The House of Representatives is set to vote on a proposed budget that phases out some IRA tax credits supporting clean energy development.
The House Ways and Means Committee’s proposed budget reconciliation bill includes early phase-outs of long-term clean energy tax credits created by the Inflation Reduction Act (IRA) of 2022. The proposal cuts about $6.5 billion in spending from the Biden-era legislation, said Reuters.
The proposed budget sunsets the 48E Investment Tax Credit and the 45Y Production Tax Credit for clean energy projects several years ahead of schedule, phasing to 80% of the full value in 2029, 60% in 2030, 40% in 2031, and 0% in 2032.
The budget also cuts tax credit transferability and ends the 25D residential solar credit for any projects not placed in service by 2025.
Furthermore, the bill would rescind any uncommitted funds from the $27 billion Greenhouse Gas Reduction Fund, administered by the EPA.
Industry reactions
“Tax policies have created a stable market environment that unleashed $115 billion in new clean energy generation, supported over 3.5 million jobs, and powered a record 170 million homes in 2024. Maintaining certainty around the existing tax policies will lower energy costs, quickly scale the build out of reliable electricity, and enable of the use of all technologies so we aren’t vulnerable to relying on any one form of generation or its underlying fuel source.” Ray Long, president and chief executive officer, American Council on Renewable Energy (ACORE).
“At a time when billions of dollars are being invested in states that overwhelmingly voted for President Trump, this proposed legislation will effectively dismantle the most successful industrial onshoring effort in U.S. history. This legislation will cause hundreds of American factories to close, eliminate tens of thousands of jobs, force electric bills to skyrocket for everyone, weaken the reliability of our electric grid, and eliminate our capacity to compete with China.” Abgail Ross Hopper, president and chief executive officer, Solar Energy Industries Association (SEIA).
“Eliminating the 25D tax credit would be a step backward for American families and small businesses. Ending the tax credit will cost jobs, destroy small businesses, and make it harder for homeowners already facing rising energy bills.” Charlie Hadlow, president and chief operations officer, EnergySage.
“This measure would deal a devastating blow to the companies and workers across the country that are hard at work building the economy of the future. By gutting clean energy and electric vehicles incentives, it would throw into doubt billions of dollars of investments from Georgia to Michigan to Utah.” Jackie Wong, senior vice president, Natural Resources Defense Council (NRDC).
“The Ways and Means bill is at odds with American energy dominance. If adopted, the proposed language will raise energy costs for American consumers, force American factories to shut their doors, and threaten American jobs. While our industry is ready to engage constructively and find a workable path forward, the Committee’s approach simply goes too far too fast. With energy demand surging, this is not the time for disruption. It is possible to phase out incentives for clean energy investment, production, and manufacturing without harming American consumers or businesses — and we stand ready to help.” Jason Grumet, chief executive officer, American Clean Power Association.
