Estate and Succession Planning
Dean Mead’s Estate and Succession Planning Department is one of the largest and most respected groups of estate planning attorneys in Florida. We are frequently…
Published: July 30, 2025
The Investment Tax Credit (ITC) and Production Tax Credit (PTC) have existed since the 1970s and 1990s, respectively, and have been regularly updated to include different energy technologies. These updates often include deadlines and changing credit amounts.
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The Inflation Reduction Act (IRA), passed in 2022, is regarded as creating a more streamlined, technology-neutral tax credit system in support of clean electricity. This new system introduced:
- Section 45Y – A production tax credit (PTC) for clean electricity generated by eligible facilities.
- Section 48E – An investment tax credit (ITC) for capital spent on eligible clean energy projects, including energy storage.
In January 2025, the U.S. Treasury and IRS issued final rules on how to qualify for these credits, what documentation is needed, how emissions are calculated, and how to earn bonus credits.
To qualify for either credit, a facility must:
- Begin operating (be “placed in service”) after 2024, and
- Have net-zero greenhouse gas (GHG) emissions, determined by its full lifecycle emissions.
The credits include:
- A base rate and bonus incentives for using U.S.-made materials, locating in energy communities, and meeting labor standards.
- A 10-year duration, starting from when the facility is placed in service.
- A phaseout starting in 2032, or sooner if electricity sector emissions fall to 25% of 2022 levels.
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The One Big Beautiful Bill Act (OBBBA) introduced significant changes to 45Y and 48E—especially for solar and wind projects.
Update: Accelerated Phaseout for Solar and Wind – To qualify for 45Y or 48E, solar and wind projects now must:
- Be placed in service by December 31, 2027, and
- Begin construction by July 4, 2026 (12 months from the bill’s enactment), unless they meet special grandfathering or continuity rules.
What This Means
- Only solar and wind are affected by this faster timeline.
- Projects already in service or those that begin construction before July 4, 2026, are not impacted.
Implications for Developers
These changes mean developers must re-evaluate timelines, tighten project schedules, and adjust financing and compliance strategies to ensure they remain eligible for the valuable tax credits. Staying informed and working closely with tax and legal advisors will be essential moving forward.
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Further Trump Administration Action
Following the passage of the OBBA President Trump also signed an executive order on July 7, 2025 focused on what the Trump Administration believes is “ending market distorting subsidies for unreliable, foreign controlled energy sources.” This order directs the Secretary of the Treasury to “take all action necessary and appropriate” to strictly enforce the termination of the clean electricity production and investment tax credits under Sections 45Y and 48E of the Internal Revenue Code for wind and solar facilities, including develop revised regulations specifically targeting the definition of “Beginning of Construction”, within 45 days of the passage of the OBBA (August 18, 2025), which seems targeted to create a very limited definition of “Beginning of Construction” that would preclude many projects that have not yet began.
