UPDATES
On May 12, 2025, the House Ways and Means Committee released its budget reconciliation bill titled “The One, Big, Beautiful Bill.” This bill proposes several broad changes to the Internal Revenue Code, including the rollback or phase-out of several clean energy incentives introduced under the Inflation Reduction Act (IRA).
Key energy-related provisions include:
- Section 45L (Energy-Efficient Home Credit) is scheduled to sunset for homes acquired after December 31, 2025, unless construction began before May 12, 2025. Projects that meet the construction start window may claim credits through the end of 2026.
- Section 48 (Investment Tax Credit) is proposed to begin a phase-down starting in 2030, with projects beginning construction in 2032 or later no longer eligible.
- Section 48E (Clean Electricity Investment Credit) begins to phase out for projects placed in service starting in 2029, reducing by 20% each year through 2032, when it is fully phased out. The bill also includes new restrictions for facilities receiving material assistance from foreign entities of concern.
- Transferability of 48E credits would be repealed and unavailable for projects that commence construction after 2 years from the date that the bill is enacted upon
- Elective Pay (Direct Pay) appears to remain intact in the proposed legislation, with no changes made to the ability of tax-exempt entities to receive refundable credits for qualifying clean energy projects.
Section 30C (Alternative Fuel Vehicle Refueling Property Credit) would also be repealed for any property placed in service after December 31, 2025.
Importantly, Section 179D (Energy Efficient Commercial Buildings Deduction) remains unaffected by the proposed legislation.
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IMPACT
If enacted, the proposed legislation would preserve a meaningful investment window for clean energy and electrification projects. The full value of the Investment Tax Credit (Section 48) and Clean Electricity Credit (Section 48E) remains available through at least the end of 2028. This presents a strong 4- to 6-year runway for developers, investors, and manufacturers to capitalize on enhanced credit structures, including prevailing wage and apprenticeship bonuses.
Although the bill proposes a phase-down for credits beginning in 2029 and a repeal of transferability upon enactment, the fundamentals of project eligibility, value, and structure remain intact for deals that move forward within the current planning horizon. For those able to begin construction or place projects in service over the next few years, the outlook remains highly favorable.
Walker Reid and Blue Energy are actively reviewing the full legislative text and will provide further guidance to help clients optimize project timing, qualification, and monetization strategies under the proposed framework.
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GUIDANCE
(Provided by Managing Partner David Diaz and CEO Josh Howes)
Clients and partners should stay alert as Congress begins negotiating this reconciliation package. Although the bill is still in draft form, the proposed repeal of transferability and accelerated sunsets signal a meaningful policy shift. While some clean energy incentives remain untouched, others are clearly at risk.
If your team is planning projects that depend on the 45L credit, the ITC, or any of the affected provisions, we strongly recommend evaluating construction start timing, eligibility documentation, and financing strategies now.
There is still time to contact your congressional representatives and make your voice heard. Whether you support preserving credit transferability, maintaining long-term certainty, or expanding access to energy tax incentives, direct input from constituents can shape the outcome of this bill.
Walker Reid and Blue Energy will continue to advocate for clear, stable, and actionable guidance in the energy tax space. We are closely engaged with stakeholders and will provide real-time updates as this legislation progresses.
