The Senate Finance Committee has advanced its draft of the “One Big Beautiful Bill,” resulting in adverse changes for U.S. clean energy initiatives.
Key among the changes is a reduction in the 48E Investment Tax Credit for solar and wind energy projects, which currently covers 30% of installation costs. The credit will decrease to 60% of its value by the end of 2026 and further drop to 20% of its value by the end of 2027. Any projects initiated after 2028 will no longer qualify for this credit.
Other technologies, including energy storage, face similar reductions, with the credit phased down to 75% for projects placed in service in 2034, 50% in 2035, and eliminated after that.
In a concerning move for consumers and small businesses, the 25D residential solar tax credit will be cut just 180 days after the bill becomes law. The same timeline applies to tax credits for residential efficiency projects, batteries, and heat pumps, all of which will also be eliminated within six months of enactment.
Moreover, the 30D and 45W electric vehicle tax credits will cease for purchases made 180 days after enactment, while the used EV credit will be reduced within 90 days.
Despite these cutbacks, the bill retains the provision for tax credit transferability, allowing owners of clean energy assets to sell their tax credits for cash to entities that can utilize them.
Jesse Jenkins, a professor specializing in macro-scale energy systems at Princeton University, noted that the language regarding Foreign Entities of Concern (FEOC) has evolved but remains in effect. He described the Senate draft as “hot trash and terrible for America,” although he acknowledged it is “marginally better for clean energy credits” in a post on the social media platform Bluesky.
PV Magazine USA will continue to provide updates and reactions to developments surrounding the “One Big Beautiful Bill Act.”