These Energy Tax Credits Are on Chopping Block in GOP Megabill

Tax credits for weatherization improvements, electric vehicles, heat pumps, and rooftop solar could be out the window.

Sen. Thom Tillis (R-N.C.) departs a meeting with Senate Republicans in the U.S. Capitol on June 28, 2025. Al Drago/Getty Images

A revised Senate Republican megabill to implement President Donald Trump’s agenda hastens terminations of tax credits for renewable energy development while offering a new tax inducement for coal production.

Senate Republicans are currently racing to pass the legislation—called the Big Beautiful Bill Act—ahead of a self-imposed July 4 deadline to get it before Trump’s desk.

After the Senate, the bill would move back to the House for approval before heading to the president for his signature.

The updated Senate bill that emerged on June 28 accelerates the initial iteration of the chamber’s budget drafted on June 16 by the Senate Finance Committee and more closely replicates the bill adopted by the House on May 21.

A brief outline of some key energy-related provisions includes the following.

Electric Vehicles

The $7,500 tax credit for purchasing an electric vehicle ends on Sept. 30, 2025—three months before the House bill terminates it.

The first Senate version would end the EV tax credit on Dec. 31 but extend it through the end of 2026 for automakers that had not sold already-built EVs. That provision is eliminated, and the timeline is accelerated in the latest update.

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.

These incentives were to expire in 2032.

The House eliminates the credit at the end of 2025 unless the home construction began before May 12. The Senate version ends them within six months for homes unless construction began before June 26.

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 original Senate bill proposed ending the credit within 180 days of enactment—April 1, 2026. The version that emerged over the weekend replicates the House’s bill, ending it Dec. 31.

Wind and Solar Development

The technology-neutral Production Tax Credit that subsidized production of zero-emission energy sources such as solar, wind, nuclear, hydropower, and geothermal is rescinded by 2027 for wind and solar in both chambers’ proposed spending plans.

The initial Senate budget extended those tax credits enhanced under 2022’s Inflation Reduction Act longer than the House’s plan did. It would have cut off credits or projects that aren’t plugged into the grid by the end of 2028.

Wind and solar companies could still garner the full benefit if they began planned projects within six months, 60 percent if they break ground in 2026, and 20 percent if they initiate in 2027.

The bill now terminates the 45Y clean energy production tax credit and 48E clean energy manufacturing credit for wind and solar projects after 2027. It includes a new excise tax for any projects beginning after June that use components from adversaries such as China, which dominates the solar supply chain.

Both chambers’ tentative budgets preserve the tax credits for companies that build nuclear reactors, geothermal plants, hydropower dams, or battery storage through 2033.

The proposed Senate budget adds coal-fueled projects to the Production Tax Credit program and, as Trump did in an executive order, defines coal as a critical mineral when used in manufacturing.