OBBB changes reviewed: Over the next few weeks CFO Services will go through the business credits and incentives impacted by the bill.
| Week 1 | Week 2 | Week 3 | Week 4 | Week 5 | Week 6 | Week 7 | Week 8 |
| OBBB Overview | 174 Research Expenses | 48D Semi Incentives | 48E/45Y Clean Energy | 45V Clean Hydrogen | 45Z Clean Fuel Production | 45Q Carbon Capture | 45X and Buy/Sell |
In Brief
Section 48E (Clean Electricity Investment Tax Credit):
- The ITC for wind and solar projects is now set to end for property placed in service after December 31, 2027, unless construction begins within 12 months of OBBB enactment.
- New, stricter domestic content requirements apply, and projects beginning construction after 2025 cannot include “material assistance” from prohibited foreign entities (PFEs).
- Credits are subject to 100% recapture if certain payments are made to PFEs within 10 years of the project being placed in service.
Section 45Y (Clean Electricity Production Tax Credit):
- The PTC for wind and solar also ends for facilities placed in service after December 31, 2027, unless construction begins within 12 months of enactment.
- PFE restrictions and phased cost ratio thresholds apply, with allowable PFE-sourced content decreasing annually.
- Credits cannot be transferred to specified foreign entities.
Suggested Action:
To qualify for these credits, wind and solar projects must begin construction within 12 months of OBBB enactment or be placed in service by the end of 2027. Review supply chains and project timelines now to ensure compliance with new domestic content and PFE rules. In the next section, the recent Executive Order also needs to be taken into consideration for planning as well.
Executive Order Targets Clean Energy Credit Guidance
On July 7, 2025, President Trump issued an executive order directing the Treasury Department to halt all regulatory and guidance projects related to clean energy tax credits under Sections 45Y and 48E, as revised by the One Big Beautiful Bill (OBBB). The order mandates the termination of wind and solar tax credits and calls for stricter enforcement of “beginning of construction” rules—specifically to prevent artificial acceleration of eligibility and limit the use of broad safe harbors unless substantial construction has occurred.
OBBB Legislative Recap: Clean Energy Credits
The One Big Beautiful Bill (OBBB) or P.L. 119-21, signed into law July 4, 2025, brings sweeping changes to U.S. tax credits for clean energy, manufacturing, and related sectors. The law accelerates the phase-out of many Inflation Reduction Act (IRA) credits, introduces new restrictions for domestic clean energy deployment hat the administration calls “market-distorting subsidies” for foreign-controlled green energy sources.
Section 48E: Clean Electricity Investment Tax Credit (ITC)
What’s New:
The ITC under Section 48E remains available for qualified facilities and energy storage technology placed in service after 2024, but with significant new restrictions and a shortened eligibility window.
- Termination for Wind & Solar: The ITC for wind and solar projects ends for property placed in service after December 31, 2027, unless construction begins within 12 months of enactment
- Domestic Content Requirements: The required percentage of domestic content increases to 45% in 2025, 50% in 2026, and 55% after 2026 (with lower thresholds for offshore wind)
- Prohibited Foreign Entity (PFE) Rules: Projects beginning construction after 2025 cannot include “material assistance” from PFEs (including certain Chinese, Russian, Iranian, or North Korean entities, or those with significant foreign ownership/control)
- Recapture Rule: If a taxpayer makes certain payments to a PFE within 10 years of placing property in service, the ITC is subject to 100% recapture
Section 45Y: Clean Electricity Production Tax Credit (PTC)
What’s New:
The PTC under Section 45Y is available for qualified facilities placed in service after 2024, but with a hard phase-out for wind and solar
- Termination for Wind & Solar: The PTC is not available for wind and solar facilities placed in service after December 31, 2027, unless construction begins within 12 months of enactment
- PFE Rules: Similar to Section 48E, facilities beginning construction after 2025 cannot include material assistance from PFEs. The definition of “material assistance” is based on a cost ratio, with the allowable percentage of PFE-sourced components decreasing over time
- Transferability: The credit can still be transferred but prohibited for transfers to a specified foreign entity
Key Changes, Deadlines, and Restrictions
| Feature | Prior Law (IRA) | OBBB (as Enacted) |
| ITC (48E) & PTC (45Y) for Wind/Solar | Available through 2032+ | Ends for property placed in service after 2027 (unless construction begins within 12 months of enactment) |
| Domestic Content | 40% (offshore 20%) | 45% (2025), 50% (2026), 55% (2027+); offshore wind: 27.5%/35%/55% |
| PFE Restrictions | Not present | Strict limits on PFE involvement; phased cost ratio thresholds |
| Transferability | Allowed | Still allowed but prohibited to specified foreign entities |
| Recapture | Standard | 100% recapture if PFE payments made within 10 years |
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