House Passes “One Big Beautiful Bill Act” with Significant Cuts to IRA Renewable Energy Tax Credits
On May 22, 2025, the U.S. House of Representatives passed H.R. 1, titled the “One Big Beautiful Bill Act” (“House Bill”), a budget reconciliation bill that introduces sweeping changes to the Inflation Reduction Act (“IRA”) clean energy tax credits. This legislation, which passed by a narrow, party-line vote, could profoundly impact the renewable energy sector by accelerating the phaseout of key incentives and imposing stringent timelines for project eligibility. As the bill advances to the Senate, where amendments are expected, Pierson Ferdinand LLP is dedicated to keeping our clients updated on the potential impacts to renewable energy projects and investments, and guiding them in developing strategic plans to address these changes.
Key Provisions Affecting Renewable Energy Tax Credits
Compressed Timelines for Clean Energy Projects: The House Bill mandates that projects seeking the technology-neutral Clean Electricity Production Tax Credit (PTC, Section 45Y) and Investment Tax Credit (ITC, Section 48E) must begin construction within 60 days of the bill’s enactment AND be placed in service by December 31, 2028, to qualify for these incentives. Failure to meet either deadline would result in ineligibility for these credits.
Nuclear Project Exception: Advanced nuclear facilities are granted a more lenient timeline, exempt from the 60-day construction start requirement, provided construction begins by December 31, 2028, and the project is operational by December 31, 2031.
Termination of Other Credits: The bill repeals several IRA credits after 2025, including the Clean Hydrogen Production Tax Credit (45V), Clean Vehicle Credits (30D, 25E, 45W), and various residential energy efficiency credits (25C, 25D, 45L). These changes eliminate long-term incentives previously available through 2032.
Phaseout of Manufacturing Credits: The Advanced Manufacturing Production Credit (45X) remains in place but faces a phased reduction starting after 2029.
Restrictions on Transferability and Foreign Involvement: Transferability of credits, a mechanism allowing companies to sell tax benefits, is limited or terminated for several credits after 2027 or 2028. Additionally, strict “Foreign Entities of Concern” (FEOC) restrictions, particularly impacting solar and energy storage sectors, will apply to multiple credits starting January 1, 2026.
Industry Implications and Concerns
The passage of the House Bill has raised significant alarm within the clean energy sector. Industry leaders warn that the accelerated phaseout and tight eligibility windows could jeopardize billions in investments, stall project development, increase energy costs, and result in substantial job losses nationwide. The compressed 60-day construction start requirement, in particular, poses a severe challenge for developers already navigating complex project timelines.
Senate Outlook and Next Steps
While the House bill represents a clear intent to curtail IRA clean energy incentives, the legislation is expected to undergo significant revisions in the Senate. Several Republican senators, including Senator Thom Tillis (R-NC), have indicated openness to moderating the House’s aggressive cuts, with ongoing discussions about the timeline and scope of the credits. Industry stakeholders remain hopeful that the Senate will provide a more balanced approach to preserve investment certainty in the renewable energy space.
How Pierson Ferdinand LLP Can Assist
Pierson Ferdinand LLP understands the critical importance of navigating this evolving legislative landscape. Our team, with deep experience in federal income tax and international taxation for the renewable energy sector, is prepared to assist clients in:
Evaluating current project timelines to meet potential eligibility deadlines under the House Bill';
Structuring organizations and transactions to maximize remaining tax benefits; and
Monitoring Senate developments and advocating for client interests as the bill progresses.
For clients in the renewable energy industry, including those focused on sustainable energy solutions, we are ready to provide tailored guidance to mitigate risks posed by these legislative changes. Please contact us to discuss how the House Bill may impact your operations and to explore strategic options for compliance and optimization.
For further information or to schedule a consultation, please contact Pierson Ferdinand’s Energy, Renewables, and Sustainability team at Renewables@pierferd.com or contact Liz Delnegro directly at elizabeth.delnegro@pierferd.com.
We remain committed to supporting your success in the face of these challenging legislative shifts.
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