OBBBA Didn’t Eliminate All Energy Credits: A Breakdown of What’s Left

The One Big Beautiful Bill Act (OBBBA), signed into law on July 4, 2025, ended nearly all federal tax incentives for clean energy projects. Over the next several months, most tax credits for investments in electric vehicles, solar, wind, and more will no longer be available.

But not all the tax credits are going away. Let’s break down what OBBBA did — and didn’t — do to energy tax credits and how taxpayers can still benefit from their green investments for the next several years.

How Did OBBBA Affect Clean Energy Credits?

The OBBBA terminated most — but not all — of the tax benefits associated with investing in clean energy projects. Expirations vary by credit, with dates ranging from the end of September to the end of 2027.

Here’s a list of the terminated or soon-to-be-terminated energy tax credits (as well as one deduction):

Credit	Section	Expiration
Previously owned clean vehicle credit	25E	September 30, 2025
Clean vehicle credit	30D	September 30, 2025
Commercial clean vehicle credit	45W	September 30, 2025
Sustainable aviation fuel credit	6426(k)	September 30, 2025
Energy-efficient home improvement credit	25C	December 31, 2025
Residential clean energy credit	25D	December 31, 2025
Alternative fuel vehicle refueling credit	30C	June 30, 2026
New home energy-efficient home credit	45L	June 30, 2026
Energy-efficient commercial buildings deduction	179D	June 30, 2026
Clean hydrogen production credit	45V	January 1, 2028

These are not the only clean energy tax benefits affected by the OBBBA. Several other clean energy credits are further restricted. For example:

• The nuclear power production credit under Section 45U is no longer available to foreign entities. After two years from the OBBBA’s enactment, so-called foreign-influenced taxpayers won’t have access to the credit, either.
• The technology-neutral investment tax credit under Section 48E and the technology-neutral electricity production tax credit under Section 45Y will no longer apply to solar and wind facilities placed in service after December 31, 2027. Like the nuclear power production credit, these technology-neutral credits will face restrictions for foreign-based and foreign-controlled taxpayers.

Are Any Clean Energy Credits Still Available?

Although the OBBBA eliminated the majority of federal clean energy tax incentives, some were simply restricted, and a select few were untouched. Notably, the investment tax credit (ITC) under Section 48 and the electricity production credit (PTC) under Section 45 remain intact, not subject to any new restrictions.

The ITC is designed to provide a tax break of up to 30% for investments in clean energy projects, such as solar, wind, and geothermal energy storage. The PTC provides a tax credit based on the amount of energy produced through clean energy resources. Note that you can’t double dip; for projects that qualify for the ITC and the PTC, taxpayers must choose only one.

The ITC and PTC are available now, but they won’t be for much longer. With exceptions for geothermal projects whose construction began before January 1, 2035, the ITC is available only for projects whose construction began before January 1, 2025, or June 16, 2025 (depending on the nature of the project). And the PTC applies only for projects whose construction began before December 31, 2024.

That means projects currently under construction or those that have been placed in service can continue to reap the benefits of the ITC and PTC. The ITC is claimed in the year of investment, and the PTC is claimed for each of the first 10 years of a qualifying project.

If you’re involved — or are weighing an investment — in a clean energy project, it’s essential to connect with an experienced tax advisor to ensure that you’re maximizing the available tax incentives.

Case Study: Investment Tax Credit

To better understand how clean energy tax credits work, let’s take a look at how Energy Co. took advantage of the ITC.

1. Invest in a qualifying project

The ITC requires a significant investment in a clean energy project, such as solar, wind, hydro, geothermal, fuel cell, and more.

In 2025, Energy Co. invested $1 million to create a geothermal energy facility that qualifies for the credit. The company worked quickly and was able to place the facility into service at the end of the year.

2. Calculate credit amount

The base ITC amount is 6% of the investment, but it rises to 30% for projects that meet specific wage and apprenticeship program requirements. There are additional increases available for energy projects that use domestically manufactured materials or are located in low-income communities.

Determining the actual ITC amount is fairly complex, which is why most companies rely on their trusted tax advisors. Energy Co.’s tax advisors determined that its $1 million investment qualifies for a 30% credit, resulting in a $300,000 reduction in its current-year tax bill. Unlike the $1 million tax deduction, which reduces taxable income, the $300,000 credit reduces the company’s tax liability — dollar for dollar.

The credit is not refundable (except for tax-exempt entities), so if Energy Co.’s tax bill is less than $300,000 for the year, any unused amount is carried forward to offset its tax bill in a future tax year.

3. Claim depreciation deduction

The company’s geothermal energy facility investment qualifies for 100% bonus depreciation. However, the Section 38 credit requires taxpayers to reduce the depreciable basis by 50% of the credit amount. Therefore, the company can claim a depreciation deduction of $850,000 in the year the asset is placed in service ($1 million – (50% × $300,000)).

4. File Form 3468, Investment Credit

The ITC is claimed on Form 3468, which requires extensive information about the energy project, including the project’s GPS coordinates and energy capacity. It’s necessary to fill out this information accurately and completely.

Form 3468 is filed along with your (or your business’s, depending on how the investment was made) annual tax return. In this case, Energy Co. will include Form 3468 with its annual Form 1120, U.S. Corporation Income Tax Return.

Smith + Howard: Finding Clean Energy Credit Opportunities

It may seem like all federal tax incentives related to clean energy credits were suddenly lost after OBBBA’s passage, but they’re not all lost. Although most green tax credits are on their way out, many highly valuable tax benefits remain available for the next several months or years.

Smith + Howard advisors who specialize in clean energy tax credits are adept at helping their clients identify tax-saving investments that make sense for their business. To learn more about optimizing investments in clean energy, contact an advisor.