The End of the Green Energy Era? (The “Big Beautiful Bill” Slashes Many Familiar Credits)

By Daniel Gayer July 17, 2025

Note:  This article is one of many that BNN is publishing to cover the tax features of the so-called “Big Beautiful Bill.”  Each one is authored by one of BNN’s own tax professionals.  Our coverage includes a summary article that briefly describes many of the bill’s features and many more that are deeper dives into specific areas of interest to our clients.  A topical list of those in-depth articles may be found at the front of our summary article.

President Trump’s Big Beautiful Bill (BBB), signed into law on July 4, 2025, is by far the largest piece of tax legislation since his 2017 Tax Cuts and Jobs Act (TCJA).  The BBB’s primary goal is extending tax cuts created under the TCJA that were set to expire at the end of 2025. To do that, revenue raising features had to be identified to offset all the reductions to revenue resulting from extension of those tax cuts. This was true because the BBB, passed on a 50/50 party line vote in the Senate with Vice President Vance breaking the tie, followed a unique path known as “reconciliation,” which requires, in part, that the impact of the underlying legislation meets certain fiscal requirements. It doesn’t have to be budget-neutral, but there are perimeters within which it must operate. Truncating the tenure of many green energy credits served that purpose and made good on years of political rhetoric and campaign promises targeting green energy. Coupled with an Executive Order signed by Trump on July 7, 2025, mandating strict enforcement of expiration dates on energy tax credits, this bill drastically changes the landscape and financial realities for solar, wind, and EV development for the foreseeable future.

Whether you’re a homeowner thinking about installing solar panels, a business investing in electric vehicle infrastructure, or a developer working on energy-efficient buildings, the clock is now ticking.  Incentives you were likely counting on as a key aspect of your financial planning will be cut off sometime between two months and two years from now depending on the specifics of your project, which is at least five to seven years sooner than was the case under prior law.

In this article, we’ll walk you through the key changes from the new law, how they affect individuals and businesses, and what steps you can take now to lock in tax benefits before they are cut off.

A Pivotal Shift in Energy Tax Policy

First, let’s understand the philosophical shift this bill represents.

As far back as 1978, when President Carter enacted the first round on residential solar credits in response to the oil embargoes of the 1970’s and resulting spike in energy prices, the federal government has provided a growing menu of tax incentives to encourage the adoption of clean energy. Carter’s original solar credit was allowed to expire during the Regan administration but was revived by George W. Bush in 2005 as the 30% solar credit that has existed with some updates for the last twenty years.

Homeowners have received credits for solar, wind, geothermal, battery systems, and energy efficiency improvements. Car buyers could claim credits for electric vehicles. Builders and investors could reduce tax burdens by constructing energy-efficient buildings and infrastructure. These incentives weren’t just economic boosts—they were intended to, and in fact did, drive investment in new clean energy technologies, primarily solar and wind, that has helped shape the American energy market we have today.

Now, the BBB and the accompanying executive order halt or reverse many of these policies. The new law emphasizes domestic energy production, reduced reliance on foreign components, and reduced federal expenditures on green energy tax credits to offset the cost of other priorities, primarily the extension of tax cuts from the 2017 TCJA. The result is a complex web of new deadlines, construction definitions, and eligibility restrictions—all of which will impact your tax planning for 2025 and beyond.

Timing is Everything: What “Beginning Construction” Really Means

The primary mechanism of the BBB is to cut off credits unless projects “begin construction” by a specific date and are “placed in service” by another specific date to qualify for tax credits. But what does this really mean?

The IRS recognizes two general methods for establishing when construction begins:

1. The Physical Work Test – Requires significant, continuous physical work on the project (e.g., excavation, mounting of equipment).
2. The 5% Safe Harbor – Requires the taxpayer to incur at least 5% of the total expected project cost.

Just signing a contract or obtaining a permit does not meet the standard.

When a project is “placed in service” is generally more straightforward – if you flip the switch to the “on” position, is the equipment ready to function as intended?

Proper documentation of expenditures and timing of physical work progress and completion will be critical moving forward.  Future audits, as directed by Trump’s executive order, will almost certainly scrutinize these details and seek to disallow credits if taxpayers cannot prove they met the required standards for beginning and completing work by the required dates. Taxpayers hoping to preserve eligibility for expiring credits must ensure that these standards are met—and that they’re met before the relevant deadline.

What Homeowners Need to Know: Drastic changes for Green Home Incentives

For individual taxpayers, the BBB brings the end of popular residential energy credits that many have used in recent years.

Residential Energy Efficiency Improvements (IRC §25C)

This credit has been around in various forms for over a decade. In its latest iteration under the IRA, homeowners could claim up to $1,200 annually for qualifying energy efficiency upgrades such as windows, doors, insulation, and HVAC systems. In addition, heat pumps were eligible for a separate up to $2,000 credit, making them a popular choice for energy-conscious upgrades.

Under the BBB, this credit terminates for any property placed in service after December 31, 2025. If you haven’t already scheduled upgrades or installations, you may be cutting it close. Installation—not just purchase—must be complete by year-end.

Residential Clean Energy Credit (IRC §25D)

The residential energy credit has arguably been most generous and widely-used green tax incentive for individuals: a 30% credit on the cost of solar panels, battery storage systems, geothermal heating, and more. This credit also applies to community solar projects, which allowed individuals to participate in clean energy through shared installations.

The BBB eliminates the credit for any expenditures made after December 31, 2025.  This is an “expenditures made” rather than a placed in service or beginning of construction test, so it does appear to allow taxpayers who cannot get the work completed by December 31, 2025 to pre-pay the costs in 2025 and still claim the credit even if the installation is not complete until after year-end.

Electric Vehicle Credits (IRC §§30D and 25E)

Tax credits for new EVs ($7,500) and used EVs ($4,000) have been significant in accelerating the adoption of electric vehicles. But under the new law:

• Vehicles must be acquired before or on September 30, 2025 to qualify.
• “Acquired” means purchased—not ordered or reserved.

If you’re planning to buy an EV this year, you’ll need to close the deal before Q4 to secure these tax benefits. Availability and delivery will likely become bottlenecks as many taxpayers rush to meet the deadline.

Impacts for Business Owners, Developers, and Investors

While the accelerated terminations for individual credits have the shortest timelines, the changes for businesses are more sweeping, and more complex.  The business-focused credits typically are used for larger projects that require more time and planning to implement, so although the deadlines are a bit farther away, there’s just as much if not more urgency to understand the implications now for what can easily be multi-million dollar projects that can take several years to go from the initial planning stages to being placed in service.

EV Charging Infrastructure (IRC §30C)

Businesses installing EV charging stations or alternative fuel refueling equipment can currently claim a 30% tax credit provided that the station is placed in an eligible low-income or rural area areas.

That credit is now scheduled to terminate for any equipment placed in service after June 30, 2026.

Energy-Efficient Commercial Buildings (IRC §179D)

This deduction applies to both new construction and retrofits that increase a building’s energy efficiency. It’s been a popular incentive among developers and architects.

Under the BBB, the deduction cannot be claimed for any project where construction begins after June 30, 2026.  Note that this is a “beginning of construction” rather than a “placed in service” date, so there’s still some time to act now and get the benefits of this deduction, but only if you are confident that all the preconstruction hurdles – planning, permitting, materials and labor availability, etc. – can be overcome quickly so the work will be well underway by June 30 of next year.

Energy-Efficient Home Credit (IRC §45L)

Builders of new, energy-efficient homes could claim a credit of up to $5,000 per home, depending on the standards met. Under the new rules, homes sold or leased after June 30, 2026 will no longer qualify for the credit.  This means that the home must be completed and sold or leased to someone to use as a residence just under a year from now, so if the planning and building process is not already well under way, it’s unlikely work can be completed and the sale done in time for the expiration.  Builders should begin reviewing timelines now.

The Clean Electricity Transition: New Credits, New Limits, New Deadlines

While some clean energy provisions are ending, others are evolving—particularly the technology-neutral credits for clean electricity. These revised credits come with shorter windows and far more restrictions than the prior versions.

Clean Electricity Production Credit (IRC §45Y)

This production-based credit rewards the generation of clean electricity, regardless of source.   Wind, solar, geothermal, certain nuclear facilities, and others all qualify provided their greenhouse gas emissions rate is zero. The BBB adds new limitations for this credit applicable for solar and wind facilities only.  Other zero-emissions technologies still qualify as before.

For solar and wind, in order to qualify they now must:

• Begin construction by July 4, 2026,
• Or, if construction begins after July 4, 2026, be placed in service by December 31, 2027.

Failure to meet one of these tests results in no credit.

The BBB also cuts off the credit for tax years beginning after July 4 ,2025 (meaning 2026 and future years for calendar-year taxpayers) for solar or wind property that is leased to a third party.

The credit is similarly cut off for tax years beginning after July 4 ,2025  for all green energy technologies, not just wind and solar, if the taxpayer is a specified foreign or foreign-influenced entity, or if the project uses certain components or critical minerals from specified foreign entities.  We will need to wait for additional regulations to understand exactly what this means, but the primary goal seems to be to target components and minerals sourced from China and several other countries as part of the current administration’s ongoing international trade strategy.

Clean Electricity Investment Credit (IRC §48E)

Replacing the former IRC §48 solar investment credit beginning with the 2025 tax year, IRC §48E, as it was created under the IRA, was originally intended to allow a technology-neutral 30% credit for the cost of clean energy projects until 2032. Under the BBB, the timeline is now much shorter for wind and solar project and there are additional restrictions added:

• For wind and solar:
  • Construction must begin by July 4, 2026.

Projects that are leased to third parties—a common structure in the clean energy field—will no longer be eligible for the credit starting in tax years after July 4, 2025. For all technologies:

• To qualify for domestic content bonuses, construction must have begun before June 16, 2025, and meet U.S. materials sourcing rules.
• Like the production tax credit, if a taxpayer receives assistance or uses materials from a “prohibited foreign entity” (expected to include China, Russia, and others), the credit may be disallowed entirely for tax years starting after July 4, 2025.

These layered restrictions are already causing uncertainty in the market. Investors and developers should scrutinize supply chains, project ownership structures, and timelines to ensure eligibility.

Depreciation Changes: No More 5-Year MACRS for Wind and Solar

Perhaps one of the more under-the-radar changes is the elimination of 5-year MACRS depreciation for solar and wind facilities that begin construction after December 31, 2024.  Note that with this date, this change is retroactive to January 1 of this year, so any financial modeling for 2025 projects that assumes 5 year MACRS depreciation should be updated immediately.

Instead, projects must now use default MACRS rules for electrical generation, which may mean significantly longer recovery periods—depending on the technology and system size.

The BBB has brought back 100% bonus depreciation, and that may be available for some project components, and would be more important than ever if the alternative is regular depreciation over a longer period.

Fuel Cells and Clean Commercial Vehicles: One Final Chance

The bill offers a slight expansion of the qualified fuel cell property credit, maintaining the credit rate at 30% for projects starting after 2025, and also allowing the credit even if the fuel cell project still generates some greenhouse gas emissions.  Up to this point, developers have found it difficult to keep fuel cell project emissions low enough to qualify.  Hydrogen is seen as a potential domestic alternative to imported rare-earth-based energy solutions, and this provision may reflect that strategic interest.

Additionally, the credit for commercial clean vehicles over 14,000 pounds—up to $40,000 per vehicle—will terminate for vehicles purchased after September 30, 2025. Fleet operators may wish to accelerate purchases to meet this deadline.

The Survivor – Energy Storage Technology

Unlike solar and wind energy generation equipment, the 30% credit under IRC §48E for energy storage technology has not been cut off and remains available until 2033.   The typical project here is a high-capacity battery system to store excess energy generated when the sun is shining and wind is blowing to offset the intermittent nature of solar and wind power.

However, this credit faces the same enhanced restrictions involving foreign entities and foreign-sourced components.  Given the current reality that much of the world’s supply chain for high-capacity batteries still runs through China, it may be difficult to find components to assemble a qualifying system to claim the credit, even if it is still technically available.

What Should Taxpayers Do Now?

The changes introduced by the BBB represent a fundamental shift in federal energy policy. While some may support the move away from government-backed green energy subsidies, others are scrambling to capitalize on the remaining benefits before they disappear.

Here’s what we recommend:

1. Start Now – Don’t wait for Q4. Lead times, labor shortages, and equipment backlogs could delay your ability to place systems in service.  Expect that many others will also be rushing to capitalize on these credits before they are gone, and installation companies may soon be booked solid through the expiration dates if they are not already.
2. Document Construction Dates – Ensure you have clear and contemporaneous documentation showing either physical work or at least 5% of total costs incurred before the deadlines, and when the project was completed and placed in service.  Assume you will be audited, and plan accordingly!
3. Evaluate Supply Chains – If your energy project involves foreign-made components, especially from China, you could be denied credits under new foreign entity rules.
4. Review Ownership Structures – Leased clean energy assets may soon be ineligible for credits. Consider direct ownership instead.
5. Plan with Your CPA – The timing and structure of these investments are now critical. Let us help you navigate these transitions to minimize surprises during your next filing season.

Final Thoughts

The BBB reshapes how taxpayers, investors, and developers will think about energy going forward. With many credits being cut off starting less than 3 months from now, it’s both a policy shift and a race against time to secure lucrative credits before they expire.

Our firm is monitoring the implementation of these changes closely, and we’re here to help you adjust your tax strategies accordingly.  As with most new legislation, the text of the law itself leaves many unanswered questions that will need to be addressed in future regulations and agency guidance documents, so expect to hear more on this topic in the coming months.

Feel free to reach out with any questions—we’re ready to help you navigate the complexities of the post-credit world.

For more information, please contact your BNN tax service provider at 800.244.7444.