The 2026 Energy Incentive Roadmap: What to Expect for 179D, 45L, and ITC Next Year

The Inflation Reduction Act (IRA) was supposed to give energy incentives a long, predictable runway. Then the One Big Beautiful Bill Act (OBBBA) arrived in July 2025 and changed the timeline.

If you work in real estate, development, construction, or clean energy, 2025 and 2026 are now a race against the clock. Section 179D, 45L, and parts of the Investment Tax Credit (ITC) still offer strong value, but many provisions have hard dates attached to them after OBBBA.

This roadmap walks through where the key incentives stand today, what is confirmed for 2026, and which benefits are set to sunset or phase down if Congress does not act again.

Quick Refresher: IRA vs OBBBA

Under the IRA, Congress expanded long term incentives for:

• Energy efficient commercial buildings (179D)
• Energy efficient homes (45L)
• Clean power and storage projects through the ITC and the new tech neutral credit in Section 48E

Most of these were intended to last into the 2030s. OBBBA did not scrap everything, but it shortened the runway or tightened rules for several high impact incentives, especially buildings and clean power.

For anyone planning projects now, the key question is no longer just “Do I qualify?” It is also “Will I qualify if I start this project after mid 2026?”

Section 179D in 2025–2026: Still Valuable, Now Time Limited

Section 179D continues to provide a valuable deduction for energy efficient commercial building projects. Under the IRA structure, the deduction is available on a sliding scale of roughly 2.50 to almost 6 dollars per square foot when prevailing wage and apprenticeship rules are met, with annual inflation adjustments. 

OBBBA did not remove that structure, but it put an end date on new projects:

• 179D remains available for projects that begin construction on or before June 30, 2026
• For projects that begin construction after June 30, 2026, the deduction is terminated under current law

A few planning points for 179D between now and that date:

• Begin construction rules matter. IRS guidance allows two ways to show that a project has officially begun construction. You can start physical work on site, such as excavation or demolition, or you can meet the five percent safe harbor by spending at least five percent of total construction costs. How you document this determines which incentive rules your project qualifies for.
• The prevailing wage and apprenticeship requirements still control whether you receive the full higher deduction or a much lower amount.
• Tax exempt building owners can still allocate the deduction to designers (architects, engineers, design build contractors), but only for projects that meet the June 30, 2026 construction start deadline. 

Takeaway: 2025 and early 2026 are prime years to lock in 179D. Projects that are still on the drawing board should be reviewed now to see whether accelerating “beginning of construction” before June 30, 2026 makes sense.

Section 45L: A Shorter Window for Energy Efficient Homes

Section 45L provides a credit to builders and developers of new energy efficient homes, including single family, townhomes, and multifamily. Under the IRA, 45L was scheduled to run through 2032 with per unit credits of:

• 2,500 dollars per unit for ENERGY STAR certified homes
• 5,000 dollars per unit for DOE Zero Energy Ready Homes

OBBBA significantly shortened this timeline:

• 45L now terminates for homes acquired after June 30, 2026
• “Acquired” means sold or first leased by that date 

Other important details that still apply until that date:

• For larger multifamily projects, prevailing wage rules affect whether you receive the full 2,500 or 5,000 dollar credit per unit or a reduced amount
• 45L can be used in combination with Low Income Housing Tax Credit (LIHTC) projects without reducing LIHTC basis, which is a significant advantage for affordable housing developers 

Takeaway: Any builder or developer planning energy efficient residential projects that will close or lease after mid 2026 needs to revisit assumptions. There is now a clear advantage to bringing qualifying 45L projects forward so that units are acquired by June 30, 2026.

ITC and the Shift to Section 48E: A Moving Target

The Investment Tax Credit (ITC) story is more complex because OBBBA did not eliminate it outright. Instead, it:

• Preserved the tech neutral ITC structure in Section 48E for some technologies
• Introduced earlier deadlines and new restrictions for others

According to USGBC and industry analysts: 

• Wind and solar facilities now need to begin construction by July 4, 2026 and be placed in service within four years, or be placed in service by December 31, 2027, to receive the full credit
• Storage and other zero emission technologies can still qualify for the full credit through 2033, with a phasedown in 2034–2035
• The domestic content and energy community bonus credits survive, but domestic content percentage requirements ratchet up over time
• Direct pay and transferability remain available for many projects, although new “prohibited foreign entity” rules and domestic content conditions can limit the benefit or add due diligence burden beginning in 2026 

In practice, that means:

• Commercial and industrial rooftop solar and storage that start in 2025 or early 2026 are in a favorable window
• Projects that plan to rely on direct pay or transferability need to build compliance checks into their financing and procurement process

Takeaway: For ITC eligible projects, 2025 and 2026 are still attractive, but long range assumptions that once stretched comfortably into the 2030s now come with more uncertainty and conditions.

What is Confirmed for 2026, and What Could Sunset

Based on current law and IRS guidance, here is the near term timeline to watch: 

Locked in through June 30, 2026

• 179D: Available for projects that begin construction on or before June 30, 2026
• 45L: Available for homes that are sold or first leased on or before June 30, 2026
• 30C (EV charging and refueling property): Available for eligible property placed in service on or before June 30, 2026

Deadlines around mid 2026 and 2027

• Wind and solar ITC under 48E: Projects need to begin construction by July 4, 2026 and be placed in service within four years, or be placed in service by December 31, 2027, to access the full credit

Continuing but phasing down later

• Certain storage and other zero emission technologies keep ITC eligibility through 2033, with a phasedown in 2034–2035

All of this is subject to future legislation. Congress could extend or modify these provisions again. However, planning based on what is written today means treating June 30, 2026 and July 4, 2026 as real working deadlines, not soft suggestions.

Planning Moves for 2025 and Early 2026

Given this compressed timeline, here are practical steps for owners, developers, and advisors:

1. Inventory your pipeline
   
   • Identify projects that might qualify for 179D, 45L, or ITC.
   • Flag which ones could realistically begin construction or be acquired before mid 2026.
2. Model scenarios with and without incentives
   
   • Compare project economics if you hit the 2026 deadlines versus if you do not.
   • In many cases, incentives can mean the difference between a marginal project and a strong one.
3. Clarify “begin construction” and “acquired” dates
   
   • Coordinate with design, construction, and legal teams to document start dates and acquisition dates accurately.
4. Layer incentives with cost segregation and other tools
   
   • For commercial projects, consider how 179D, ITC, and cost segregation interact within your overall tax strategy.
5. Build a compliance and documentation plan
   
   • Prevailing wage, apprenticeship, domestic content, energy performance modeling, and residency rules all affect incentive value.
   • Treat documentation like an integral part of the project, not an afterthought.

Final Thoughts

The big picture is simple. The IRA created a decade-long runway for many energy incentives. OBBBA shortened that runway for key provisions like 179D, 45L, and parts of the ITC, and turned 2025 and 2026 into critical action years.

If you own, design, or develop buildings, or you are responsible for energy or tax strategy, now is the time to map out which projects can still qualify and how to sequence them. The rules are still favorable, but the clock is ticking.

If you want help evaluating your project pipeline, modeling potential deductions, or coordinating with cost segregation and other tax strategies, TaxTaker can collaborate with your team so you have a clear plan before these windows close.