IRS Answers FAQs on Expiration of Energy Credits and Deductions Under OBBBA

The IRS issued guidance in the form of answers to FAQs providing initial guidance on several energy credits that are expiring under the One Big Beautiful Bill Act (OBBBA). These FAQs are meant to provide information that taxpayers and tax professionals can rely on to avoid negligence or other accuracy-related penalties.

Key Takeaways

• The OBBBA accelerated termination dates for several of the green energy tax incentives.
• An acquisition alone doesn’t allow the taxpayer to elect to transfer clean vehicle credits.
• A residential clean energy credit can’t be claimed for property installed or constructed after December 31, 2025, even if payment is made for the property on or before that date.

Expiring Energy Credits and Deduction Provisions

The OBBBA accelerated termination dates for several of the green energy tax incentives. Below is a chart found in the FAQs laying out the expiring energy credits and deduction provisions as well as their termination dates.

The FAQs define “acquired” for the clean vehicle credits under sections 25E, 30D and 45W. “Acquisition” is defined as the date a written binding contract is entered into and a payment has been made. Payment includes a nominal downpayment or a vehicle trade-in.

Even though “acquisition” is important, the credit can only be claimed when the vehicle is “placed in service” (i.e., when you take possession of the vehicle). The FAQs state that if the vehicle is considered “acquired” prior to September 30, 2025, the taxpayer will be entitled to take the credit when the vehicle is placed in service, even if after September 30, 2025.

Related to the clean vehicle credits, the FAQs specify that acquisition alone doesn’t allow the taxpayer to elect to transfer the credit (most likely transferred to the dealer selling the vehicle). Taxpayers should wait until they take possession of the vehicle to make the transfer.

The residential clean energy credit under section 25D applies to residential installation of solar and other clean energy incentives. The FAQs state that a credit can’t be claimed for property installed or constructed after December 31, 2025, even if payment is made for the property on or before that date.

The IRS has stated that future guidance will be issued on other provisions impacted by the OBBBA. At Creative Planning Business Services, we’ll continue to keep you informed when this guidance is issued. Schedule a meeting with a tax advisor today to discuss how the timing of the energy tax credits expiring impacts your current and future tax situation.