Charles Goulding and Jacob Goldman

The recently signed “One Big Beautiful Bill Act” (OBBBA) has sent ripples through the world of tax incentives, particularly for those invested in renewable energy and energy efficiency. The OBBBA tweaks, terminates, and preserves various provisions from the Inflation Reduction Act (IRA), affecting businesses, municipalities, and individuals eager to invest in a greener future. Whether you are installing solar panels, building EV charging stations, or retrofitting a commercial building, the OBBBA’s changes could affect your bottom line.

Section 48: Investment Tax Credit – The Good News

Section 48 for geothermal heat pump projects was completely untouched, continuing to allow an investment tax credit up to 50%. This is a boon for those investing in this efficient technology. In addition, the “Limited Use” issue was also resolved, so Energy as a Service can now be available for ground source projects.

Section 6417: Elective Pay for Tax-Exempt Entities – More Good News?

Elective Pay has been a lifeline for schools, non-profits, and municipalities: Section 6417 allows tax-exempt entities to receive cash payments instead of tax credits for energy projects. It’s a game-changer, letting organizations that don’t pay taxes still benefit from incentives like those in Sections 48, 48E, 30C, and 45W.

The OBBBA largely leaves Section 6417 intact, which is good news. However, there’s a caveat: since other sections (like 48E, 30C and 45W) face repeals, the pool of eligible projects for direct pay could shrink. Imagine a school district planning to install EV chargers—Section 6417 still allows cash payments, but only if the chargers are in service before the 30C deadline.

For tax-exempt entities, this means you can still tap into cash payments, but you’ll need to align your projects with the timelines of related credits. Check for foreign entity involvement and consult a tax professional to navigate these nuances.

Section 48E: The Clean Electricity Credit’s Early Sunset – The Bad News

Section 48E was designed to pick up where Section 48 left off for clean electricity projects like solar, thermal storage, batteries, and wind, starting in 2025. The OBBBA creates Foreign Entity of Concern (FEOC) requirements for all these technologies. Some of these FEOC rules kick in immediately, others for projects that begin construction in 2026. It appears that these FEOC rules will make it difficult for solar projects to qualify if construction starts in 2026 or later. Careful planning will be required to navigate FEOC. Note that although the volume of U.S. Domestic Solar panels is limited, the amount is increasing and may be available for your projects.

In addition, the rules then diverge based on which technology you are implementing. For example, besides the added FEOC rules, Thermal Storage has no additional changes. On the other hand, solar and wind projects where construction starts after July 4, 2026 will need to be placed in service before December 31, 2027. Projects that start construction before July 4, 2026 could potentially have four years from construction commencement but a recent executive order may have Treasury change the four- year grace period.

If you’re developing a clean energy facility, you’ll need to hustle to get it operational by December 31, 2027. The foreign entity restriction adds another layer. To stay ahead, plan your project timeline carefully, start construction as soon as possible, and vet partners and vendors to avoid surprises.

Section 30C: The End of EV Charging Station Credits – More Bad News

The Section 30C credit has fueled the growth of EV infrastructure, making it easier for businesses and communities to support electric vehicles.

The OBBBA, however, sets a sunset date: the Section 30C credit will vanish for property placed in service after June 30, 2026. Install your EV chargers before mid-2026, or you’ll miss out on the tax savings. For businesses planning to build charging networks or property owners adding chargers to attract EV-driving tenants, this deadline is critical. The repeal could slow the expansion of charging infrastructure, raising costs for future installations.

Section 45W: Farewell to Commercial Clean Vehicle Credits – Bad News Continues

Section 45W is the unsung hero for businesses transitioning to cleaner transportation, offering a tax credit for purchasing qualified commercial clean vehicles, like electric buses or fuel-cell trucks. It’s been a catalyst for companies upgrading their fleets to greener options.

The OBBBA, however, pulls the plug, repealing the credit for vehicles acquired after September 30, 2025. This is a tight deadline, after this date, the cost of going electric could jump, making fleet transitions pricier. For businesses, the message is clear: buy and register your clean vehicles before October 1, 2025.

Section 179D: The Energy-Efficient Building Deduction’s Last Stand-The Bad News keeps coming

Section 179D is a deduction that rewards buildings for their energy-efficient projects, like; better roofs, efficient HVAC systems, or advanced lighting.

The OBBBA ends this deduction for projects beginning construction after June 30, 2026. If you’re a developer or property owner planning a green retrofit or new construction, this deadline looms large. Projects will need to start construction before July 1, 2026, to lock in the 179D deduction

Section 25E: Used Clean Vehicle Tax Credit

For purchasers of used electric or fuel-cell vehicles that cost $25,000 or less; must fall below certain income thresholds to access this incentive. This credit was available for vehicles purchased by 2033 and is now only available for vehicles purchased before Sept. 30, 2025.

Section 30D: New Clean Vehicle Tax Credit

For purchasers of new, qualified EVs or fuel-cell vehicles; must fall below certain income thresholds to access this incentive. This credit was available for vehicles purchased by 2033 and is now only available for vehicles purchased before Sept. 30, 2025.

Wrapping It Up: Your Path Forward

The OBBBA allowed some incentives to survive, others face the chopping block. By preserving Section 48 and Section 6417, setting early deadlines for Section 48E and repealing Sections 30C, 45W, and 179D, the bill creates urgency. Whether you are a business owner, a non-profit leader, or a municipal planner, these changes affect your ability to invest in a sustainable future.

Here is what you can do.

• Act Fast: Start construction on renewable energy projects as soon as possible, install EV chargers by June 30, 2026, buy clean vehicles by September 30, 2025, and begin energy-efficient construction by June 30, 2026.

• Stay Informed: Monitor Treasury guidance for clarity regarding Foreign Entity of Concern rules and the definition of Beginning Construction.

• Get Help: Work with a tax advisor to ensure compliance and maximize benefits.

The OBBBA’s changes may feel daunting, but they also offer opportunity. By acting before these deadlines, you can harness tax incentives to make clean energy and efficiency more affordable.

Here are some specifics:

Section 48 – Investment tax credit (ITC)
Technology: Geothermal Heat Pump Property
For Commercial, Industrial, Municipal, Not for Profits, Tribal
No Change

Section 48E – Clean electricity investment tax credit
Technology: Solar & Wind
For Commercial, Industrial, Municipal, Not for Profits, Tribal
1. Must follow Foreign Entity of Concern Rules
2. REPEALED for projects placed in service after 12/31/27. Projects that begin construction before 7/4/26, may be placed in service after 12/31/27(awaiting pending guidance)

Section 48E – Clean electricity investment tax credit
Technology: Battery, Thermal Storage etc.
For Commercial, Industrial, Municipal, Not for Profits, Tribal
Must follow Foreign Entity of Concern Rules

Section 168(e)(3)(B)(vi)(I) – Energy Property Accelerated Depreciation
Technology: Geothermal Heat Pump, Solar, Wind, Battery, Thermal Storage etc.
For Commercial for Profit Taxpayers
Accelerated Depreciation due to Energy Property REPEALED for placed in service after 12/31/24. Other ways to accelerate depreciation may exist in some cases.

Section 179D – Energy efficient commercial buildings deduction
Technology: Energy efficient products related to Lighting, HVAC and Building Envelope
For Designers of Government, Not For Profit or Tribal buildings and New Construction Commercial and Industrial and Multi-Family Rentals >3 stories
REPEALED for projects that begin construction after 6/30/26

Section 6417 – Elective payment of applicable credits
Technology: Any related to Section 48, 48E, 30C, 45W…
For Municipal, Not for Profit, Tribal
No Change, although affected by changes to 48E, 30C & 45W

Section 6418 – Transfer of certain credits
Technology: Any related to Section 48, 48E, 30C, 45W…
For Commercial Income Taxpayers
Not available for Specified Foreign Entities, No other changes although affected by changes to 48E, 30C & 45W

Section 30C – Alternative fuel vehicle refueling property credit
Technology: EV Charging Stations
For Commercial, Industrial, Municipal, Not for Profits, Tribal
REPEALED for projects placed in service after 6/30/26

Section 45W – Qualified commercial clean vehicles credit
Technology: Commercial Electric Vehicles, Electric Buses
For Commercial, Industrial, Municipal, Not for Profits, Tribal
REPEALED for vehicles acquired after 9/30/25

Section 45L – New energy efficient home credit
Technology: Energy efficient residential units/homes
For Developers/Contractors
REPEALED for units/homes that are acquired after 6/30/26

Section 25C – Energy efficient home improvement credit
Technology: Heat Pumps, Boilers, Central air, Bio Mass, Envelope
For Homeowners
REPEALED for property placed in service after 12/31/25

Section 25D – Residential clean energy credit
Technology: Geothermal Heat Pump, Solar, Wind, Battery, Fuel Cell
For Homeowners
REPEALED for property placed in service after 12/31/25