On July 4, 2025, President Donald Trump signed into law the One Big Beautiful Bill Act (OBBBA) (P.L. 119-21), which includes a number of tax law changes that directly impact the energy industry.
A significant number of the OBBBA’s energy provisions consist of the accelerated termination of various green energy credits, including the clean electricity production credit under Internal Revenue Code Section 45Y (commonly referred to as the PTC) and the clean electricity investment credit under Internal Revenue Code Section 48E (commonly referred to as the ITC), and other benefits that were included in the Inflation Reduction Act (IRA) of 2022. In a reversal of IRA policies, the OBBBA includes incentives for the fossil fuel industry, primarily coal, oil, and gas. Also included are various other changes, including those related to fuel cells, carbon sequestration, transportation fuels and domestic feedstock requirements. In addition to accelerated termination provisions, the OBBBA limits foreign-owned or foreign-assisted company access to existing credits and other benefits.
Below are specific OBBBA provisions, including their effective dates. These dates are specific to each provision, and companies and individuals currently receiving or planning to receive any credits or incentives must determine whether any operational or purchasing changes are necessary to receive such benefits. Should the changes in the OBBBA result in a loss of benefits, companies and individuals must understand the costs and mitigation options.
Wind and Solar
- Ends the Clean Electricity Production Credit (for property placed in service after December 31, 2027)
- Ends the Clean Electricity Investment Credit (for property placed in service after December 31, 2027)
Note that projects for which construction begins before the one-year anniversary of the OBBBA’s enactment are exempt from the above deadlines.
Hydrogen
- Ends the Clean Hydrogen Production Credit (for construction beginning after January 1, 2028)
Clean Transportation Fuels
- Extends the Clean Fuel Production Credit (from December 31, 2027, to December 31, 2029)
Coal
- Includes metallurgical coal as an Applicable Critical Mineral for Purposes of the Advanced Manufacturing Production Credit (starting December 31, 2026, and applied to such coal produced through December 31, 2029)
- Lowers the Coal Leasing Royalty Rate from 12.5 percent to 7 percent (from July 4, 2025, to September 30, 2034)
Electric Vehicles
- Ends the Clean Vehicle Credit, Previously Owned Clean Vehicle Credit, and Qualified Commercial Clean Vehicles Credit (for vehicles acquired after September 30, 2025)
Housing
- Ends the Residential Clean Energy Credit (for expenditures made after December 31, 2025)
- Ends the New Energy Efficient Home Credit (for homes acquired after June 30, 2026)
- Ends the Energy Efficient Home Improvement Credit (for property placed in service after December 31, 2025)
Infrastructure
- Ends the Energy Efficient Commercial Buildings Deduction (for construction beginning after June 30, 2026)
- Ends the Alternative Fuel Vehicle Refueling Property Credit (for property placed in service after June 30, 2026)
- Ends the 5-Year Cost Recovery for Energy Property (for construction that began after December 31, 2024)
On July 7, 2025, President Trump signed an executive order titled “Ending Market Distorting Subsidies for Unreliable, Foreign‑Controlled Energy Sources,” which, among other items, directs the secretary of the Treasury to “strictly enforce the termination of the clean electricity production and investment tax credits under sections 45Y and 48E of the Internal Revenue Code for wind and solar facilities.” Given the language in the executive order, companies in the wind and solar industry should not expect any relief from the OBBBA’s placed-in-service requirements.
Please see our other alerts for a general overview of the OBBBA’s provisions and its impacts on manufacturing, healthcare, private educational institutions and nonprofits, and state and local tax.
If you have any questions regarding the OBBBA’s general impact on the energy sector, please contact Allen O’Neil (aoneil@mccarter.com) and John Adragna (jadragna@mccarter.com) in the Environment & Energy group.
For tax-specific OBBBA questions, please contact Michael Puzyk (mpuzyk@mccarter.com), Michael Guariglia (mguariglia@mccarter.com), or Paul Buonaguro (pbuonaguro@mccarter.com) in the Tax, Employee Benefits & Private Clients group.