IRS Releases Info on Ending Clean Energy Tax Benefits

The Internal Revenue Service (IRS) released a fact sheet on August 21 detailing the expiration of several clean energy tax credits and deductions under the One Big Beautiful Bill Act. These incentives, which affect both individuals and businesses and include allowances for energy-efficient homes, electric vehicles, and energy-efficient buildings, were introduced under the Biden administration but are due to expire soon.

These energy tax incentives were initially rolled back with the implementation of President Donald Trump’s tax law, which came into effect on July 4. However, the incentives will not be phased out immediately.

The fact sheet details the specifics of the expiration process. It highlights the fastest expiring incentives, and provides information on their new termination dates under the One Big Beautiful Bill Act. The IRS notes that several energy credit and deduction provisions have had their termination dates accelerated under this Act.

The fact sheet also includes an in-depth table listing the specific code sections, the corresponding titles, and their termination dates. The table lists tax credits and deductions for energy-efficient home improvements, clean residential energy, and clean vehicles, among others. The termination dates range from December 31, 2025, to June 30, 2026.

In addition to shedding light on the expiring tax incentives, the fact sheet also answers six other frequently asked questions on the topic.

An executive order signed by Trump on July 7 directed the Treasury Department to enforce strictly the end of clean energy production and investment tax credits for wind and solar facilities under sections 45Y and 48E of the tax code. In this order, he also instructed Treasury Secretary Scott Bessent to issue new guidance to ensure policies concerning the “beginning of construction” aren’t evaded, including by preventing the acceleration or manipulation of eligibility artificially and by restricting the use of broad safe harbors unless a substantial portion of a facility has been built.

Last week, the IRS issued further guidance changing how wind and solar energy projects qualify for energy tax credits. Now, projects are required to demonstrate significant physical work started before July 5, 2026.

Top 40 accounting firm Novogradac provided their interpretation in an Aug. 20 analysis of the new IRS guidance. They noted a significant shift in tax equity practice, with physical work of a significant nature now being the requirement to establish construction start. The firm pointed out that this change disrupts the status quo but can be successfully navigated by project investors and developers through adaptation.