The One Big Beautiful Bill Act (OBBBA) introduces major changes to clean energy tax incentives originally established by the Inflation Reduction Act. The Stone House Group has analyzed the implications of these shifts and what they could mean for future projects in solar, wind, EVs, and more.
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The Federal Government enacted significant modifications to clean-energy credits, previously established by the Inflation Reduction Act of 2022 (IRA), when he signed H.R. 1, also known as the One Big Beautiful Bill Act (OBBBA), on July 4, 2025.
The OBBBA introduces changes to clean-energy tax incentives that include accelerated phase-outs for certain energy credits, stricter domestic content requirements, and new restrictions on foreign entities. Additionally, some projects must now meet earlier deadlines to qualify for incentives. We've summarized these changes below.
This provision was introduced in the IRA and allows not-for-profit entities to receive tax credits for energy investments. The Elective Pay provision remains unchanged.
The bill maintains full ITC eligibility for qualifying geothermal heat pump (aka, geo-exchange or ground source heat pump) technologies.
OBBBA terminates the eligibility of wind and solar projects for Investment Tax Credits if the projects do not meet specified deadlines.
• Projects must begin construction within twelve months of enactment of the legislation, before July 4, 2026, or
• Projects must be placed in service before December 31, 2027.
Solar and wind projects must also comply with Foreign Entity of Concern (FEOC) rules, described below.
The bill maintains full ITC eligibility for battery, fuel cell, and CHP technologies that comply with FEOC rules.
The Foreign Entity of Concern rules operates under three categories, barring tax credit eligibility:
(i) where the project is owned by an foreign entity,
(ii) where a foreign entity exercises “effective control” over the project, or
(iii) where the project has a material reliance on products/materials sourced by an foreign entity.
To determine FEOC eligibility, the initial step involves assessing whether the project received "material assistance" during its construction from a "prohibited foreign entity." The IRS will issue a formula in the future to determine if a power or storage project benefited from such assistance.
Tax credits for electric vehicles, charging stations, and residential clean energy systems were repealed, with the repeals effective at different times over the next year.
On July 7th, the President issued an Executive Order, “Ending Market Distorting Subsidies for Unreliable, Foreign Controlled Energy Sources”.
The EO directs, within 45 days of enactment of H.R. 1 (i.e., by August 18, 2025), the Treasury Department to take “necessary and appropriate [action] to strictly enforce the termination of the clean electricity production and investment tax credits … for wind and solar facilities. This includes issuing new and revised guidance as the Secretary of the Treasury deems appropriate and consistent with applicable law to ensure that policies concerning the ‘beginning of construction’ are not circumvented, including by preventing the artificial acceleration or manipulation of eligibility and by restricting the use of broad safe harbors unless a substantial portion of a subject facility has been built.”
It further directs “prompt action as the Secretary of the Treasury deems appropriate and consistent with applicable law to implement the enhanced Foreign Entity of Concern restrictions in the One Big Beautiful Bill Act.”
We understand that these policy changes raise more questions than they answer, especially for organizations actively planning or considering clean energy projects. While this summary outlines the key updates under the One Big Beautiful Bill Act, the full impact will depend on your specific project type, timeline, and compliance requirements. If you’re navigating next steps or evaluating your eligibility for clean energy incentives, The Stone House Group is here to help. Connect with our team to explore your options and ensure your project stays aligned with the latest federal requirements.
Downloadable copy available here.
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