The One Big Beautiful Bill Act, signed July 4, 2025, terminated the Residential Clean Energy Credit under Section 25D for expenditures made after December 31, 2025. That credit covered 30 percent of the cost of rooftop solar, battery storage of at least three kilowatt-hours, solar water heaters, fuel cells, small wind turbines and geothermal heat pumps.
It had been scheduled to hold at 30 percent through 2032, then step down to 26 percent in 2033 and 22 percent in 2034 before expiring. It ended seven years early. Systems placed in service from January 1, 2026 receive no federal residential credit at all. The Energy Efficient Home Improvement Credit under Section 25C, covering insulation, windows, doors and HVAC, ended on the same date.
For utility-scale projects the picture is more complicated. The clean electricity production and investment credits under Sections 45Y and 48E were not repealed outright, but their timelines were compressed sharply. Wind and solar projects generally must begin construction before July 4, 2026 and be placed in service by the end of 2027 to qualify.
Other credits fared differently. The Section 45Q carbon capture credit was retained with its value increasing annually. The Section 45U nuclear production credit was retained. The Section 45V hydrogen credit was extended for projects beginning construction before the end of 2027, then repealed. Geothermal, hydropower, nuclear and storage retain access to the investment and production credits, subject to the new restrictions.
Starting in 2026, no credit is allowed for a project owned by a specified foreign entity, defined by reference to a list of authorities identifying security threats, or by foreign control. A second set of restrictions applies where such entities provide material assistance in the design, construction or operation of a project. Domestic sourcing thresholds for bonus credits were also raised.
Supporters of the restrictions argue American taxpayers were subsidizing supply chains controlled abroad, which defeated a stated purpose of the original program. Critics argue the definitions are broad and difficult to apply, that developers have paused projects while awaiting guidance, and that the rules function as a phase-out delivered through administrative uncertainty rather than through a vote.
The left generally argues that the credits produced a large domestic build-out in solar, wind, storage and battery manufacturing, that ending residential support raised household costs by roughly a third overnight, that fossil fuels have received federal support for over a century so the comparison rarely starts from zero, and that abrupt phase-outs strand projects financed on the old timeline.
The right generally argues that subsidies direct capital by political decision rather than by which technologies work best, that the credits were uncapped and their cost ran well above the estimates used to pass them, that support tends to persist long after an industry matures because beneficiaries organize to defend it, and that per unit of electricity generated, wind and solar have received substantially more federal support than other sources.
The honest version of the disagreement is about counterfactuals. Both sides look at the same build-out and argue about how much of it the credits caused, versus how much would have happened anyway as equipment costs fell. That question is genuinely hard to answer, and neither side has settled it.
Not everything ended. The Section 30C credit for home electric vehicle chargers survives through June 30, 2026. The Section 45L new energy efficient home credit runs for homes acquired through the same date. State incentives, utility rebates, renewable energy certificate markets and power purchase agreements all continue independent of federal policy.
For households, that means the calculation shifted from a single federal credit to a patchwork that varies enormously by state and utility. Supporters of the change argue this is appropriate, since energy conditions differ regionally. Critics argue it replaced a simple, predictable incentive with one that requires research most homeowners will not do.
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