On May 14, 2025, the House Ways and Means Committee approved its markup of H.Con.Res.14, 119th Cong., 2025 (House Bill), which includes proposed changes that would modify substantially the clean energy tax incentives expanded by the IRA. The House Rules Committee released a manager’s amendment to the House Bill on May 21, 2025 (Manager’s Amendment). On May 22, 2025, the House passed the combined legislation.
The House Bill, as amended, is the first major step in the budget reconciliation process and is expected to undergo significant changes in the Senate.
The House Bill includes:
- Early sunsets for the credits for clean electricity production tax credit (Section 45Y), clean electricity investment tax credit (Section 48E), clean nuclear facilities (Section 45U) and clean hydrogen production (Section 45V);
- Transferability is preserved for the Section 48E ITC and the Section 45Y PTC, although these credits now terminate for projects that begin construction more than 60 days after the date of enactment or are placed in service after Dec. 31, 2028; and
- Substantial new restrictions based on foreign ownership or influence that could disqualify taxpayers from credit eligibility, and which may introduce uncertainty and compliance difficulties.
Taxpayers should evaluate how the proposed changes could affect planned projects, financing strategies, supply chain arrangements, and the potential for mitigating the proposals’ effects.
This GT Alert summarizes the key energy-related provisions in the final House Bill.
Proposed Terminations
The House Bill proposes to sunset the following credits on Dec. 31, 2025:
- Section 25C – Energy Efficient Home Improvement Credit
- Section 25D – Residential Clean Energy Credit
- Section 25E – Previously-Owned Clean Vehicle Credit
- Section 30C – Alternative Fuel Vehicle Refueling Property Credit
- Section 30D – Clean Vehicle Credit
- Section 45L – Energy Efficient Home Credit
- Section 45W – Qualified Commercial Clean Vehicles Credit
The Manager’s Amendment does not modify these proposed termination dates.
Modified Phaseouts and Other Proposals
In addition to the 2025 sunsets, the House Bill proposes accelerated phaseouts and other changes to many of the IRA’s cornerstone credits.
| Phaseouts / Other Proposals | |||
| Credit | House Bill | Manager’s Amendment | |
| 45U Zero-Emission Nuclear Power Production | Phasedown beginning after Dec. 31, 2028; fully terminated after Dec. 31, 2031 | Eliminates phaseout; credit ends after Dec. 31, 2031 | |
| 45V Clean Hydrogen Production | Terminated for facilities that begin construction after Dec. 31, 2025 | No change | |
| 45X Advanced Manufacturing Production |
Wind components ineligible for credits after Dec. 31. 2027 Other eligible components phased down beginning after Dec. 31, 2028; fully terminated after Dec. 31, 2031 |
No change | |
| 45Y Clean Electricity Production | Phasedown beginning for projects placed in service after Dec. 31, 2028; fully terminated for projects placed in service after Dec. 31, 2031 |
Eliminates phaseout; credit ends for projects beginning construction more than 60 days post-enactment or placed in service after Dec. 31, 2028; exceptions for (i) advanced nuclear facilities beginning construction on or before Dec. 31, 2028, and (ii) expansion of approved nuclear facilities provided the expansion begins on or before Dec. 31, 2028 No credit available for leased wind or solar systems that otherwise qualify for Section 25D credits |
|
| 45Z Clean Fuel Production | Extended through Dec. 31, 2031; requires that feedstock be grown or produced in the U.S., Canada, or Mexico for fuel sold after Dec. 31, 2025; excludes land use changes from lifecycle greenhouse gas emissions | No change | |
| 48 Energy Investment Credit | New phaseout for geothermal heat pump property; fully terminated for geothermal heat pump property that begins construction after Dec. 31, 2031 | No change | |
| 48E Clean Electricity Investment Credit |
Phasedown beginning for projects placed in service after Dec. 31. 2028; fully terminated for projects placed in service after Dec. 31, 2031 Low-income bonus credit sunsets after Dec. 31, 2031 |
Eliminates phaseout; credit ends for qualified facility or energy storage technology beginning construction more than 60 days post-enactment or placed in service after Dec. 31, 2028; exceptions for advanced nuclear facilities beginning construction on or before Dec. 31, 2028 No credit available for leased wind or solar systems that otherwise qualify for Section 25D credits |
|
The House Bill extends 100% bonus depreciation under Section 168(k) for property acquired and placed in service after Jan. 19, 2025, and before Jan. 1, 2030 (or 2031 for certain long-lead property). The Manager’s Amendment does not make any changes to this extension.
Neither the House Bill nor the Manager’s Amendment would accelerate the phaseout or termination of Section 45Q carbon capture credits.
Repeal of Credit Transferability
The House Bill would significantly curtail the ability to transfer credits under Section 6418.
| Transferability Cutoff | |||
| Credit | House Bill | Manager’s Amendment | |
| 45Q Carbon Oxide Sequestration | Equipment beginning construction more than 2 years after enactment | No change | |
| 45U Zero-Emission Nuclear Power Production | Electricity produced and sold after Dec. 31, 2027 | Preserves transferability through the full credit period, which extends to Dec. 31, 2031 | |
| 45X Advanced Manufacturing Production | Components sold after Dec. 31, 2027 | No change | |
| 45Y Clean Electricity Production | Facilities beginning construction more than 2 years after enactment | Preserves transferability, subject to the sunset of the credits for projects that begin construction more than 60 days after enactment, or that are placed in service after Dec. 31, 2028 | |
| 45Z Clean Fuel Production | Fuels produced after Dec. 31, 2027 | No change | |
|
48 Energy Investment Credit: Geothermal Heat Pump Property |
Property beginning construction more than 2 years after enactment | No change | |
| 48E Clean Electricity Investment Credit | Facilities beginning construction more than 2 years after enactment | Preserves transferability, subject to the sunset of the credits for projects that begin construction more than 60 days after enactment, or that are placed in service after Dec. 31, 2028 | |
Restrictions on Prohibited Foreign Entities
The House Bill would disqualify taxpayers from claiming certain energy credits where there is foreign ownership, control, or involvement from “prohibited foreign entities.”
Key definitions:
- Specified Foreign Entity: Includes foreign terrorist organizations, Chinese military companies, entities identified under U.S. national security laws, and foreign-controlled entities.
- Foreign-Influenced Entity: Includes entities with specified foreign entity ownership ≥10% (or ≥25% in the aggregate), significant debt holdings, board appointment rights, or substantial payments made to foreign entities.
- Material Assistance: Includes any component, subcomponent, or critical mineral in an energy property that is extracted, processed, recycled, manufactured, or assembled by a prohibited foreign entity, or any design based on such entity’s intellectual property. Limited exceptions apply for non-unique parts or materials not predominantly produced by prohibited foreign entities.
The House Bill uses the above terms to impose restrictions on eligibility for various credits. The Manager’s Amendment does not alter the House Bill’s definition of prohibited foreign entities, specified foreign entities, foreign-influenced entities, or material assistance.
Taxpayers that are controlled by, or make certain payments to, a specified foreign entity may be disqualified from claiming credits in the first taxable year after enactment. Foreign-influenced entities would become ineligible two years after the date of enactment. In some cases, making a payment to a prohibited foreign entity could trigger full recapture of previously claimed credits.
The Manager’s Amendment does, however, modify the effective date of restrictions under Sections 48E and 45Y related to material assistance from prohibited foreign entities. Under the House Bill, qualified facilities and energy storage property that received material assistance from a prohibited foreign entity were disqualified if construction began more than one year after the date of enactment. The Manager’s Amendment replaces this floating one-year deadline with a fixed date: Dec. 31, 2025.