The One Big Beautiful Bill Act (OBBBA), signed into law on July 4, 2025, extends and enhances several tax incentives for businesses. However, the legislation also accelerates the expiration of key clean energy tax breaks, making it crucial for companies to act quickly.
For example, the Qualified Commercial Clean Vehicle Credit (Section 45W), originally set to expire after 2032, will now end for vehicles acquired after September 30, 2025. Fortunately, some other clean energy incentives remain available — but only for a limited time.
Deduction for Energy-Efficient Building Improvements (Section 179D)
The Section 179D deduction allows owners of commercial buildings to immediately deduct the cost of energy-efficient improvements instead of depreciating them over the usual 39-year period.
Under the OBBBA, this deduction will end for properties beginning construction after June 30, 2026.
Who Qualifies for the 179D Deduction?
Eligible taxpayers include:
- Commercial building owners (new or existing)
- Tenants and REITs that make qualifying improvements
- Designers (architects, engineers, and contractors) of buildings owned by:
- Government entities
- Nonprofit organizations
- Religious and tribal organizations
- Nonprofit schools or universities
Eligible Buildings and Improvements
The 179D deduction applies to:
- New construction or renovations/additions to commercial buildings
- Multifamily residential buildings (four or more stories above ground)
Qualifying improvements include systems related to:
- Interior lighting
- HVAC and hot water systems
- The building envelope
Energy Savings Requirements and Deduction Amounts
To qualify, the improvements must be part of a certified plan designed to reduce annual energy costs by at least 25% compared to standard benchmarks.
- Base deduction:
- $0.50 per sq. ft. for 25% energy savings
- Up to $1.00 per sq. ft. for 50% savings
- Bonus deduction (for projects meeting wage & apprenticeship standards):
- $2.50 per sq. ft. for 25% energy savings
- Up to $5.00 per sq. ft. for 50% savings
Other Clean Energy Tax Breaks for Businesses
The OBBBA also affects several other clean energy tax incentives:
Alternative Fuel Vehicle Refueling Property Credit (Section 30C)
This credit applies to clean fuel storage or EV charging equipment, worth up to $100,000 per item.
- New rule: Eliminated for property placed in service after June 30, 2026.
- (Originally scheduled to sunset after 2032.)
Clean Electricity Investment & Production Credits (Sections 48E and 45Y)
These credits support wind and solar energy facilities.
- Eliminated for facilities placed in service after 2027, unless construction begins before July 4, 2026.
- Projects started after that date must be in service by the end of 2027 to qualify.
Advanced Manufacturing Production Credit (Section 45X)
Changes under the OBBBA include:
- Wind energy components no longer qualify after 2027.
- Metallurgical coal is added to the list of critical minerals (eligible until 2029).
- Other critical materials will see a phase-out from 2031 to 2033.
Act Now to Capture Remaining Tax Benefits
Many of these incentives are ending years earlier than expected, leaving businesses a short window of opportunity to take advantage of them.
If your company is considering clean energy projects, now is the time to act.
Our team can help you:
- Determine eligibility for remaining credits
- Optimize project structure for maximum deductions
- Ensure compliance with wage and energy certification requirements
📞 Contact us today to explore how your business can still benefit from clean energy tax breaks before they expire.
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