How The One Big Beautiful Bill Act Accelerates Expiration Dates & Reshapes Incentives For Clean Energy Investments
Among the countless moving parts of the One Big Beautiful Bill Act (OBBBA), clean energy credits were a primary target of the Trump Administration. Originally introduced into law by the Inflation Reduction Act (IRA) of 2022, the vast array of clean energy credits incentivized organizations to implement clean energy solutions into their operations.
With more than 70 excise, investment, and production tax credits introduced with the IRA, organizations have begun investigating how their processes can adapt to clean energy alternatives.
While some of these tax benefits were strengthened with the signing of the OBBBA, a significant portion of clean energy credits are set to expire at varying points between 2025 and 2027. This has created a race against time for organizations to implement their clean energy alternatives, so they may still claim the credits that were originally set to expire at a much later time.
Personal & Commercial Clean Vehicle Credits: Shortened Timelines
| Before | After |
| Individuals and businesses were able to claim a credit for purchasing qualifying new or pre-owned electric vehicles. | Credits were set to expire on Sept. 30, 2025. |
Residential Improvement Credits: Expiring Soon
| Before | After |
| Individuals could claim a credit for 30% of costs for qualifying clean energy home improvements through the Residential Clean Energy and Energy Efficient Home
Improvement Credits. Eligible clean energy improvements include, but are not limited to, solar, wind, geothermal, fuel cell, and qualified battery storage projects |
Credits set to expire Dec. 31, 2025. |
Alternative Fuel Vehicle Refueling Property Credit: Countdown to Expiration
| Before | After |
| Individuals and businesses could claim a credit for 30% of costs for installing electric vehicle rechargers or clean-burning fuel infrastructure. | Credits set to expire June 30, 2026. |
Alternative Fuel Excise Tax Credit: Already Sunset
| Before | After |
| Businesses could claim a credit in the amount of $0.50 per gallon for the sale or use of alternative fuels for motor vehicles. Qualifying alternative fuels include natural gas, propane, and off-road diesel. To qualify, the business must have been liable for paying the federal excise tax on the use or sale of fuel in motor vehicles. | Since the OBBBA did not affect this credit and the expiration date was Dec. 31, 2024, this credit may no longer be claimed. |
Commercial Building & New Home Credits: Construction Deadlines
| Before | After |
| Home builders and businesses could claim a credit for the qualifying construction of new energy-efficient commercial buildings and residential housing. These credits include the New Energy Efficient Home Credit and Energy Efficient Commercial Buildings Deduction. | Construction/acquisition of these buildings must begin before June 30, 2026, to qualify for the credit. |
Solar & Wind Facility Credits: New Construction Cutoffs
| Before | After |
| Individuals and businesses could claim credits for either investing in (Clean Electricity Investment Credit) or producing (Clean Electricity Production Credit), eligible for solar and wind projects. | To qualify for solar and wind facility credits, construction of these facilities must begin by July 4, 2026, and the facilities must be placed into service by Dec. 31, 2027. |
Accelerated Depreciation Recovery: Ending Soon
In connection with these clean energy credits, the IRA additionally sought to incentivize clean energy production through allowing for an accelerated cost recovery period of five years for qualified clean energy facilities, property, and technology. With the OBBBA, this accelerated depreciable life will be terminated for tax years beginning after Dec. 31, 2024.
Strengthened Credits: Clean Fuel Production & Carbon Oxide Sequestration
While most clean energy credits have been weakened, a couple were strengthened with the OBBBA. One such credit is the Clean Fuel Production Credit. The OBBBA extended the expiration date of the credit until 2029, as opposed to 2027, and relaxed the lifecycle greenhouse gas emission rules that were necessary to qualify for the credit. The Carbon Oxide Sequestration Credit by making the full credit apply to CO2 used for enhanced oil recovery.
Planning For The Future
In summary, the One Big Beautiful Bill Act has accelerated the expiration of numerous clean vehicle, wind, and solar energy credits. While a few credits have been strengthened, most clean energy incentives now face earlier expiration dates and stricter requirements, making careful planning more important than ever. To fully understand how these changes may impact your organization’s clean energy strategies, we encourage you to contact your trusted GBQ advisor for guidance so you may receive the best benefit.
Ready to navigate the changing landscape of clean energy credits? Contact your trusted GBQ advisor today to ensure your organization maximizes available incentives before they expire. Expert guidance can help you make the most of these opportunities and avoid missing out.
By Hunter Longnecker, CPA, Tax & Advisory
Looking for additional OBBBA insights? Check out these resources:
One Big Beautiful Bill Act’s Impact On Federal Informational Reporting
IRS Issues Transitional Guidance On Reporting Interest From Specified Passenger Vehicle Loans
Opportunity Zones Evolve: Comparing TCJA & OBBBA Legislation For Investors & Communities
