The new tax law just recently passed has expiration dates for several energy credits that may require action to secure the credits SOONER THAN LATER before they expire.
Electric vehicle credits (Expiring September 30, 2025)
The “One Big Beautiful Bill” (OBBB), passed in 2025, significantly impacts the clean vehicle credit established under the Inflation Reduction Act of 2022. The key effect is the accelerated phase-out of the federal tax credit for qualified new/used personal and new commercial clean vehicles, which include battery electric vehicles, plug-in hybrid EVs, and fuel cell electric vehicles. The existing credits to be terminated are as follows:
- Commercial Clean Vehicles Credit. Up to $7,500 for light electric vehicles and up to $40,000 for heavy-duty commercial vehicles.
- New Clean Vehicle Credit. Up to $7,500 for qualifying new electric vehicles for qualified individuals
(Income limits for the credit based upon Adjusted Gross Income— ($300,000 for joint returns; $225,000 for Head of Household returns; $150,000 for single and married separate returns)
- Previously Owned Clean Vehicle Credit. Up to $4,000, or 30 percent of the purchase price, for eligible used electric vehicles.
The OBBB terminates these credits for Assets Placed in Service after September 30, 2025.
Business owners and individuals (if qualified) intending to take advantage of this credit prior to the cutoff date should expect heavy demand with dealers and require action sooner than later.
Residential solar tax credit (Expiring December 31, 2025)
The “One Big Beautiful Bill” (OBBB), passed in 2025, significantly impacts the residential solar tax credit, also known as the Residential Clean Energy Credit, established under the Inflation Reduction Act (IRA) of 2022.
The OBBB terminates the residential solar tax credit for Assets Placed in Service after December 31, 2025. Prior to this, the credit allowed homeowners to claim a tax credit of 22% to 30% of the cost of installing qualified solar energy systems (including solar panels, solar water heating systems, and geothermal systems) for primary and secondary residences through 2034.
The looming deadline may drive a surge in solar installations, as homeowners and installers rush to claim the 30% credit while it remains available. The deadline is expected to potentially strain supply chains and installation capacity in the short term, so action SOONER THAN LATER is required to make sure that the project is completed by the end of 2025.
Energy efficient home improvement credits (Expiring December 31, 2025)
The “One Big Beautiful Bill” (OBBB), passed in 2025, impacts the Energy Efficient Home Improvement Credit, which provides tax credits for energy-efficient home improvements, including items like qualified heat pumps, qualified efficient air conditioners, insulation, windows, and exterior doors. The improvements must meet specified energy-efficiency standards and be installed by year end.
The OBBB terminates the Energy Efficient Home Improvement Credit for property Placed in Service after December 31, 2025. Prior to this, the credit allowed homeowners to claim up to 30% of the cost of qualifying energy-efficient improvements, with an annual cap of $1,200 (and $2,000 for certain heat pumps and biomass stoves), as established under the Inflation Reduction Act (IRA) of 2022. There is also a credit of $150 available for a certified home energy audit. These are non-refundable credits that offset tax, but do not benefit if there is no tax calculated.
Given the upcoming deadlines, we expect that there will be a significant rush to complete projects in time. If you have any questions, please feel free to contact our office.