Early terminations for green energy tax provisions
OBBBA reverses Inflation Reduction Act provisions, giving taxpayers just months to earn credits
Public Law 119-21 (“One Big Beautiful Bill Act” or OBBBA) accelerates the termination of several green energy tax provisions, such as tax credits for energy efficient home improvements and clean vehicles. Most of these provisions were set to expire several years ago; however, the Inflation Reduction Act of 2022 (P.L. 117-169) reset most of the termination dates to December 31, 2032.
Taxpayers now have relatively short windows to either acquire or place into service certain green energy property if they want to qualify for these tax provisions before they expire within the 12 months.
Tax professionals should clearly communicate these changes to their clients as soon as possible. See below for a taxpayer-friendly message available to paid subscribers.
Clean vehicles
The credits for clean vehicles (EVs) now terminate for property acquired after September 30, 2025. This includes the following:
§30D clean vehicle credit,
§25E previously owned clean vehicle credit, and
§45W qualified commercial clean vehicles credit.
A taxpayer looking to purchase an EV should so so as soon as possible to qualify for one of these credits.
Clean buildings
The following clean building provisions now terminate for property placed in service after December 31, 2025:
§25C energy efficient home improvement, and
§25D residential clean energy credit.
A taxpayer making energy-producing or energy-efficient home improvements should do so as soon as possible. Note that this property must be placed in service by December 31, 2025, and there is no special transition rule for binding contracts in effect prior to the above dates (hat tip to Thomas A. Gorczynski for pointing this out).
If you have questions about the §25D residential clean energy credit, listen to Episode 1 of my Tax in Action podcast. (You can also qualify for CE by completing the course on Earmark CPE.) I cover the necessary criteria to claim this credit.
Taxpayer-friendly message (for paid subscribers)
