The One Big Beautiful Bill (OBBB) Act brings sweeping changes to renewable energy tax incentives, including the Production Tax Credit (PTC), Investment Tax Credit (ITC), and Electric Vehicle (EV) and related credits. Read on for a summary of the final provisions and their implications for developers, investors, and manufacturers.

PTC and ITC: Finalized expiration and eligibility rules

Projects that began construction by Dec. 31, 2024, are generally unaffected by the changes made by the OBBB and are covered by the prior PTC under Section 45 of the Internal Revenue Code, or the prior ITC under Section 48. 

Projects that begin construction in 2025 or later are not eligible for the prior PTC or ITC, but are potentially eligible for the so-called “tech-neutral” PTC or ITC that originated under the Inflation Reduction Act (IRA) but have now been modified by the OBBB, either the 45Y PTC or the 48E ITC. Most of the new limitations under the new law apply to these renewables and especially wind and solar electricity generation projects.

Tech-neutral credit-eligible wind and solar projects must now meet the following rules: Either begin construction before July 5, 2026, or be placed in service by Dec. 31, 2027, in order to qualify for 45Y or 48E credits. 

Foreign Entity of Concern (FEOC) restrictions and credit transfer limitations have been made law, requiring careful planning for projects involving international ownership, investment, licensing, supply chains, or credit monetization.

EV and EV charging credits: Confirmed sunset and exceptions

The EV credit under IRC 30D will expire for vehicles acquired after Sept. 30, 2025. The used EV credit (25E) and commercial EV credit (45W) follow similar timelines. The 30C EV charging credit terminates for charging equipment placed in service after June 30, 2026.  

Dealerships and manufacturers must now adapt to the finalized eligibility rules, including domestic content and income thresholds, which remain in effect until expiration.

Residential and manufacturing credits: Clarified outcomes

• IRC Section 25C – Energy-Efficient Home Improvement Credit: Expires for all property placed in service after Dec. 31, 2025.
• 25D – Residential Energy Credits: Ends for any expenditures made after Dec. 31, 2025.
• IRC §45L – New Energy-Efficient Home Credit: Terminates for any home acquired after June 30, 2026.
• IRC §45X – Advanced Manufacturing Production Credit: Subject to several technical modifications (details not specified here).
• IRC §179D – Commercial Building Energy-Efficiency Deduction: Ends for property that begins construction after June 30, 2026.
• Bonus depreciation: Restored to 100%, effective retroactively for 2024 through 2026. Taxpayers may also elect 60% or 40% bonus depreciation in certain cases.

Foreign entities of concern (FEOC)

The OBBB imposes new burdensome and costly restrictions limiting many credit-eligible projects’ ability to qualify for tax credits if certain FEOCs are involved. 

These new restrictions apply into two scenarios: 

1. relating to ownership or control, and
2. relating to “material assistance” during construction.

Given the critical nature of the FEOC rules, compliance with these new requirements is a new and unavoidable requirement that imposes new burdens and costs on developers, sponsors, investors and credit purchasers, thus adding a new level of risk and due diligence to every tax credit to which it applies.

Strategic guidance: Action steps now that the bill is law

With the bill enacted, stakeholders should:

• Immediately assess project timelines to meet the new 2026 begun construction safe harbor deadline and the ability of such projects to meet the 2027 placed in service deadlines.
• Review safe-harbor compliance strategies in light of new deadlines and recent executive order requirements that are yet to be known.
• Evaluate supply chain exposure to FEOC restrictions and for purposes of meeting safe harbor requirements.
• Update financial models to reflect changes in law.