July 14, 2025
The One Big Beautiful Bill (OBBB) Act was signed into law in early July by President Trump. To date it is the Administration’s landmark legislation which calls for significant changes to tax incentives, credits and deductions available to individuals, families, and businesses. In a prior post, we covered many of the tax provision changes impacting businesses. However, there were several energy tax incentives which were changed including the Energy Efficient Commercial Building Deduction (Section 179d), electric vehicle tax incentives, and the residential clean energy tax credit. The updates made generally call for a limitation of benefits or an early termination of the incentives. It is important to become familiar with these changes to proactively plan to capture these incentives before expiration. To help clients, prospects, and others, Wilson Lewis has provided a summary of the key changes below.
- Energy Efficiency Home Improvement Credit – This is a federal tax credit which allows for an offset against certain energy efficient improvements made in homes located in the U.S. There is a maximum credit of $1,200 for improvements such as new insulation, windows, doors, and other energy items like air conditioning and water pumps. The credit is not refundable and there is no lifetime limit. The OBBB terminates this credit for property placed into service after December 31, 2025.
- Advanced Manufacturing Production Credit – This is a federal tax credit which was designed to incentivize the domestic production and sale of clean energy components. Generally, it applies to solar energy and wind energy components (blades and towers), inverters battery components and select critical minerals. The credit amount is based on several variables and types of equipment. Under the OBBB, the credit will no longer apply to wind energy components produced and sold after December 31, 2027. It also eliminates the credit for integrated components after December 31, 2026.
- Clean Fuel Production Credit – This is a federal tax credit which provides an incentive to produce low emission transportation fuels. It applies to both sustainable aviation fuel and other fuel types. The amount of the credit is a base rate of $.35 for aviation and $.20 for other fuel types. While the OBBB has extended the credit through 2029 (originally scheduled to expire in 2027) there are now significant eligibility and calculation changes starting in 2026. One example is a change in lifecycle emissions calculations which could mean lower saving opportunities.
- Energy Efficient Commercial Building Deduction – Also known as Section 179d, this federal tax deduction is designed to encourage the construction and renovation of energy efficient commercial buildings. This includes the installation of interior lighting, air conditioning, hot water heaters or certain changes made to the building envelope. The amount of the credit is dependent on what level of energy savings are realized. At 25% total energy savings, the deduction amount is $2.50 per square feet. The OBBB terminates this deduction by disqualifying any new construction from eligibility starting after June 30, 2026. The good news is any projects started before this date will still be eligible without consideration to when completed.
- Residential Clean Energy Credit – This is a federal tax credit available to homeowners that install eligible clean energy systems in their homes. Also known as the Solar Tax Credit, it applies to the purchase and installation of solar panels, wind turbines, heat pumps, battery storage technology and related installation costs. The amount of the credit is generally 30% of the cost of the clean energy property. The OBBB changes the expiration date to December 31, 2025.
- Electric Vehicle Tax Incentives – There are several electric vehicle tax incentives which were impacted by the OBBB. This includes the New Clean Vehicle, Used Clean Vehicle, and the Commercial Clean Vehicle Credit. The OBBB has repealed all these credits starting for any eligible vehicle acquired after September 30, 2025, and the repeal for related charging infrastructure after June 30, 2026.
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The changes in the One Big Beautiful Bill will certainly impact both individual and corporate taxpayers. It will also influence businesses offering related sales and installation services. While most of the provisions do not expire immediately, the life expectancy of these incentives is now limited. It is important to become familiar with the changes and determine how you will be impacted. If you have questions about the information outlined above, or need assistance with another tax or accounting issue, Wilson Lewis can help. For additional information call 770-476-1004 or click here to contact us. We look forward to speaking with you soon.
