June 17, 2025
On June 16, 2025, the Senate Finance Committee (SFC) released its Reconciliation Legislative Text, proposing major updates to existing clean energy tax policy and revising key elements of the House-passed “One Big Beautiful Bill Act” (OBBBA). This blog post summarizes each of the SFC’s proposed changes section by section, with the heaviest focus on proposed changes to ITCs & PTCs for Wind and Solar.
Current Law:
Taxpayers can claim tax credit for electricity produced and sold by wind and solar facilities with net-zero or negative greenhouse gas emissions. The credit is 0.3¢ per kWh, or 1.5¢ per kWh if prevailing wage and apprenticeship standards are met. It applies for 10 years after the facility is placed in service, is transferable, and begins phasing out in 2032 or when power sector emissions fall to 25% of 2022 levels, whichever is later.
SFC Proposal:
The phaseout of the clean electricity PTC would be accelerated based on when the construction of the facility begins:
Taxpayers cannot claim the PTC for electricity generated by wind or solar systems that are leased to residential customers.
Immediately following enactment, a Taxpayer cannot claim the PTC if the Taxpayer is a Prohibited Foreign Entity (PFE), as described in the William M. (Mac) Thornberry National Defense Authorization Act for FY 2021. Additionally, a Taxpayer cannot claim credits for facilities that begin construction after December 31, 2025 if they include “material assistance” from a PFE.
The core transferability mechanism for PTCs is maintained under the SFC proposal.
Current Law:
Taxpayers can claim tax credits for investments in electricity facilities or energy storage technologies with net-zero or negative greenhouse gas emissions. The base credit is 6% of the investment, or 30% if prevailing wage and apprenticeship requirements are met. ITCs can be transferred to unrelated Taxpayers. The credit begins phasing out in 2032 or when electricity sector emissions fall to 25% of 2022 levels, whichever comes later.
SFC Proposal:
For investments in wind and solar technology, the phaseout of the clean electricity ITC would be accelerated based on when the construction of the facility begins:
For investments in hydropower, nuclear, and geothermal, the phaseout of the clean electricity ITC will also be based on when the construction of the facility begins:
Immediately following enactment, a Taxpayer cannot claim the ITC if the Taxpayer is a Prohibited Foreign Entity (PFE), as described in the William M. (Mac) Thornberry National Defense Authorization Act for FY 2021. Additionally, a Taxpayer cannot claim credits for facilities that begin construction after December 31, 2025 if they include “material assistance” from a PFE.
The core transferability mechanism for ITCs is maintained under the SFC proposal.
Current Law:
Taxpayers can claim a tax credit for electricity produced by existing nuclear power plants. The credit is 0.3¢ per kWh, or 1.5¢ per kWh if prevailing wage and apprenticeship standards are met. It phases out as power prices rise and expires December 31, 2032.
SFC Proposal:
Starting in 2028, Taxpayers cannot claim the credit if their nuclear fuel is sourced from a covered nation (as defined in 10 U.S.C. § 4872(f)) or from entities linked to those countries. Companies must certify compliance, but existing fuel contracts signed before January 1, 2023, are exempt. Taxpayers owned or controlled by foreign governments become ineligible for credit immediately upon enactment. Entities with significant foreign influence (as defined in 26 U.S.C. § 7701(a)(51) and (a)(51)(D)) lose eligibility two years after the date of enactment.
Current Law:
Taxpayers can claim tax credits for each kilogram of clean hydrogen produced for sale or use. The credit applies for 10 years from when the facility is placed in service and ranges from 20% to 100% of $0.60 per kg, based on the emissions intensity of the production process. Credits can be transferred to unrelated Taxpayers and are available for facilities that begin construction before January 1, 2033.
SFC Proposal:
Terminate hydrogen production tax credits for all facilities which begin construction after December 31, 2025.
Current Law:
Previously owned clean vehicle tax credits will expire for vehicles acquired after December 31, 2032.
SFC Proposal:
Terminate the tax credit for previously owned clean vehicles purchased more than 90 days after the date of enactment.
Current Law:
New clean vehicle tax credits will expire for vehicles acquired after December 31, 2032.
SFC Proposal:
Terminate the tax credit for new clean vehicles purchased more than 180 days after the date of enactment.
Current Law:
Qualified commercial clean vehicle tax credits will expire for vehicles acquired after December 31, 2032.
SFC Proposal:
Terminate the tax credit for new qualified commercial clean vehicles purchased more than 180 days after the date of enactment.
Current Law:
Alternative fuel vehicle refueling property tax credits will expire for property (i.e. EV charging stations, LNG refueling stations, etc.) placed in service after December 31, 2032.
SFC Proposal:
Terminate the tax credit for new alternative fuel vehicle refueling property placed in service more than 12 months after the date of enactment.
Current Law:
Energy efficient home improvement tax credits will expire for property placed in service after December 31, 2032.
SFC Proposal:
Terminate the energy efficient home improvement property tax credit for all property placed in service 180 days after the date of enactment.
Current Law:
Residential clean energy tax credits will begin phasing out for property placed in service by December 31, 2024. The value of the tax credit is 30% of expenditures through December 31, 2032, 26% of expenditures through taxable year 2033, and 22% of expenditures in taxable year 2034.
SFC Proposal:
Terminate the residential clean energy tax credit for all relevant expenditures made 180 days after the date of enactment.
Current Law:
Taxpayers can deduct energy-efficient upgrades to commercial buildings (such as lighting, HVAC, and insulation) based on square footage. Deductions range from $0.50–$1.00 per square foot, or $2.50–$5.00 if prevailing wage and apprenticeship standards are met.
SFC Proposal:
Terminate the deduction for property that is constructed 12 months or more after the date of enactment.
Current Law:
New energy efficient home tax credits will expire for homes acquired after December 31, 2032.
SFC Proposal:
Terminate the new energy efficient home tax credits for all homes acquired 12 months after the date of enactment.
Current Law:
Normally, businesses recover property costs over time through depreciation. However, certain energy-related assets, like zero-emission power generation facilities, some biogas systems, microgrid controllers, and electrochromic glass & energy storage, qualify for a faster five-year depreciation schedule.
SFC Proposal:
Terminate the special recovery period for property placed in service immediately after the date of enactment.
Current Law: Taxpayers can claim tax credits for producing and selling eligible clean energy components, such inverters, solar, wind, battery parts, and critical minerals, to unrelated buyers. Credit amounts vary by component and can be transferred. The credit phases down from 2030 to 2032 and ends after 2032, except for critical minerals, which remain permanently eligible.
SFC Proposal:
Introduces a phase out for producing critical minerals:
Tax credits for wind components produced and sold after December 31, 2027 phase out entirely
Eliminates tax credits for components manufactured in 2026 or later with material assistance from a prohibited foreign entity, as defined in modified Section 7701. Eliminates tax credits if the Taxpayer is a specified foreign entity or foreign-influenced entity, starting immediately after enactment.
Current Law:
Taxpayers can apply for a 30% investment tax credit for qualifying advanced energy projects. Of the $10 billion in available credits, $4 billion was set aside for projects in designated energy communities. After receiving preliminary approval, Taxpayers had two years to meet certification requirements and another two years to place the project in service. Unused or reclaimed credits were returned to the program for future allocation.
SFC Proposal:
Change the rules for the advanced energy project tax credit by prohibiting the reallocation of credits that are returned when projects fail to meet requirements — meaning unused credits will no longer be recycled into the program immediately following the enactment of the bill.
Current Law:
Taxpayers can claim tax credits for producing transportation fuel, including sustainable aviation fuel, if it meets specific greenhouse gas emission standards. The credit is based on a per-gallon rate ($0.20 for non-aviation fuel and $0.35 for sustainable aviation fuel) multiplied by an emissions factor. These amounts increase fivefold if prevailing wage and apprenticeship requirements are met. The credit applies to fuel sold before January 1, 2028.
SFC Proposal:
Extend the clean fuel production credit through December 31, 2031. Starting in 2026, reduce the credit by 20% for fuel made using foreign-grown or -produced feedstocks. End the credit immediately for any Taxpayer classified as a specified foreign entity under Section 7701(a)(51). Eliminate the credit two years after enactment for any Taxpayer considered a specified foreign-influenced entity under Section 7701(a)(51)(D).
Current Law:
Taxpayers can claim tax credits for each metric ton of carbon oxide they capture and either store or use in approved ways. For facilities placed in service between 2016 and 2027, the credit is $17 per ton for secure geological storage and $12 per ton for qualified uses like enhanced oil recovery or chemical conversion. Credits exist for 12 years after the equipment is placed in service. Direct air capture (DAC) facilities placed in service after 2022 receive higher credits ($36 per ton for storage and $26 per ton for approved uses). These amounts increase fivefold if prevailing wage and apprenticeship rules are met. The credits are inflation-adjusted starting in 2027, can be transferred to unrelated taxpayers, and apply to facilities that begin construction before January 1, 2033.
SFC Proposal:
For equipment placed in service after December 31, 2022, the tax credit value is now the same whether carbon oxide is directly stored or first used and then stored, removing the prior difference in credit amounts between disposal and utilization methods. End the credit immediately for any Taxpayer classified as a specified foreign entity under Section 7701(a)(51). Eliminate the credit two years after enactment for any Taxpayer considered a specified foreign-influenced entity under Section 7701(a)(51)(D).
Current Law:
Certain C corporations (“applicable corporations”) are subject to a corporate alternative minimum tax (AMT) based on their adjusted financial statement income (AFSI). This AMT is calculated as the difference between the tentative minimum tax and the corporation’s regular tax liability (including the BEAT, if applicable). The tentative minimum tax equals 15% of the corporation’s AFSI (after accounting for certain net operating losses), minus any applicable foreign tax credits. AFSI is derived from the corporation’s financial statements, with adjustments outlined in Section 56A.
SFC Proposal:
Starting in 2026, companies must adjust their AFSI to:
Current Law:
Certain businesses are allowed to be taxed as partnerships, even if their interests are publicly traded, under the publicly traded partnership (PTP) rules. To qualify, at least 90% of their gross income must come from approved sources, such as activities related to minerals, natural resources, industrial carbon dioxide, or specified fuels. These activities include exploration, production, processing, refining, transportation, or marketing.
SFC Proposal:
Expand the types of income that count as qualifying income for publicly traded partnerships (PTPs), allowing them to maintain favorable tax treatment starting in 2026. The newly eligible activities include:
Current Law:
Federal excise taxes are typically applied when fuel exits the bulk transfer system. Even if that fuel is ultimately used for tax-exempt purposes, like farming or off-road equipment (which use dyed fuels), the tax still applies at the time of transfer. There is currently no way to claim a refund if the fuel is later used in a non-taxable way, creating a compliance and fairness issue for distributors and end users.
SFC Proposal:
Allow refunds of federal fuel excise taxes for dyed fuel, effective for dyed fuel removed on or after 180 days after the enactment date.
The bill now moves to the Senate floor, where it will undergo debate and possible amendments before a full vote. Because it’s moving through reconciliation, only a simple majority is needed for passage. If the Senate approves the bill, the House must decide whether to accept the Senate version as-is or request a conference committee to reconcile differences between the two versions.. Once both chambers pass identical text, the bill will be sent to the President for signature. Senate leadership is aiming for a vote before the July 4 recess, meaning final passage could occur by mid-July if the House agrees quickly, or later in the summer if negotiations are needed.
