Green Energy — News & Analysis

OBBBA slashes clean energy tax credits — wind and solar face a 2027 cliff (July 4, 2025)

July 4, 2025 — The One Big Beautiful Bill Act made sweeping cuts to the clean energy tax credits introduced by the Inflation Reduction Act, putting an estimated 53 to 59 percent of new clean power generating capacity at risk over the next decade, according to Rhodium Group modeling. Wind and solar projects must now begin construction by July 4, 2026 and be placed in service by December 31, 2027 to qualify for the Clean Electricity Investment Credit (Section 48E) and the Clean Electricity Production Credit (Section 45Y) — a drastic compression from the IRA's original timelines extending into the 2030s. The residential solar tax credit (Section 25D), which offered homeowners a 30 percent credit for rooftop solar installations, was terminated effective December 31, 2025.

The $7,500 federal tax credit for new EV purchases was eliminated for most vehicles placed in service after December 31, 2025, along with credits for used EVs, commercial EVs, and home EV charging equipment. Wind energy components were also stripped from the Advanced Manufacturing Production Credit (Section 45X) for components sold after 2027, removing a core incentive for domestic wind turbine manufacturing. Three days after signing the OBBBA, Trump reinforced the cuts with Executive Order 14315 on July 7, directing the Treasury to "strictly enforce the termination" of wind and solar credits and instructing the IRS to tighten construction-start rules that developers had relied on for project planning certainty.

Research firm Rhodium Group had previously identified $522 billion in announced U.S. clean energy investments linked to the tax credits that had not yet come online — all now potentially at risk. "Whether or not you agreed with everything the IRA did, it gave you policy stability," said the CEO of one solar developer. "With the One Big Beautiful Bill you've now tied energy policy to whichever party is in power."