The One Big Beautiful Bill Upends Inflation Reduction Act Energy Initiatives

Both the House and Senate versions of the One Big Beautiful Bill Act (OBBBA), passed by the House on May 22, 2025, and the Senate on July 1, 2025, phase out tax credits for wind, solar, and electric vehicle (EV) projects, rolling back incentives established under the 2022 Inflation Reduction Act (IRA). This move has been criticized for potentially undermining the U.S. renewable energy industry and increasing electricity costs for consumers. The House bill terminates the Clean Electricity Production Credit (Section 45Y) and Investment Tax Credit (Section 48E) for projects not beginning construction within 60 days of enactment or not operational by December 31, 2028, and eliminates EV credits after 2025. The Senate bill terminates the Clean Electricity Production Credit (Section 45Y) and Investment Tax Credit (Section 48E) for wind and solar projects that begin construction 12 months after enactment (approximately July 1, 2026) and are placed in service after December 31, 2027, while maintaining credits for nuclear, hydropower, geothermal, and energy storage facilities until 2033, with a later phase-down as under current law. The Senate also terminates EV credits for vehicles acquired after September 30, 2025. Critics warn that the rollback of IRA incentives could significantly reduce clean energy capacity, lead to substantial job losses, and increase household electricity costs.

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