What Clean Energy Tax Incentives Does the One Big Beautiful Bill Act Eliminate?

Lawmakers have been considering changes to many of the tax incentives established or expanded under the Inflation Reduction Act (IRA). With the passage of the One Big Beautiful Bill Act (OBBBA), several of those provisions are being scaled back or eliminated. Below is an overview of the individual and business clean energy tax incentives affected by the OBBBA.

Clean Energy Tax Breaks Affecting Individuals

The OBBBA eliminates several tax credits that previously benefited eligible individual taxpayers. However, it provides short “grace periods” before the provisions expire, giving taxpayers a limited time to take advantage of the credits.

For example, the Energy Efficient Home Improvement Credit (Section 25C) was scheduled to expire after 2032. It is now available only for eligible improvements placed in service through December 31, 2025. Under the IRA, this credit was increased to 30 percent and applies to certain expenses such as exterior windows, skylights, exterior doors, and home energy audits.

Similarly, the Residential Clean Energy Credit (Sec. 25D) was scheduled to expire after 2034. It is also now limited to projects completed by December 31, 2025. The IRA boosted the credit to 30 percent for eligible clean energy improvements made between 2022 and 2025. It applies to the installation of solar panels and other renewable energy systems, including wind, geothermal, and biomass technologies.

Clean Energy Tax Breaks Affecting Businesses

The Alternative Fuel Vehicle Refueling Property Credit (Section 30C) applies to property that stores or dispenses clean-burning fuel or recharges electric vehicles. Worth up to $100,000 per item, including charging ports, fuel dispensers, and storage properties, the credit was set to expire after 2032. Under the OBBBA, eligible property must be placed in service on or before June 30, 2026.

The OBBBA also eliminates the long-standing Energy Efficient Commercial Buildings Deduction (Section 179D) for buildings or systems where construction begins after June 30, 2026. In place since 2006, this deduction was significantly expanded by the IRA to increase potential deduction amounts and broaden eligibility.

Wind and solar projects are among the most affected. The OBBBA repeals both the Clean Electricity Investment Credit (Section 48E) and the Clean Electricity Production Credit (Section 45Y) for facilities placed in service after 2027, unless construction begins on or before July 4, 2026. Projects starting by that date must be placed in service by the end of 2027.

The Advanced Manufacturing Production Credit (Section 45X) will also be restricted, with wind energy components no longer qualifying after 2027. The law further modifies the credit by expanding eligibility to include metallurgical coal (used in steel production), while phasing out credits for other critical minerals between 2031 and 2033. The credit for metallurgical coal will expire after 2029.

Finally, the OBBBA continues to allow taxpayers to transfer clean energy credits while they remain in effect, though transfers to “specified foreign entities” are restricted.

Clean Vehicle Credits

If you have been considering the purchase of a new or used electric vehicle (EV), you should act soon to take advantage of available tax credits. Under the OBBBA, the Clean Vehicle Credit (Section 30D) is available only through September 30, 2025.

The IRA had significantly expanded this credit for qualifying clean vehicles placed in service after April 17, 2023, and extended eligibility beyond EVs to include hydrogen fuel cell cars and plug-in hybrids. The maximum credit for new vehicles is $7,500 when both sourcing requirements—critical minerals and battery components—are met. Vehicles meeting only one of these requirements qualify for a $3,750 credit.

The IRA also established a new Used Clean Vehicle Credit (Section 25E) for eligible taxpayers who purchase used clean vehicles from dealers. This credit equals the lesser of $4,000 or 30 percent of the sale price and expires on September 30, 2025.

The OBBBA further limits incentives for businesses that acquire clean vehicles. The Qualified Commercial Clean Vehicle Credit (Section 45W), originally scheduled to expire after 2032, is now available only for vehicles acquired on or before September 30, 2025. Depending on vehicle weight, the maximum credit ranges from $7,500 to $40,000.

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