Clean Energy Credits Overhaul
House GOP tax plan slashes key green incentives, extends one biofuel break

Republican lawmakers are moving to dismantle cornerstone clean energy tax incentives enacted under Democrats’ 2022 climate law, advancing a proposal that would terminate or phase out most credits years ahead of schedule — while selectively extending support for renewable fuel production.

Clean Fuel Credit Extension (Through 2031)

• Extended: The clean fuel production credit for low-emission fuels (e.g., soy, corn) would be extended four years, through 2031.
• Restrictions:
  • Applies only to feedstock from the U.S., Mexico, or Canada
  • Transferability eliminated, meaning credits can't be sold
• Cost: Adds $45.4 billion to the deficit through FY 2034 (JCT estimate)

EV and Vehicle Credit Eliminations (Starting 2026)

• New EV Credit: $7,500 credit eliminated in 2026, fully phased out by 2027
  • Only claimable in 2026 if a manufacturer sold <200,000 vehicles by 12/31/25
• Used EV Credit: $4,000 tax credit repealed in 2026
• Commercial EV Credits: Also eliminated starting in 2026
• Savings: Cuts over $190 billion from deficit through FY 2034

Other Tax Credits Repealed in 2026

• Alternative Fuel Refueling Property Credit
• Clean Hydrogen Production Credit
• Energy Efficient Home Improvement Credit
• Residential Clean Energy Credit (biggest cut: +$77.4B revenue)
• New Energy Efficient Home Credit
  • Exception: Homes under construction before May 12, 2025, still qualify if bought by 12/31/26

Accelerated Phase-Outs of Electricity and Manufacturing Credits

Applies to projects starting 60+ days after enactment or after 12/31/2028:

• Clean Electricity Production & Investment Credits:
  • Wind, solar, energy storage projects no longer eligible after 2028
  • Originally phased out in 2032 or when emissions drop 75%
• Zero-Emission Nuclear Production Credit: Ends in 2031 (1 year early)
• Advanced Manufacturing Credit: Ends in 2032 (1 year early)
  • Wind component eligibility ends in 2028
  • Still applies to solar, battery, and clean tech components
• Geothermal Credit: Phased out by 2032 instead of 2035

Foreign Entity Restrictions

• Prohibited Entities:
  • Companies tied to China, terrorist groups, or sanctioned regimes
  • Firms with ≥10% ownership by such entities
• Blocked Activities:
  • Advanced manufacturing, electricity credits, and carbon capture credits
  • Disqualified if receiving:
    • Material assistance
    • ≥5% of total energy payments to one specified entity
    • ≥15% across multiple foreign entities

Partnership Rule Update

• Income from clean energy (e.g., hydrogen transport, carbon capture electricity) qualifies for publicly traded partnerships to be treated as corporations for tax purposes.