Category: Newsletters

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OBBB changes reviewed: Over the next few weeks CFO Services will go through the business credits and incentives impacted by the bill.     

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)

IRS Circular 230 Required Notice‐‐IRS regulations require that we inform you that to the extent this communication contains any statement regarding federal taxes, that statement was not written or intended to be used, and it cannot be used, by any person (i) for the purpose of avoiding federal tax penalties that may be imposed on that person, or (ii) to promote, market or recommend to another party any transaction or matter addressed herein. 

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OBBB changes reviewed: Over the next few weeks CFO Services will go through the business credits and incentives impacted by the bill.     

In Brief  

•  The One Big Beautiful Bill Act (OBBB) extends the deadline to begin construction for Section 45V hydrogen projects from December 31, 2025 (House proposal), to December 31, 2027 (Senate-enacted), giving developers two additional years to qualify for the credit. 
• Credit Value and Structure Unchanged: The maximum credit remains at $3/kg for clean hydrogen, with a 10-year credit period and continued options for direct pay and transferability (except to certain foreign entities). 
• Action Required: Projects must start construction before January 1, 2028, to secure eligibility. Sponsors should review project timelines and ownership, and monitor for further IRS guidance on emissions measurement and foreign entity definitions. 

OBBB Legislative Update: Section 45V Hydrogen Credit 

The One Big Beautiful Bill Act (OBBB, P.L. 119-21) was signed into law on July 4, 2025, bringing sweeping changes to federal tax credits and incentives for clean energy, including the Section 45V hydrogen production credit. The OBBB modifies the eligibility window and phase-out schedule for the 45V credit, with significant implications for project developers and investors. 

What is Section 45V? 

Section 45V provides a production tax credit (PTC) for clean hydrogen produced at facilities with low lifecycle greenhouse gas emissions. The credit is available for 10 years after a facility is placed in service, with the amount determined by the emissions intensity of the hydrogen produced (up to $3/kg for the cleanest hydrogen) .  

Key OBBB Changes to 45V Hydrogen Credit 

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 

1. Extension of Construction Start Deadline 

• Prior Law: Facilities had to begin construction by December 31, 2032, to qualify. 

• House Bill: Proposed to terminate the credit for facilities beginning construction after December 31, 2025. 

• Senate Bill (Enacted): Extends the deadline—facilities must begin construction before January 1, 2028 to qualify for the 45V credit.  

Result: The OBBB gives the hydrogen industry two additional years to start construction and still claim the credit, compared to the House proposal. 

2. No Change to Credit Value or Structure 

• The maximum credit remains at $3/kg for hydrogen produced with emissions ≤0.45 kg CO₂e/kg H₂. 

• The 10-year credit period and direct pay/transferability options are retained for projects that qualify. 

3. Transferability and Direct Pay 

• The Senate bill does not repeal elective transferability or direct pay for 45V credits, but transfer to specified foreign entities is prohibited upon enactment . 

Key Changes, Deadlines, and Restrictions 

Feature	Prior Law (IRA)	OBBB (as Enacted)
Max Credit Value	$3/kg	$3/kg
Construction Start Deadline	12/31/2032	12/31/2027
Credit Period	10 years	10 years
Transferability/Direct Pay	Yes	Yes (with restrictions)

IRS Circular 230 Required Notice‐‐IRS regulations require that we inform you that to the extent this communication contains any statement regarding federal taxes, that statement was not written or intended to be used, and it cannot be used, by any person (i) for the purpose of avoiding federal tax penalties that may be imposed on that person, or (ii) to promote, market or recommend to another party any transaction or matter addressed herein.