Energy Tax Credit Changes Under the One Big Beautiful Bill Act
Posted by Sara Dayton on September 12, 2025
With the passing of the One Big Beautiful Bill Act (OBBB), a number of the tax incentives created or strengthened by the Inflation Reduction Act (IRA) of 2022 have been repealed. Government agencies, businesses, and individuals that invested in clean energy with the understanding that they would be eligible for certain tax incentives should look closely at specific credits to see if and when those credits will expire under OBBB. The key takeaway? Act fast. Many credits that were set to run through 2032 will now expire as early as September 2025.
Electric Vehicle Tax Credits Expire September 2025
One of the most utilized clean tax credits, the Clean Vehicle Credit (Sec. 30D), was expanded in 2023. Under the IRA, any “clean vehicle,” including EVs, hydrogen fuel cell cars, and plug-in hybrids, was eligible for the credit. Vehicles that met sourcing requirements for both critical minerals and battery components received the maximum $7,500 credit; clean vehicles that could only satisfy one of the two requirements would qualify for a reduced $3,750 credit. Originally scheduled to expire in 2032, this credit will now only be available through September 30, 2025. For individuals considering an electric vehicle purchase, this represents significant potential savings, but only if you act immediately.
Tax-exempt organizations and businesses will see another popular credit expire under the OBBB – the Qualified Commercial Clean Vehicle Credit (Sec. 45W). This credit is based on vehicle weight, and the maximum credit is between $7,500 (cars, vans, trucks, and similar passenger-sized vehicles) and $40,000 (larger vehicles like school buses and semi-trucks). Previously scheduled to expire after 2032, this credit will now expire September 30, 2025. Local governments and school districts considering fleet updates may consider electric school buses and municipal vehicles as options to qualify for these credits.
Another clean vehicle credit, the Used Clean Vehicle Credit (Sec. 25E), created under the IRA, granted eligible taxpayers purchasing clean vehicles from dealers the lesser of $4,000 or 30% of the sale price. This credit will also expire on September 30, 2025.
Government agencies and businesses with vehicles should strongly consider taking advantage of these credits before they expire. The window is closing rapidly, and the potential savings are substantial.
Commercial Clean Energy Tax Deductions End June 2026
The IRA established the Alternative Fuel Vehicle Refueling Property Credit (Sec. 30C) for property installed to store or dispense clean-burning fuel or recharge electric vehicles in businesses or homes. The credit, originally worth up to $100,000 per qualifying charging port, fuel dispenser, or storage property, was originally scheduled to expire after 2032. To qualify for this credit under OBBB, the property must now be placed in service on or before June 30, 2026. Businesses considering EV charging stations for employees or customers should begin planning immediately, as installation and permitting processes can take time.
Under OBBB, the Energy Efficient Commercial Buildings Deduction (Sec. 179D) will also be eliminated for buildings constructed after June 30, 2026. This deduction has been available since 2006 but was strengthened and expanded under the IRA. Commercial property developers and business owners planning new construction should factor these deductions into their timeline and building specifications.
Solar and Wind Energy Tax Credits Face 2027 Deadline
Credits available for wind and solar energy projects will also be impacted. The Clean Electricity Investment Credit (Sec. 48E) and the Clean Electricity Production Credit (Sec. 45Y) will both be eliminated for wind and solar projects beginning service after 2027, unless construction begins on or prior to July 4, 2026. Projects started after July 4, 2026 must begin service by the end of 2027. For businesses and local governments with renewable energy ambitions, now is the time to commit to projects or lose significant federal support.
Additionally, components for wind energy will not be eligible for the Advanced Manufacturing Production Credit (Sec. 45X) after 2027. OBBB also modifies this credit to include “metallurgical coal” for steel production to the list of critical minerals considered as manufacturing components. The credit as it relates to metallurgical coal will expire after 2029.
Residential Energy Tax Credits Expire December 2025
Individuals hoping to take advantage of clean energy tax breaks should act quickly to meet the requirements before they are scheduled to sunset. Originally scheduled to expire in 2032, the Energy Efficient Home Improvement Credit (Section 25C), is now available for eligible improvements added by December 31, 2025. Improvements under the IRA include energy efficient exterior windows and doors, skylights, and home energy audits. If they are something you have considered previously, homeowners should prioritize these upgrades now.
Similarly, the Residential Clean Energy Credit (Sec. 25D) was increased under the IRA to 30% for clean energy improvements made between 2022 and 2032. The credit is available for the installation of solar panels or other equipment meant to harness renewable energy sources, such as wind, geothermal, or biomass energy. OBBB will expire this credit December 31, 2025. For homeowners considering solar panels or other renewable energy systems, 2025 may be your last opportunity to receive federal tax credits.
Clean Energy Tax Planning After OBBB Changes
Under OBBB, clean energy credits for projects associated with “foreign entities of concern” will also be limited, and stricter domestic content requirements will be put in place. These changes add complexity to qualify for credits, making professional guidance more important than ever.
Don’t allow these opportunities for financial savings to pass by. Whether you’re an individual homeowner, business owner or local government official, the accelerated timeline means decisions that were once “someday” considerations now need to become immediate priorities. Contact our team for help navigating the accelerated expiration dates on clean energy incentives and ensure your agency or business is in compliance with new restrictions.
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Sara has extensive experience serving governmental entities in the areas of internal and external auditing, single audits, taxation, information returns, and financial reporting. As the leader of our governmental services group, Sara is responsible for reviewing all governmental financial statements and assists with the management and delivery of services by facilitating risk assessment and client expectations for our larger governmental clients. She maintains and exceeds the continuing professional education requirements of Government Auditing Standards. In addition to the services she provides to local governments, Sara performs audits and related financial services for commercial businesses and nonprofit organizations.