Tracking the Status of Federal Funding

May 23, 2025

Early on May 22 the House passed "One Big Beautiful Bill Act," sending the budget to the Senate for review.

This version had more dramatic changes to clean energy tax cuts than the earlier House version of the bill. 

Here is a quick summary of how the House bill changes clean energy tax credits:

• Residential tax credits for EVs (30D, 25E), energy efficiency (25C), and solar (25D) will go away by the end of 2025. 
• Commercial EV tax credits (45W) and charger credits (30C) go away by the end of 2025.
• The renewable tax credits (48E/45Y) will be terminated for any projects that start construction more than 2 months after the bill becomes law OR finishes construction after Dec 31, 2028. Nuclear is the exception to this change. 
  • This effectively stops any new solar, wind, and battery projects after late 2025 (assuming bill passes in August as planned).  
• The manufacturing production tax credit (45X) adds foreign entity of concern (FEOC) restrictions that effectively makes it difficult for existing and new projects to meet the requirements because many subcomponents for solar, wind, battery, and inverters are manufactured in China, which is a FEOC. 
  • This would remove the credit for both existing and new projects in two years when the requirement takes effect.  
• The hydrogen production tax credit (45V) is terminated at the end of 2025.
• The sustainable aviation fuel tax credit (45Z) is extended through to 12/31/2031(this is a positive development)

Thanks to our colleagues at RMI for providing much of that summary.

For more on these changes, see

• Yale Climate Communications summary of changes
• Heatmap summary of changes
• Inside Climate News reporting on the politics associated with this vote
• The Guardian reporting on how the changes are likely to affect emissions

Of course none of this is certain yet. The House bill will go to the Senate where it is possible that the Senate will make changes, prompting negotiations between the two chambers before a final bill goes to the President for signature. 

Again, we'll provide new updates as the discussions in Washington evolve. 

In the meantime, we encourage local stakeholders to stay focused on the work at hand. The clean energy credits are definitely available for projects completed in 2025--which means this is a great time to take action.  

May 19, 2025

The House Ways & Means Committee released a draft budget bill last week that proposes substantive changes to the clean energy tax credits available under the Inflation Reduction Act.

Specifically, the current draft proposes ending all electric vehicle (EV) credits (individual and business plus EV charging installation provisions) at the end of 2025.

The budget bill also terminates the residential clean energy credits for renewable energy and energy efficiency at the end of 2025.

The Investment Tax Credit—the provision for solar, geothermal and batteries in commercial facilities (and for tax exempt entities via Elective Pay)—is not eliminated immediately.  The current credit levels would continue for projects completed by December 31, 2028 and then the funding would phase out starting in 2029 where entities could claim 80% of the current credit. The credit would be gone for projects completed in 2032 under this draft (whereas, currently, the credit begins to phase out in 2033).  Additionally:

• Another big change is that projects would qualify for the credit when put into service, not when construction begins--so the changing deadlines become really important. 
• And there are updated requirements about foreign components in projects that could make the credits difficult to use.

The current draft ends transferability (where an entity can sell their tax credit to another entity) and there’s not specific language ending Elective Pay.

None of this is certain, of course, This is the first version of the bill so it is still subject to debate in the House and then additional consideration in the US Senate. We’ve seen GOP members of both chambers speak out in support of the clean energy credits so perhaps the final bill preserve more of the existing clean energy tax credits.  

Multiple entities have posted analyses of the draft budget.  These include:

• Heatmap article describes the foreign components issue. 
• Lawyers for Good Government issued an alert, summarizing their concerns about the draft billl
• Evergreen Action posted an analysis too.
• Rhodium Group posted an analysis that includes some projected impacts on broader climate goals.
• UndauntedK12 did a helpful summary specific to schools.  

Again, we'll provide new updates as the discussions in Washington evolve. 

In the meantime, we encourage local stakeholders to stay focused on the work at hand. The clean energy credits are definitely available for projects completed in 2025--which means this is a great time to take action.