The One Big Beautiful Bill Act (OBBBA) includes several provisions to terminate or phase out deductions and credits related to energy efficiency improvements. This makes the timing of when energy-efficiency projects begin construction and when they are placed into service important.
Changes for Businesses
The OBBBA makes several changes to the Advanced Manufacturing Production Credit, including:
- Modifying the subcomponent rule.
- Terminating the credit for wind energy components produced and sold after December 31, 2027.
- Redefining qualifying critical minerals.
- Reworking the requirements for being a battery module.
- Changing property that includes “material assistance from a prohibited foreign entity.”
These modifications are effective for tax years beginning after the date of enactment and for subcomponents sold during tax years beginning after December 31, 2026.
Changes to the Clean Electricity Investment Credit
The OBBBA includes several changes to the clean electricity investment credit for solar and wind projects, including:
- Solar and wind projects need to begin construction before December 31, 2025, to avoid the restrictions on specified foreign interest equipment and funding.
- Solar and wind projects also need to begin construction before July 4, 2026, to avoid a requirement to be placed in service by December 31, 2027.
- Projects that begin construction before July 4, 2026, have four years from the start of construction to be placed in service.
Repealed Tax Credits and Deductions
The OBBBA repealed the following tax credits and deductions:
- Energy Efficient Commercial Buildings Deduction for Construction (section 179D) on properties that begin construction after June 30, 2026.
- Credit for purchases of commercial clean vehicles acquired after September 30, 2025.
- Credit for installation of alternative fuel vehicle refueling property for property placed in service after June 30, 2026.
- Credit for the construction of new energy-efficient homes for homes acquired after June 30, 2026.
- Credit for clean electricity production and clean electricity investment for expenditures made after December 31, 2027.
Changes for Individuals
The OBBBA repealed the following tax credits:
- Credit for expenditures for energy-efficient home improvements for all property placed in service after December 31, 2025.
- Credit for expenditures after December 31, 2025, for clean energy improvements to their home. These improvements included solar electricity, solar water heating, qualified fuel cells, small wind energy, geothermal heat pumps and battery storage technologies.
- Credit for purchases of previously owned clean vehicles acquired after September 30, 2025.
- Credit for purchases of new clean vehicles acquired after September 30, 2025. It has also made changes to the requirements for new clean vehicles purchased before September 30, 2025, and put into service in 2026.
Important Dates
It is important to keep these deadlines in mind when planning any energy-efficiency projects. Schedule an appointment with your RKL advisor to see if you qualify for these credits and deductions before they expire.
