Energy Tax Credits

Energy Tax Credits

The OBBBA accelerates the repeal of clean energy tax credits, enforces stricter domestic content requirements, and imposes new foreign entity of concern (FEOC) restrictions that prevent specific foreign entities from accessing energy tax credits.

 EV Charging Stations 

  • Section 30C credit eligibility may be compromised if chargers contain FEOC-linked parts. 
  • By 2025, the credit is fully phased out for any projects using restricted FEOC components. These requirements become effective for tax years beginning after July 4, 2025. Therefore, calendar year initiating projects on or before December 31, 2025, are not subject to the new FEOC restrictions for eligibility purposes. 

Solar Energy Systems 

  • Section 48 Investment Tax Credit (ITC) could be denied or reduced based on non-compliant materials. 
  • Supply chain transparency and traceability are now essential to maintain eligibility. 

Rule 

Effective Date 

Urgency 

FEOC Component Ban 

Jan 1, 2024, fully enforced by 2025 

High – Immediate action required 

Certification & Reporting 

Required beginning 2024; tighter in 2025 

Medium – Prepare compliance systems 

Safe Harbor (Projects in Progress) 

Available only if construction began before 2024 

High – New projects must comply 

Key Stakeholder Actions 

  • Act Now: Ensure your solar or EV infrastructure plans meet OBBA component requirements. 
  • Audit Supply Chains: Engage only with suppliers who can certify compliance with FEOC restrictions. 
  • Mind Your Timeline: Projects starting after 2024 risk being entirely ineligible if non-compliant components are involved. 

Credits & Phaseout

  • Commercial EVs: Credits eliminated after September 30, 2025. 
  • EV Charging: Must be in service by June 30, 2026. 
  • Solar/Wind: Complex phase-out with new foreign supply chain restrictions starting January 1, 2026. Must commence construction by December 31, 2025 to claim credits under original rules. 
  • Residential Credits: Individual EV, efficiency, and solar credits ending September-December 2025. 
  • Geothermal & Battery Storage: Full credits through 2033, then gradual phase-out. 

Note: By 2025, any presence of FEOC-sourced components disqualifies projects from federal clean energy incentives. 

Sources: Electrification Coalition, The Center for American Progress

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