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President Trump recently signed the One Big Beautiful Bill Act (OBBBA) into law, which significantly accelerates the termination date for federal energy tax incentives. Builders and remodelers using the credits should be aware of the new expiration dates and, where necessary, consult with their tax professional for additional guidance.

Æðµã´«Ã½ members should also be aware that the IRS and Treasury may issue additional taxpayer guidance on the changes included in OBBBA. Taxpayers should expect the IRS to strictly interpret the OBBBA phase-outs. President Trump issued an on July 7 directing the Treasury “to strictly enforce the termination of the clean electricity production and investment tax credits under sections 45Y and 48E of the Internal Revenue Code for wind and solar facilities. This includes issuing new and revised guidance…”

Below is a list of the most common energy tax credits used in residential construction and remodeling sector along with the new expiration dates under OBBBA.

Section 45L New Energy Efficient Home Credit

This tax credit is available to builders of energy efficient single-family and multifamily homes. To qualify, the dwelling unit must qualify for either Energy Star or the Zero Energy Ready Home program. Under the Inflation Reduction Act, this credit was extended through the end of 2032.

OBBBA Change: This credit will terminate for homes acquired (i.e., rented or sold) after June 30, 2026.

Section 25D Residential Clean Energy Credit

This allows home owners to claim a 30% tax credit for certain clean energy systems, such as solar panels, small wind turbines, geothermal systems and battery storage technology. Under the Inflation Reduction Act, this credit was extended for property placed in service prior to Jan. 1, 2035, with the credit being phased down to 22% starting in 2033.

OBBBA Change: This credit will expire with respect to expenditures made after Dec. 31, 2025.

Section 48E Clean Electricity Investment Credit

Beginning at the start of this year, the Section 48 Investment Tax Credit changed to a technology neutral approach under Section 48E, but projects that began construction prior to 2025 may continue to fall under the Section 48 tax credit rules (consult your tax advisor). For projects commencing construction in 2025, Section 48E is a technology neutral tax credit for installing energy producing technology that does not emit greenhouse gases, such as solar panels and wind turbines. The Inflation Reduction Act made numerous changes to this credit, including extending it through 2032, or when the U.S. reaches certain emission targets, whichever occurred sooner.

OBBBA Change: The Section 48E credit terminates for solar and wind facilities placed in service after Dec. 31, 2027, unless construction began within 12 months of the bill being signed into law (i.e., by July 4, 2026). Facilities that begin construction prior to July 4, 2026, generally have four years to be placed in service.

Note: Earlier versions of OBBBA would have prohibited companies offering solar leasing arrangements to home owners from claiming the Section 48E tax credit. In the final law, leased residential solar panel systems remained eligible, but leased residential solar water heater and small wind systems are not eligible.

Section 179D Energy Efficient Commercial Buildings Tax Deduction

This deduction allows commercial building owners, including multifamily buildings falling under the ASHRAE standard, a tax benefit for making energy efficient upgrades that reduce energy consumption by at least 25%. This deduction was a permanent tax provision.

OBBBA Change: This deduction will expire for properties beginning construction after June 30, 2026.

Section 25C Energy Efficient Home Improvement Tax Credit

This tax credit allows home owners to claim a credit for qualifying energy-efficient improvements, including windows, doors, insulation and HVAC systems. Under the Inflation Reduction Act, this credit was extended for property placed in service prior to Jan. 1, 2033.

OBBBA Change: This credit will expire for any property placed in service after Dec. 31, 2025.

Æðµã´«Ã½ AVP of Government Affairs J.P. Delmore provides an overview in the video below.

Æðµã´«Ã½ is providing this information for general information only. This information does not constitute the provision of legal advice, tax advice, accounting services, investment advice or professional consulting of any kind nor should it be construed as such. The information provided herein should not be used as a substitute for consultation with professional tax, accounting, legal or other competent advisers. Before making any decision or taking any action on this information, you should consult a qualified professional adviser to whom you have provided all of the facts applicable to your particular situation or question.