Critical Updates on Energy Credits

03 Sep 2025 Critical Updates on Energy Credits

In a move that garnered widespread attention, the One Big Beautiful Bill Act (OBBBA) accelerated the expiration dates of several energy tax credits. Given the shortened windows for claiming these benefits, taxpayers are encouraged to pay careful attention to the updated rules and deadlines to ensure they do not miss out on potential savings.

Overview of expiring credits under OBBBA

The OBBBA accelerates the termination dates for an array of tax incentives, each tied to different activities and property types:

Section 25C – Energy Efficient Home Improvement Credit

The Energy Efficient Home Improvement Credit ceases to apply to qualifying property placed in service after December 31, 2025. This means that if you’re planning to install energy-efficient windows, doors, or similar qualifying upgrades, you must ensure that the installation is fully wrapped up by the close of 2025. Notably, because of the impending deadline, qualified manufacturers are no longer required to submit periodic written reports to the IRS, though they must still register with the IRS if they wish for their products to remain eligible for the credit.

Section 25D – Residential Clean Energy Credit

The Residential Clean Energy Credit also expires on December 31, 2025. However, the critical detail here is that it hinges on the completion date of the installation rather than the date of purchase. If the final installation of a solar panel system or another qualifying property occurs after December 31, 2025, or if you begin “original use” of a newly constructed or reconstructed residence after that deadline, you will not be able to claim this credit even if you paid for your equipment in full before the cutoff date.

Section 25E – Previously Owned Clean Vehicles Credit

The Previously Owned Clean Vehicles Credit is no longer available for vehicles acquired after September 30, 2025. Under these rules, “acquired” means you must have a binding written contract and place a payment, or even a nominal down payment or trade-in, toward the vehicle by the cutoff date. Simply signing a contract without any form of payment is not sufficient. However, you will only be able to claim the actual credit at the point when you “place the vehicle in service,” meaning when you take possession and start using the vehicle.

Section 30C – Alternative Fuel Vehicle Refueling Property Credit

For those building or installing alternative fuel vehicle refueling stations, the Alternative Fuel Vehicle Refueling Property Credit ends for property placed in service after June 30, 2026. This extended deadline gives businesses and homeowners nearly nine additional months beyond the vehicle credit cutoffs to install infrastructure such as electric vehicle charging or hydrogen fueling stations.

Section 30D – New Clean Vehicle Credit

Similar to Section 25E, the New Clean Vehicle credit expires for vehicles acquired after September 30, 2025. Again, the operative word is “acquired,” which requires both a binding contract and payment. As with the previously owned clean vehicle credit, taxpayers claiming this credit must “place the vehicle in service” to finalize eligibility.

Section 45L – New Energy Efficient Home Credit

Real estate developers and homebuyers should note that the New Energy Efficient Home Credit will not be available for any qualified new energy-efficient home acquired after June 30, 2026. This provision underscores the importance of timing: developers should aim to complete and transfer properties well before this date to ensure buyers can benefit from the credit.

Section 45W – Qualified Commercial Clean Vehicle Credit

For commercial entities planning to overhaul their fleets with clean vehicles, the OBBBA also sets an expiration date of September 30, 2025, for vehicles that fail to meet the “acquired” threshold by that time. The same definition of “acquired” applies here, requiring a signed, binding contract and an initial payment. Failure to meet this date may result in losing out on valuable tax savings intended for green fleet strategies.

Section 179D – Energy Efficient Commercial Buildings Deduction

Finally, any commercial building project aiming to claim the deduction must begin construction by June 30, 2026. Projects initiated after that date will not be eligible for the Energy Efficient Commercial Buildings Deduction. Given the length of time commercial construction can take, developers and property owners considering significant retrofits or new builds that qualify for 179D need to ensure they get started promptly.

Practical considerations

Because some deadlines are right around the corner, now is the time to organize your plans, whether it’s purchasing a new electric vehicle or retrofitting your property for greater energy efficiency. For vehicle purchases, consider finalizing your binding contracts and down payments before September 30, 2025, to ensure you qualify for the expiring credits. For home or commercial building projects, ensure that installation or construction work is completed by the relevant cutoff date.

Keep thorough records, including copies of any binding contracts, documentation of down payments, and receipts for installation milestones. In the case of vehicle purchases, be sure you receive the “time of sale” report from the dealer when you take possession.

Another piece of the puzzle is the Energy Credits Online portal. If you are planning to use the transfer election for clean vehicle credits, register before user registration closes on September 30, 2025. While the portal will remain open past that date, it will have limited functionality for those already registered.

Special issues

One of the questions frequently asked is about transferring the clean vehicle credit. Although you can “acquire” a vehicle before the deadline, that acquisition in and of itself does not mean you can immediately transfer the credit. The credit transfer election occurs at the time of sale, which hinges on when you officially take possession of the vehicle.

In addition, while periodic reporting for certain credits (for example, the Section 25C energy-efficient home improvement credit) is no longer required, it remains essential that manufacturers register with the IRS to keep their products eligible for the credit. Taxpayers should consult IRS FAQs and updates frequently, as new guidance or modifications to existing guidance may take place.

Take action before time runs out

Speed and diligence are key as the OBBBA reshapes the timeline for claiming popular energy incentives. Whether you are planning home electrical upgrades, mulling over electric-vehicle options, or designing a new commercial facility, early action can help you preserve access to these valuable credits. Understanding what the law means by “acquired,” “placed in service,” and other key terms will be vital as you develop your strategy. While there are many procedural details to keep in mind, the potential rewards in tax savings could be well worth the effort.

If you have questions about which credits apply to your situation or need help developing a strategy to maximize your tax savings before these deadlines, contact our office today. Our team can provide personalized advice to help you take advantage of these expiring incentives while ensuring full compliance with all requirements.

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