One Big Beautiful Bill Act passes in the Senate, now returns to House

After months of debate and negotiation — and a 26-hour amendment marathon — the Senate passed President Donald Trump’s signature tax and spending legislation yesterday. The House is expected to take up the bill today, with the goal of passing it in its current form and delivering it to the President’s desk by his stated July 4 deadline.

While many of the proposed cuts to energy and manufacturing tax credit provisions were moderated compared to the May House version, the Senate — influenced by both President Trump and the House Freedom Caucus (HFC) — ultimately adopted a punitive stance toward solar and wind technologies. In contrast, credits for other sectors were largely preserved or, in some cases, expanded.

An intermediate version of the bill released last Friday introduced even more restrictive measures than those found in the original House text. These included a new excise tax on all wind and solar facilities that fail to meet stringent Foreign Entity of Concern (FEOC) requirements, as well as a reversion to a strict “placed-in-service” requirement for qualification — replacing the more flexible, longstanding “commence construction” standard.

Moderate senators, most notably Lisa Murkowski (R-AK), John Curtis (R-UT), and Thom Tillis (R-NC), led efforts to soften the bill’s treatment of solar and wind. Their push resulted in several key revisions in the final version, including a one-year “commence construction” carveout, full credit eligibility for projects placed in service by the end of 2027, and the reinstatement of residential solar eligibility under the tech-neutral credit regime.

For a deeper dive, register for our policy briefing on Wednesday, July 9.

Key takeaways

Transferability fully preserved 

The final language maintained the original Senate treatment of transferability, and even expanded it to the §40A small agri-biodiesel producer credit. All applicable credits retain transferability for the full life of the reformed credits. However, tax credit buyers will now be subject to FEOC requirements. 

Additional restrictions on wind and solar

Wind and solar projects that begin construction within 12 months of the date of enactment of the law retain the ability to use the “commence construction” date as a safe harbor to earn the technology-neutral credits under §48E and §45Y. However, after that year, a project must be placed in service by the end of 2027 to be eligible for the credit. 

As noted, residential solar retained eligibility for §48E and §45Y, reversing the previous House elimination. Additionally, the final Senate text restored five-year accelerated depreciation eligibility for solar and wind projects that otherwise qualify for §48E and §45Y requirements.

Other energy sources and credits retain and increase favorable treatment

• §48E and §45Y technology neutral credits: Energy sources other than wind and solar (including nuclear, geothermal, hydropower, and energy storage) retain the “commence construction” standard and longer phaseout through 2035 (with a phasedown in 2034–2035). 
• §45Q carbon sequestration and §45U nuclear credits: These retain their original sunset in the Inflation Reduction Act (IRA).
• §45V clean hydrogen credit: This credit now ends after 2027, a two-year extension compared to previous House and Senate text. 
• §45X advanced manufacturing credit: The final language maintains the House and Senate treatment, eliminating eligibility for wind components after 2027 and introducing a phaseout for critical minerals from 2031–2033, with the addition of making metallurgical coal eligible for a version of the critical mineral credit.
• §45Z clean fuel credit: This credit is extended through 2029 (a two-year reduction compared to the previous House and Senate text) but retains other favorable changes to feedstock and emissions rules.
• §40A(b)(4) small agri-biodiesel producer credit: New as of the final Senate text, this credit is granted a two-year extension through 2026 with an increased credit value, stackability with §45Z, and transferability. 

FEOC here to stay

The final bill largely retains the FEOC structure proposed by the House and tweaked by the Senate Finance Committee. Changes in the final language included:

• Delay in the timing of implementation for solar and wind to align with the balance of the credits beginning in 2026.
• New rules for publicly traded companies. 
• New anti-circumvention regulations to block stockpiling and verify the commencement of construction.
• Adjustments to the percentage limits for the material assistance cost ratios that are used to determine whether a company is receiving material assistance from a prohibited foreign entity.
• Other small modifications to improve overall usability. 

Find the latest FEOC definitions and changes in our FEOC cheat sheet.

Changes to specific energy and manufacturing credits

Please note, this is a fluid situation and any analysis is subject to change. We will continue to monitor developments and provide timely updates as the legislative process unfolds.

Join us on Wednesday, July 9 for a webinar to unpack changes to clean energy and manufacturing tax credits and what they mean for developers, manufacturers, tax credit buyers, and investors. Register now.