The One Big Beautiful Bill Act (OBBBA) includes provisions such as significant tax cuts, the elimination of taxes on tips and overtime pay, and reductions in spending on certain federal programs. Supporters of the legislation state that its aim is to provide financial relief and strengthen the economic position of American citizens.
However, the legislation also proposes the elimination of several clean energy and energy efficiency tax incentives that were enacted under the Inflation Reduction Act. These programs were originally designed to lower energy costs for consumers and promote climate-conscious construction and purchasing decisions.
The following programs are scheduled for termination under the OBBBA:
- Previously-Owned Clean Vehicle Tax Credit: Provided up to $4,000 for the purchase of qualifying used clean vehicles (ends 09/30/2025).
- Clean Vehicle Tax Credit: Offered up to $7,500 for the purchase of qualifying new clean vehicles (ends 09/30/2025).
- Energy Efficient Home Improvement Tax Credit: Allowed up to $3,200 in credits for qualifying energy-efficient improvements to a primary residence (ends 12/31/2025).
- Energy Efficient Commercial Buildings Tax Deduction: Allowed deductions for certain energy-efficient commercial properties placed in service after 2005 (ends 06/30/2026).
- New Energy Efficient Home Tax Credit: Provided a tax credit for contractors building qualified energy-efficient homes used as residences (ends 06/30/2025).
These programs were intended to incentivize the adoption of energy-efficient technologies and construction practices. With the proposed changes, taxpayers and contractors may have a limited window to take advantage of these incentives before they expire.
For those interested in utilizing the existing tax credits before they are phased out, contact E3 INNOVATE.
