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On May 9, 2025, the House Ways & Means Committee released its initial draft of the “One, Big, Beautiful Bill,” a sweeping tax proposal that aims to extend many of the cuts introduced by the 2017 Tax Cuts and Jobs Act (TCJA). While much of the bill focuses on continuing individual and business tax relief, it also includes major revisions that will reshape the landscape of federal energy tax incentives.
For developers, design professionals, and clean energy stakeholders, the proposed legislation introduces both risks and opportunities. Several high-impact incentives are slated for early termination or reduced benefits, including the Section 45L New Energy Efficient Home Credit and the Clean Electricity Production and Investment Credits. At the same time, the exclusion of Section 179D from the proposal sends a positive signal about its long-term viability.
Beyond extending individual and business tax cuts, the proposed bill makes major changes to several clean energy incentives. Many programs that previously offered long-term certainty now face early sunsets, new eligibility restrictions, and limits on credit transferability.
These changes could significantly affect developers, designers, and clean energy stakeholders—especially those managing multi-year projects or working to align construction schedules with evolving incentive deadlines. Below is a summary of the key provisions covered in this article:
Current Law
The Clean Electricity Production Credit (CEPC), created under Section 45Y of the Internal Revenue Code, is a performance-based, technology-neutral credit for facilities that generate zero greenhouse gas emissions. It applies to electricity produced and either sold to an unrelated person or consumed/stored with proper metering, and begins for qualified facilities placed in service after December 31, 2024.
The base credit amount is 0.3 cents per kilowatt hour, but can increase to 1.5 cents if the facility meets additional criteria such as being under 1 megawatt in size and satisfying prevailing wage and apprenticeship requirements. Additional bonuses are available for using domestic content and locating in energy communities, and the credit amount is adjusted annually for inflation.
Importantly, the credit is available for ten years after a facility is placed in service, and under current law it is not scheduled to begin phasing out until the later of 2032 or when national electricity-related emissions drop below 25% of 2022 levels. The credit is also transferrable or available via elective payment, making it accessible to tax-exempt organizations and public entities.
Proposed Change
The proposed bill replaces the emissions-based phaseout structure with a fixed timeline that begins in 2029. Under the new framework, the credit would be reduced as follows:
In addition, the proposal repeals the ability to transfer the credit for any facility that begins construction more than two years after the bill’s enactment. This could limit financing options for large or public-private projects relying on third-party capital.
Implications
If passed, this legislation would reduce the long-term availability of the CEPC and introduce geopolitical compliance requirements for developers. Still, the multi-year timeline provides an actionable window for clean energy developers and public agencies to initiate and complete eligible projects before phaseout milestones take effect. The ability to stack prevailing wage, domestic content, and siting bonuses remains, making early-stage projects particularly valuable under current law.
Current Law
Section 30C of the Internal Revenue Code provides a tax credit equal to 30 percent of the cost of qualified alternative fuel vehicle refueling property placed in service during the tax year, up to $100,000 per unit of depreciable property. Qualifying technologies include EV charging stations, hydrogen fuel systems, and equipment for dispensing other clean-burning fuels such as compressed natural gas or propane.
For property that is subject to depreciation (typically commercial installations), the base credit is 6 percent, but can be increased up to 30 percent if prevailing wage and apprenticeship requirements are met. Bidirectional EV charging equipment qualifies, and projects located in eligible low-income or non-urban census tracts are required to qualify.
The credit is currently set to remain in effect until December 31, 2032, allowing for long-term planning and investment in clean transportation infrastructure.
Proposed Change
The proposed bill would accelerate the expiration date of the Section 30C credit to December 31, 2025. No property placed in service after that date would qualify, and the bill does not include any transition rule for projects already underway.
Implications
This change shortens the planning horizon by seven years and creates urgency for developers, fleet operators, and infrastructure investors to finalize and place projects in service before the end of 2025. Projects in design or early construction may need to be expedited to secure eligibility. For those pursuing credits for large-scale or multi-site deployments, this proposed change may significantly impact return on investment projections if not accounted for in the current timeline.
Current Law
Section 48E provides a technology-neutral, emissions-based investment tax credit for qualifying clean electricity facilities and energy storage technologies. The credit begins in 2025 and is available to projects that produce zero greenhouse gas emissions or store energy for later use.
The base credit is 6 percent of eligible investment, but can increase to 30 percent for projects that meet prevailing wage and apprenticeship requirements, or fall under specific size or construction timing exceptions. Additional 10 percentage point bonuses are available for projects located in energy communities or using domestic content, pushing the total credit as high as 50 percent in certain scenarios.
The credit applies to new facilities placed in service after December 31, 2024, and was originally designed to remain in place until at least 2032, or until national emissions from electricity drop below 25 percent of 2022 levels. Like its companion production credit under Section 45Y, it is transferable and eligible for direct payment, making it widely accessible to tax-exempt organizations and developers relying on third-party financing.
Proposed Change
The proposed legislation would replace the emissions-based phaseout with a fixed timeline, starting in 2029. Under the proposal:
Additionally, the ability to transfer the credit would be eliminated for facilities that begin construction more than two years after the bill’s enactment.
Implications
The shift to a calendar-based phaseout compresses the window of opportunity for clean electricity and storage developers to benefit from this powerful credit. Projects already in planning stages should aim to begin construction and be placed in service before 2029 to maximize available incentives. While the new restrictions may reduce long-term certainty, the multi-year lead time offers a runway to align financing, labor, and compliance strategies before the credit is scaled down.
Current Law
Under existing law, businesses can claim bonus depreciation on certain types of qualified property, including machinery, equipment, and improvements with a useful life of 20 years or less. However, this benefit has been phasing out: property placed in service in 2025 would currently qualify for only a 40 percent bonus deduction, and just 20 percent in 2026, with full phaseout beyond that.
Cost segregation studies have remained valuable under this framework by identifying shorter-lived assets eligible for accelerated depreciation—though the reduced bonus rates have somewhat limited their immediate impact.
Proposed Change
The proposed bill fully restores 100 percent bonus depreciation for qualified property acquired on or after January 20, 2025, and placed in service before January 1, 2030. This means taxpayers can immediately expense the full cost of eligible property in the year it is placed in service.
Implications
This change dramatically enhances the value of cost segregation. Assets reclassified as 5-, 7-, or 15-year property—such as lighting, millwork, and certain land improvements—can now be fully deducted in the first year rather than spread out over decades. For real estate owners and developers, this accelerates tax savings and improves after-tax cash flow.
The extension of 100 percent expensing offers a strong incentive to revisit current or upcoming projects to determine whether a cost segregation study can unlock additional deductions under the restored rules.
Current Law
Section 179D provides a deduction for energy-efficient improvements to commercial buildings, including upgrades to HVAC, lighting, and building envelope systems. Following the passage of the Inflation Reduction Act, the deduction was expanded and made permanent for the first time in its history, with rates reaching up to $5.81 per square foot when projects meet prevailing wage and apprenticeship standards.
The deduction is available to building owners in the private sector, as well as to architects, engineers, and contractors working on government-owned or tax-exempt properties.
What’s New?
In the newly proposed tax legislation, 179D is not mentioned at all. This omission is significant and further demonstrates the administration’s commitment to keeping this deduction made permanent in the Consolidated Appropriations Act of 2021. While many other clean energy incentives face early sunsets, phaseouts, or tightened eligibility, 179D currently remains unchanged.. The lack of proposed changes suggests strong bipartisan support for the deduction and reinforces its role as a stable, long-term incentive for commercial energy efficiency.
Implications
The absence of 179D from this first draft reinforces its permanence and reliability however, edits to the legislation are likely to occur as the bill progresses through the House and Senate. Guidance once listed as a priority, such as the prevailing wage and apprenticeship requirements for 179D, have not yet been addressed and may be included as the legislation evolves. For now, developers, designers, and building owners can continue to plan energy-efficient projects with confidence that the 179D deduction will remain available for years to come and compliments the benefits of cost segregation. This is especially important as building codes evolve and decarbonization targets become more aggressive across both public and private sectors.
As the proposed legislation moves through Congress, the future of several clean energy tax incentives is beginning to take shape. While some credits face early expiration and others are set to phase out, a handful—like 179D and bonus depreciation—remain strong tools for reducing project costs and increasing ROI.
At TaxTaker, we specialize in helping developers, designers, and energy stakeholders make the most of these programs. Whether you’re racing against a deadline, evaluating eligibility, or planning long-term investments, our team is here to help you navigate the changes, maximize available incentives, and stay ahead of what’s coming.
Now is the time to assess your pipeline, adjust timelines where needed, and make informed decisions. We’re ready when you are.
Abby Massey is an expert in applying tax incentives for clean energy initiatives. With a B.S. in Civil Engineering from Purdue University and licenses in 46 states plus the District of Columbia, Abby offers significant expertise to her role at TaxTaker as the Vice President of Energy Incentives. Her experience includes certifying over 1,500 179D deductions, achieving more than $100 million in savings for clients. As a LEED Accredited Professional, Abby is dedicated to sustainable building practices. In her role at TaxTaker, she focuses on optimizing energy incentives for clients by leveraging her in-depth understanding of the 179D program, aiming to improve business sustainability and efficiency.
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