Insights and Analysis

Full U.S. House passes “One Big Beautiful Bill” – Impact on energy

28 May 2025

Clean power energy concept,Oil pump with solar panels and the sunset

On May 22, 2025 the House of Representatives, by a vote of 215-214 (no Democrats supporting), passed the One Big, Beautiful Bill Act (“OBBB”) which includes manager’s amendment changes from the version passed by the Ways and Means Committee on May 14, 2025. The manager’s amendment included in the House-passed OBBB includes significant cuts to Inflation Reduction Act clean energy tax credits that had already been cut in the version of OBBB reported by the Ways and Means Committee. (Please see our alert here regarding the version reported by the Ways and Means Committee.)

These changes under the manager’s amendment include:

An acceleration of the repeal of the sections 45Y (PTC) and 48E (ITC) clean electricity tax credits. With the exception of nuclear facilities, the House-passed OBBB requires that all qualifying 45Y or 48E projects must begin construction within 60 days of enactment and be placed in service (without any credit phase down) before 2029.
More generous treatment for nuclear facilities, including both (new advanced nuclear facilities as defined under Internal Revenue Code section 45J(d)(2) and expansions of preexisting nuclear facilities), which continue to be eligible for the 45Y PTC or 48E ITC as long as construction on such facilities begins before 2029 (with no placed in service deadline).
Restoring eligibility for credit transferability under IRC section 6418 for facilities that continue to qualify for 45Y or 48E credits.
An acceleration of the termination date of the section 45U nuclear power production credit, to the end of 2031 instead of the current 2032.
An earlier effective date for the ‘material assistance from foreign entities ‘ restriction with respect to section 45Y and 48E facilities, applicable for any facility the construction of which begins after 2025.
A new restriction to 45Y and 48E, effective for tax years beginning after enactment, denying any credit to facilities installed on residences (solar or wind) if the facility is subject to a lease agreement and the lessee would qualify for the section 25D credit (residential solar, wind credit) if the lessee owned such property.

As the House-passed bill has now been sent to the U.S. Senate, that body is expected to begin drafting its own version of the OBBB in early June. Senate Majority Leader John Thune has stated a goal of passing this bill in the Senate before the July 4th recess. Although it is still possible that the House and Senate would then have a formal conference process to reconcile their different bills, we think it is more likely that Republicans will attempt to “pre-conference” the bill, involving House Republican leadership in Senate negotiations, such that the Senate-passed bill could then be sent back to the House for final passage without amendment. Assuming this bill will include an increase in the federal debt ceiling, and given narrow Republican majorities and varying priorities within the Republican congressional caucus, we think it’s more likely that negotiations will extend well into July and perhaps beyond before a bill is sent to the President for his signature. The following table provides a summary of changes to key energy tax provisions.

Bill Section; IRC Section	Title	Effect	HL Observations
Automotive Incentives
§§ 112001; 25E(g)	Termination of previously-owned clean vehicle credit	Terminates for vehicles acquired after end of 2025. (Current law: expires end of 2032.)	Accelerates expiration of the credit by 7 years.
§§ 112002; 30D	Termination of clean vehicle credit.	Terminates for vehicles placed in service after end of 2026. (Or, for vehicles made by OEMs with more than 200,000 new vehicle tax credit (30D) credited vehicles since 2009, termination is end of 2025.) Current law: expires for vehicles placed in service after 2032.	Accelerates expiration of the credit by 7 years. Tesla, GM, Ford, and Toyota have all reportedly reached 200,000 credited vehicle sales already. Vehicles from all other OEMs would be eligible for one additional year, 2026, of EV credits, subject to 30D requirements.
§§ 112003; 45W(g)	Termination of qualified commercial clean vehicles credit	Terminates the credit for vehicles acquired after 2025 with grandfathering for vehicles acquired pursuant to a written binding contract entered into before May 12, 2025 and placed in service before 2033. Current law: expires for commercial vehicles placed in service after December 31, 2032.	Accelerates expiration of the credit by 7 years.
§§ 112004; 30C(i)	Termination of alternative fuel vehicle refueling property credit	Terminates for property placed in service after December 2025. (Current law: Expires at end of 2032).	Accelerates expiration of the credit by 7 years.
Residential Incentives
§§ 112005;25C(i)	Termination of energy efficient home improvement credit	Terminates for property placed in service after 2025. (Current law: expires at end of 2032).	Accelerates expiration of the credit by 7 years.
§§ 112006; 25D(h)	Termination of residential clean energy credit	Terminates for property placed in service after 2025. (Current law: expires at end of 2034).	Accelerates expiration of the credit by 9 years.
§§ 112007; 45L(h)	Termination of new energy efficient home credit	Terminates for homes acquired after December 31, 2025 (December 31, 2026 if construction commenced before May 12, 2025). (Current law: expires at end of 2032.)	Accelerates expiration of the credit by 7 years.
Sections 45Y, 48, and 48E Energy Production & Storage Incentives
§§ 112015; 48(a)	Phase-out of credit for certain energy property	Accelerates the phase-out for geothermal heating/cooling property by allowing 30% credit for property that begins construction by the end of 2029, and reducing this percentage to 26% in 2030, 22% for construction begun in 2031, and zero thereafter. New credit exclusions related to ‘foreign entities of concern’ are added. Repeals transferability for projects that haven’t begun construction within 2 years of enactment, except for certain geothermal projects.	The credit phase down for Section 48(a) is based on the more favorable “beginning of construction” standard, in contrast to the new “placed in service” standard being proposed for the technology neutral credits under Sections 45Y and 48E.
§§ 112008; 45Y(d)	Phase-out and restrictions on clean electricity production credit	Except for nuclear, the Section 45Y PTC is not applicable to any project (1) the construction of which begins after the date which is 60 days after the date of the enactment, or which is placed in service after December 31, 2028. For an advanced nuclear facility (as defined in section 45J(d)(2)) the phase out is instead for any such facility the construction of which begins after December 31, 2028. In the case of any nuclear facility the reactor design for which is approved by the Nuclear Regulatory Commission the phase out is for any such facility the expansion of which begins after December 31, 2028. A special restriction was added that denies the credit to a taxpayer that rents or leases a solar or wind facility to a third party during such taxable year, and where the lessee would qualify for a credit under section 25D with respect to such property if the lessee owned such property. New credit exclusions related to ‘foreign entities of concern’ are added.	In contrast to the House Ways and Means version the final version (1) adds a new beginning of construction deadline of 60 days from enactment, (2) eliminates the 2029-2031 phase out years (now a 100% termination for all projects not placed in service by 2028), adds a new replacement phase out for advanced nuclear facilities and expansions of NRC licensed existing nuclear facilities, which will receive the credit if beginning construction is before January 1, 2029. New ‘foreign entity of concern’ requirements would apply to future credits for existing and future facilities, and could place in jeopardy the value of this credit for many facilities.
§§ 112009; 48E(e)	Termination of clean electricity investment credit	Except for nuclear, the section 48E ITC is not applicable to any project (1) the construction of which begins after the date which is 60 days after the date of the enactment, or which is placed in service after December 31, 2028. For an advanced nuclear facility (as defined in section 45J(d)(2)) the phase out is instead for any such facility the construction of which begins after December 31, 2028. In the case of any nuclear facility the reactor design for which is approved by the Nuclear Regulatory Commission the phase out is for any such facility the expansion of which begins after December 31, 2028. A special restriction was added that denies the credit to a taxpayer that rents or leases a solar or wind facility to a third party during such taxable year, and where the lessee would qualify for a credit under section 25D with respect to such property if the lessee owned such property. New credit exclusions related to ‘foreign entities of concern’ are added.	In contrast to the House Ways and Means version the final version (1) adds a new beginning of construction deadline of 60 days from enactment, (2) eliminates the 2029-2031 phase out years (now a 100% termination for all projects not placed in service by 2028), adds a new replacement phase out for advanced nuclear facilities and expansions of NRC licensed existing nuclear facilities, which will receive the credit if beginning construction before January 1, 2029. These changes, if enacted in the final bill, will create a huge rush to begin construction on all non-nuclear section 48E and 45Y projects within 60 days of enactment and to get such projects placed in service before 2029, and to begin construction on all advanced nuclear before January 1, 2029. New foreign entity of concern requirements would apply to future credits for existing and future facilities, and could place in jeopardy the value of this credit for many facilities.
Clean Fuel; CO Sequestration; Nuclear; Hydrogen; Advanced Manufacturing
§§ 111112; 45Z	Extension and modification of clean fuel production credit	Extends existing credit termination to end of 2031. (Current law expiration is end of 2027.) Provides clarifications related to emissions rate determination. Adds restrictions related to use of foreign feedstocks. New credit exclusions related to ‘foreign entities of concern’ are added. Eliminates section 6418 transferability for fuel produced after December 31, 2027.	Extends the credit by 4 years. Allows for transferability for 2025 through 2027 credits. Requires that feedstocks must be sourced from North America. New ‘foreign entity of concern’ restrictions do not include the onerous ‘material assistance’ restriction in 45Y/48E/45X but could present challenges for some facilities.
§§ 112011; 45Q(f)	Restrictions on carbon oxide sequestration credit	Repeals section 6418 transferability for section 45Q credits where construction on facilities begins 2 years or more after the date of enactment of this bill. New credit exclusions related to ‘foreign entities of concern’ are added.	Existing projects and those that begin construction within 2 years of enactment will continue to be eligible for tax credit transfers for the full 12 year credit window. New ‘foreign entity of concern’ restrictions do not include the onerous ‘material assistance’ restriction in 45Y/48E/45X but could present challenges for some facilities.
§§ 112012; 45U(e)	Advanced termination of 45U zero-emission nuclear power production credit and new foreign entity of concern restrictions	Advances existing phase-out by one year. with a placed in service deadline of end of 2031. New credit exclusions related to ‘foreign entities of concern’ are added.	New ‘foreign entity of concern’ restrictions do not include the onerous ‘material assistance’ restriction in 45Y/48E/45X but could present challenges for some facilities.
§§ 112013; 45V(c)(3)	Termination of clean hydrogen production credit	Terminates the credit for projects the construction of which has not begun by the end of 2025. (Current credit: Begin construction deadline of December 31, 2032.)	Accelerates expiration of the credit by 7 years. No foreign entity of concern restriction added to 45V.
§§ 112014; 45X(b)(3)	Phase-out and restrictions on advanced manufacturing production credit	Accelerates existing phase out by eliminating the credit for wind energy components sold after 2027, and eliminating the credit for all other components sold after 2031 (with phase down after 2029 for components other than critical minerals.) Transferability is repealed for components sold after December 31, 2027. New credit exclusions related to ‘foreign entities of concern’ are added.	Eliminates wind energy credit after 2027 and phase-down for other components starting after 2029. Allows for transferability of credits for 2025 and 2026 credits. New foreign entity of concern requirements for future component production could place in jeopardy the value of this credit for many components.
§§ 112016; 7704(d)(1)(E)	Income from hydrogen storage, carbon capture added to qualifying income of certain publicly traded partnerships treated as corporations	Expands the activities that can be categorized as qualifying income to include the transportation or storage of liquified hydrogen or compressed hydrogen, and the generation of electricity or capture of carbon dioxide at a direct air capture or carbon capture facility, for taxable years beginning after December 31, 2025.	Expands the ability of publicly traded partnerships to invest in hydrogen and carbon capture.