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Tax Credit
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Changes to IRA Credits Embodied in House Bill (H.R. 1)
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Changes to IRA Credits from House Legislation Embodied in Draft Senate Legislation
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Changes to IRA Credits from Original Senate Draft Senate Bill Embodied in Passed Senate Legislation
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Transferability
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Clean Energy Production Credit (Section 45Y)
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House mandated beginning of construction within 60 days of enactment and placed in service before 2029. House bill also terminated credits and transferability after 2028. No phase-out. FEOC restrictions were effective as of January 1, 2026.
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Senate extends in some form through 2035. Solar and wind projects must begin construction by the end of 2025 (otherwise they are reduced by 40% in 2026, 80% in 2027, and 100% thereafter). FEOC Test now imposed on buyers of credits. FEOC restrictions are effective for tax years beginning after the date of enactment of the bill. Three-year phase-down from 2033 through 2035.
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Wind and solar facilities would need to be placed in service by the end of 2027 in order to qualify for the full value of the credit. However, wind and solar facilities that begin construction within 12 months after the date of enactment of the bill are exempted from this hard deadline for placed in service. If construction is begun before the expiration of this 12-month period, the deadline of placed in service by the end of 2027 would not apply. The beginning of construction notices (Notices 2013-29 and 2018-59) are codified for purposes of Section 7701(a)(51) – FEOCs. PTCs for non-wind and solar facilities would phase-out after 2032. All other non-wind and solar generating facilities retain their prior eligibility. Since projects that begin construction within 12 months following enactment of the bill are not subject to its provisions, wind and solar projects that have already begun construction are not subject to the 2027 placed in service deadline.
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Fully restored for the life/duration of the credit and is not reduced or otherwise impaired during the phase-out period.
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Clean Electricity Investment Credit (Section 48E)
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House mandated beginning of construction within 60 days of enactment and placed in service before 2029. House bill also terminated credits and transferability after 2028. No phase-out. FEOC restrictions were effective as of January 1, 2026.
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Senate extends in some form through 2035. Solar and wind projects must begin construction by the end of 2025 (otherwise they are reduced by 40% in 2026, 80% in 2027, and 100% thereafter). FEOC Test now imposed on buyers of credits. FEOC restrictions are effective for tax years beginning after the date of enactment of the bill. Three-year phase-down from 2033 through 2035.
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Wind and solar facilities would need to be placed in service by the end of 2027 in order to qualify for the full value of the credit. However, wind and solar facilities that begin construction within 12 months after the date of enactment of the bill are exempted from this hard deadline for placed in service. If construction is begun before the expiration of this 12-month period, the deadline of placed in service by the end of 2027 would not apply. The beginning of construction notices (Notices 2013-29 and 2018-59) are codified for purposes of Section 7701(a)(51) – FEOCs. The 2027 placed in service deadline is inapplicable to energy storage technology. All other non-wind and solar generating facilities retain their prior eligibility. Since projects that begin construction within 12 months following enactment of the bill are not subject to its provisions, wind and solar projects that have already begun construction are not subject to the 2027 placed in service deadline.
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Fully restored for the life/duration of the credit and is not reduced or otherwise impaired during the phase-out period.
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Zero-Emission Nuclear Power Production Credit (Section 45U)
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House bill terminated the credit and transferability after 2031 and mandated beginning of construction before 2029. No phase-out. FEOC restrictions were effective as of January 1, 2026.
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Senate legislation restores the credit and extends through 2035 in some form. FEOC Test now imposed on buyers of credit. There are different FEOC effective dates based on the type of prohibited foreign entity. Phased out from 2034 through 2035: 75% in 2034, 50% in 2034, and 0% thereafter.
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Termination date of December 31, 2032, is unchanged.
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Fully restored for the life/duration of the credit and is not reduced or otherwise impaired during the phase-out period.
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Advanced Manufacturing Production Credit (Section 45X)
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House bill terminated for wind components after December 31, 2027, and for all others after December 31, 2031. Transferability was repealed for all components sold after December 31, 2027. FEOC restrictions were effective as of January 1, 2026.
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Senate largely preserves the existing IRA timelines, with component-specific modifications, and introduces phased imposition of FEOC restrictions as well as a component-based credit phase-out. FEOC Test now imposed on buyers of credit. FEOC restrictions are effective for tax years beginning after the date of enactment of the bill. Phases-out battery and solar component eligibility after 12/31/2031 (Same as House bill, but sunsets after 12/31/2032 in IRA,); critical mineral eligibility by 2034 (previously was no sunset); and terminates wind component eligibility after 2027 (Same as House bill).
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Credit for critical minerals begins to phase out in 2031. Credit for wind components terminates for components produced and sold after December 31, 2027. Credit for metallurgical coal unavailable for metallurgical coal produced after December 31, 2029.
Phase out for critical minerals: 2031 (75%); 2032 (50%); 2033 (25%); following December 31, 2033 (0%).
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Fully restored for the life/duration of the credit and is not reduced or otherwise impaired during the relevant component phase-out periods.
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Credit for Carbon Oxide Sequestration (Section 45Q)
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House bill largely left credit intact. FEOC restrictions were effective as of January 1, 2026. House repealed transferability for carbon capture equipment on which construction began two years or more after the legislation went into effect.
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Senate largely preserves the existing IRA timeline (repealed for facilities on which construction begins after 12/31/2032). However, the bill shifts the inflation indexing year for credit adjustments forward to 2028, rather than 2027. As a result, the value of credit is somewhat eroded through 2027. FEOC Test now imposed on buyers of credit. There are different FEOC effective dates based on the type of prohibited foreign entity. Terminated after 2032 (Same as IRA and House bill).
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Preserved in draft that passed the Senate on July 1, 2025. Provides for base rate parity for different uses of sequestered carbon. Base rate ranges from $17/ton to $36/ton for all uses starting in 2025.
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Fully restored for the life/duration of credit.
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Clean Fuel Production Credit (Section 45Z)
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House bill extended credit for clean fuel that is produced before 2031 but limited it to clean fuel produced using feedstock from the U.S., Mexico, and Canada after December 31, 2025. Transferability was repealed for fuel produced after December 31, 2027. No FEOC restrictions.
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Senate extends through 2031, as in House bill. However, the Senate legislation removes the requirement that clean fuel be produced from U.S., Mexican, or Canadian feedstock. Instead, the bill permits the use of foreign feedstocks but stipulates that any portion of the resulting Clean Fuel Credit traceable to such foreign feedstocks be reduced by 20%. Only U.S. feedstocks would avoid this reduction. FEOC Test now imposed on buyers of credit. Previously no FEOC limitations, now FEOCs apply. There are different FEOC effective dates based on the type of prohibited foreign entity. Terminated after 2031.
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Effective date of amendments remains December 31, 2025. Acceptable feedstocks broadened to include U.S., Canada, or Mexico, as in House version. Extends the 179 immediate expensing provisions to the clean fuel production credit. Credit extended until December 31, 2029.
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Fully restored for the life/duration of credit.
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Clean Hydrogen Production Credit (Section 45V)
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Eliminated for facilities on which construction is begun after December 31, 2025. Transferability was unaffected by the House bill. No FEOC restrictions.
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Senate mirrors House elimination of credit for facilities on which construction is begun after December 31, 2025. Still no FEOC limitations on taxpayers; however FEOC Test now imposed on buyers of credit. Terminated after 2025 (Same as in House bill).
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Deadline to begin construction moved back two years to January 1, 2028, from December 31, 2025. Credit unavailable for facilities that do not begin construction by this date.
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Fully restored for the life/duration of credit.
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