OBBB Act of 2025

One Big Beautiful Bill: Challenges for Energy Efficiency and Renewables, Advantages for Other Tax Strategies

The One Big Beautiful Bill Act of 2025 (OBBBA) marks a major overhaul of federal tax policy, terminating or reshaping several high-impact incentives for real estate, clean energy, and business investment. The legislation ends the §45L Energy Efficient Home Credit for homes sold or leased after June 30, 2026, and phases out the §45X Advanced Manufacturing Credit for wind components and certain critical minerals. It also accelerates the phaseout of the §48E Clean Electricity Investment Tax Credit, setting hard cutoffs for project eligibility. While many incentives are curtailed, OBBBA makes permanent key business provisions, including 100% bonus depreciation for qualifying property placed in service after January 19, 2025, and the immediate deduction of research expenses under §41. Breakdown of key regulations:

§168k 100% Bonus Depreciation

100% bonus depreciation was made permanent for qualified property acquired and placed in service after January 19, 2025. Property will be treated as acquired no later than the date on which a written binding contract is entered into to acquire, renovate, or construct the property.
» OBBBA Cost Segregation Details
» Cost Segregation Overview

§179D Energy-Efficient Commercial Buildings Deduction ending June 2026

§179D deduction will end in June 30, 2026. To qualify for the deduction, construction must begin before June 30, 2026. The current deduction amount for buildings placed in service in 2025 is set at $5.81 per square foot when the project meets or is exempt from prevailing wage and apprenticeship (PWA) requirements. §179D Deduction amounts will continue to increase annually based on inflation adjustments through June 30, 2026. The deduction may still be immediately claimed in the year the property is placed in service.
» OBBBA §179D Termination Details
» §179D Details

§30C Alternative Fuel Vehicle Refueling Property Credit Ending June 2026

§30C tax credit for EV chargers and alternative fuel refueling equipment now requires property to be placed in service by June 30, 2026, to qualify. This moves the deadline up from 2032. The credit remains at 30 percent (or 5 percent for depreciable business property) and is subject to prevailing wage, apprenticeship, and location requirements. After June 30, 2026, no credit will be available for new installations.
» §30C Details

§41 Research Tax Credit

The research tax credit provision was enhanced by repealing the amortization requirement, allowing taxpayers to once again fully deduct qualified research expenses in the year they are incurred, rather than amortizing the costs over five years.
» OBBA Details
» Research Tax Credit Details

§45L Home Energy Credit ending June 2026

§45L Energy Efficient Home Credit will end in June 2026. To qualify for the §45L credit, homes must be certified and sold, or leased on or before June 30, 2026. The current credit amount for single family homes is $2,500 for units certified as ENERGY STAR or $5,000 for units certified as Zero Energy Ready Home. Tax credits are also available for multifamily and manufactured homes.
» OBBA §45L Termination Details
» §45L Overview

§45X Advanced Manufacturing Production Credit

§45X Advanced Manufacturing Production Credit was revised to phase out credits for certain components, including wind-energy components after 2027 and most critical minerals by 2034, while adding a reduced-rate credit for metallurgical coal through 2029. Beginning in 2026 or 2027, stricter domestic content and integration rules apply, requiring that a significant portion of materials be sourced from U.S.-made components. The definition of battery modules was expanded to include all essential equipment for functionality. Credits are also disallowed for entities with foreign ownership or influence or those receiving material assistance from restricted foreign entities.
» §45X OBBA Revision Details
» §45X Overview

§48E Clean Electricity Investment Tax Credit Phase Out

The §48E Clean Electricity Investment Tax Credit for solar and wind technologies will end in 2027. To qualify, projects must begin construction by July 4, 2026, or be placed in service by December 31, 2027. The current credit could be as much as 70% of qualifying energy properties. For technologies other than solar and wind, such as energy storage, the credit will begin phasing out in 2034 and will be fully eliminated by 2036.
» OBBA Phase Out Details
» §48E Clean Electricity Investment Credit Overview

§179 Expensing Expanded

Section 179 Expensing Expanded increases the maximum deduction limit to $2.5 million, with the phaseout threshold raised to $4 million. Starting after 2025, these limits will be adjusted annually for inflation

§1440Z Opportunity Zones

Qualified Opportunity Zones program made permanent with new designations every 10 years, introduces stricter eligibility criteria for qualifying tracts, and creates Qualified Rural Opportunity Funds (QROFs) to encourage investment in rural areas with enhanced tax benefits. It revises gain deferral and exclusion rules for investments made after 2026, shortens the deferral period to five years, and requires increased reporting and compliance from Opportunity Funds and businesses.