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
The One Big Beautiful Bill Act (OBBB, P.L. 119-21), signed into law July 4, 2025, brings major changes to the Section 45X Advanced Manufacturing Production Credit and the rules for transferring energy tax credits. The OBBB accelerates the phaseout of 45X for wind and other components, introduces new restrictions on foreign entity involvement, and tightens the rules for credit transferability.
Key Takeaways:
1. Accelerated Phaseout
- Wind energy components: Ineligible for the credit if sold after 2027.
- Other eligible components: Full phaseout accelerated by one year (excludes sales after 2031 rather than 2032).
- Critical minerals: Now subject to a staggered phaseout beginning in 2031.
2. Foreign Entity Restrictions
- No credit for PFEs: No 45X credit for any tax year beginning after enactment if the taxpayer is a specified foreign entity.
- No credit for foreign-influenced entities: No credit after two years for entities meeting certain foreign ownership or control thresholds.
- Material assistance threshold: The Senate bill allows a declining percentage of materials to be sourced from PFEs, with stricter limits each year.
3. Transferability
- Allowed: Credits can be transferred, but not to specified foreign entities.
- No universal ban after 2027: Unlike some earlier proposals, OBBB does not universally disallow transferability for 45X after 2027, but prohibits transfers to PFEs immediately.
4. Supplier Certification & Safe Harbors
- Supplier certifications: Required to document compliance with PFE/material assistance thresholds.
- Safe harbor tables: To be issued by Treasury for calculating PFE content.
- Anti-circumvention: Treasury is directed to issue rules to prevent evasion of PFE/material assistance restrictions.
5. Metallurgical Coal
- Added as a critical mineral: Eligible for a 2.5% credit through 2029.
Key Changes, Deadlines, and Restrictions
| Feature | Prior Law (IRA) | OBBB (as Enacted) |
| Wind Component Credit | Phased out after 2032 | Ends after 2027 |
| Other Components | Phased out after 2032 | Ends after 2031 |
| Critical Minerals | No phaseout | Phaseout begins 2031 |
| Metallurgical Coal | Not eligible | Eligible through 2029 |
| Foreign Entity Restrictions | None | Yes (phased in) |
| Transferability | Yes | Yes (not to PFEs) |
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