles acquired after Sept. 30, 2025.	Moves termination date from Dec. 31, 2032, to the end of September 2025. Eligible purchases must be made by Sept. 30, 2025.
Section 48E, investment tax credit (solar and wind facilities)	70513	The new law terminates the Section 48E investment credit relating to wind and solar facilities if property is placed in service after Dec. 31, 2027, unless construction begins before July 4, 2026. The law terminates the credit for any specified foreign entity (SFE) or foreign-influenced entity (FIE) for tax years beginning after enactment. In addition, the law imposes a clawback provision for any payments to prohibited foreign entities over a 10-year period from two years after the law’s enactment. Other eligible energy property will retain its prior investment credit phase-out date of 2032.	President Trump issued an executive order to Treasury to issue BOC guidance within 45 days of enactment. Guidance likely will be issued by the IRS in the form of a notice. The BOC safe harbor provisions are a well-established doctrine but might have more restrictions based on the new guidance and directive from the president.
Section 48E, investment tax credit (energy storage)	70513	The law carves out an exception for the accelerated termination of the investment tax credit (ITC) relating to energy storage property. Eligible energy storage property will retain the prior credit phase-out date of 2032.	The restrictions relating to material assistance from a prohibited foreign entity will apply to energy storage property. There likely will be a focus on separating energy storage from solar and wind property in projects.
Section 45Y, production tax credit	70512	Accelerates phase-out of tech-neutral production tax credit (PTC) for solar and wind generation only. Other PTCs remain mostly the same as prior law.	Provides the same phase-out for wind and solar credits as the ITC termination (Dec. 31, 2027).
Section 45X, advanced manufacturing production tax credit	70514	Retains current law phase-out schedule for the advanced manufacturing credit for the production of clean technology equipment but would subject wind energy components to an earlier expiration for components produced and sold after 2027. Adds certain metallurgical coal as a critical mineral. Requires the credit for the production of critical minerals (other than metallurgical coal) after Dec. 31, 2030, to a separate credit sunset schedule instead of the current permanent credit. Credit would expire with respect to any production of metallurgical coal after Dec. 31, 2029.	SFE ownership restriction begins applying for any taxable year beginning after enactment. FIE ownership restriction begins applying for any taxable year beginning after enactment. Material assistance limitation applies for any taxable years beginning after enactment.
Section 45V, clean hydrogen production tax credit	70511	The new law modified the definition of a clean hydrogen production facility indicating these facilities must begin construction prior to Jan. 1, 2028. Adds foreign entity restrictions.	Ends the life of the 45V credits produced from wind and solar facilities placed in service after 2027.
Section 45Z, clean fuel production tax credit	70521	Would extend the credit through 2029. Prohibition on foreign feedstocks.	Restrictions relating to SFEs beginning after enactment and FIEs apply beginning two years after enactment of the law.
Section 45Q, carbon capture and sequestration	70522	The new law amends the Section 45Q credit by increasing the amount of the credit for enhanced oil recovery. Changes are effective after the date of enactment (July 4, 2025). New law provides for revised credit amounts for certain technology used in facilities or equipment placed in service after 2022. Revised credit amounts for enhanced oil recovery (EOR) raised to $85 per ton of carbon dioxide from the maximum of $60 per ton in the prior law.	SFE ownership restriction begins applying for any taxable year beginning after enactment. FIE ownership restriction begins applying for any taxable year beginning after enactment. Increases in EOR incentives field stimulation for oil and gas production.
Section 45U, zero-emission nuclear power production credit	70510	The new law modifies the zero-emission nuclear credit by adding the prohibited foreign entity restrictions and foreign-influenced entity restrictions.	Foreign entity restrictions are effective for SFEs after date of enactment. Other prohibited foreign entity restrictions are effective two years after date of enactment.
Section 6418, tax credit transfers	Various sections	The new law prohibits transfer of credits to an SFE. No other separate transferability phase-outs are included. The law permits the biodiesel fuel tax credit determined under Section 40A, which consists of the small agri-biodiesel producer credit for fuel sold or used after June 30, 2025, as eligible to be transferred.	Transferability rules remain mostly intact, which is a significant change from the original House bill.
Section 6417, direct payment elections	Various sections	Generally, retains the direct payment provisions from existing tax law.	Direct payments remain for those credits eligible in the new bill.
Foreign entity of concern	Various sections	The new law adds restrictions on several ITCs and PTCs on which foreign entities have ownership or influence. The new restrictions impact developers across the energy credit space. For example, projects will have to trace their ownership structure to ensure that it doesn’t include any SFEs or FIEs, which include companies owned or controlled by the government or citizens of China, Russia, Iran, or North Korea, among other restrictions.	Taxpayers will need to review their ownership structure, supply chains, debt structure, and licensing and contract structure to confirm whether they are still eligible for the 45X credit.
Executive orders	N/A	Trump issued an executive order on July 7, 2025, which directed Treasury to release guidance relating to the BOC rules for property qualifying under Section 48E and Section 45Y. These rules must be issued within 45 days of the OBBB enactment. The order directs Treasury “to ensure that policies concerning the ‘beginning of construction’ are not circumvented, including by preventing the artificial acceleration or manipulation of eligibility and by restricting the use of broad safe harbors unless a substantial portion of a subject facility has been built.”	The BOC rules have been well established in IRS guidance and in case law. The safe harbor of 5% of construction costs incurred or PWSN is commonly used. The new guidance likely will be issued in the form of an IRS notice.