Senate Republicans on July 1 revised some energy tax provisions in a sweeping domestic policy bill as part of a compromise reached with Senate holdouts to secure their votes for the package.
Republicans removed a proposed excise tax on solar and wind development and added a year for renewable energy projects to begin construction to qualify for tax credits. Instead of ending on Dec. 31, 2026, that program ends on Dec. 31, 2027.
Three Republicans—Sens. Rand Paul (R-Ky.), Susan Collins (R-Maine), and Thom Tillis (R-N.C.)—joined Democrats in rejecting the measure.
Alaska’s Lisa Murkowski, a key undecided GOP senator who raised concerns about energy-related provisions in the bill before the late revisions, was among the clinching votes to end the chamber’s “vote-a-rama” that began Monday afternoon and continued through the night before concluding at midday on Tuesday.
The pivotal energy-related compromise in moving the Senate’s version of the GOP-led megabill to the House was dropping a new excise tax for any solar projects beginning after June 2025 that use components from adversaries such as China, which dominates the solar supply chain.
The nascent domestic solar industry relies on solar panels and other components manufactured in China or by Chinese-owned companies in countries such as Vietnam. President Donald Trump and some Republicans have criticized clean energy tax credits in the policy bill, calling it a “scam.”
Even without the excise tax, the nation’s solar industry could be handicapped by ending the technology-neutral Production Tax Credit. It subsidizes zero-emission energy sources such as solar, wind, nuclear, hydropower, and geothermal that, under the Inflation Reduction Act, are to expire in 2032.
The revised Senate version of the bill brings forward the phase-out date to Dec. 31, 2027.
As with the version of the bill passed by the House, the Senate-passed megabill preserves tax credits for companies that build nuclear reactors, geothermal plants, hydropower dams, and battery storage projects through 2033.
Key Energy-Related Provisions
Electric vehicles
The $7,500 tax credit for purchasing an electric vehicle (EV) ends on Sept. 30, 2025—three months before the House bill terminates it.The first Senate budget ended the EV tax credit on Dec. 31, 2025, but extended it through the end of 2026 for automakers that had not sold already-built EVs. That provision is eliminated, and the timeline is accelerated.
Energy Efficient Home Improvements
The Senate plan pulls the plug on energy-efficient home improvement credits of $2,500 to $5,000 for homes built to Energy Star and Zero Energy Ready standards and for weatherization upgrades.Energy Efficient Home Tax Credits
Under current law, taxpayers may claim a credit for residential expenditures for solar electric property, solar water heating property, fuel cell property, small wind energy property, geothermal heat pumps, and battery storage property through Dec. 31, 2032.The Senate version ends the credit on Dec. 31, 2025.
