The Clean Energy Tax Credit Shake-Up: What the “One Big Beautiful Bill” Means for Your Business

Shakh Kadirov
 
 one big bill
 

If your business has been planning to go green—think solar panels, energy-efficient upgrades, or investments in clean infrastructure—you may want to act fast.

On July 4, 2025, Congress passed the “One Big Beautiful Bill”, which significantly reshapes the landscape of clean energy tax incentives for small and medium businesses across the U.S. While marketed as a simplification effort, the bill rolls back key federal clean energy tax credits and imposes strict new rules that will affect how and whether your business qualifies.

 


What Changed? A Quick Breakdown

Section 45Y and 48E Are Being Phased Out

The bill cuts short the lifespan of the Section 45Y Clean Electricity Production Credit and Section 48E Investment Tax Credit, both of which were centerpieces of the 2022 Inflation Reduction Act. These credits provided generous federal tax savings for solar, wind, battery storage, and more.

Under the new law:

  • Projects must begin construction by July 4, 2026

  • Or be placed in service by December 31, 2027

If your business hasn’t already started the planning phase, you may risk losing out entirely on these benefits.


Restrictions on Foreign-Sourced Materials

New compliance rules prohibit projects that involve materials or technology from “foreign entities of concern,” including:

  • China

  • Russia

  • Iran

  • North Korea

This particularly affects:

  • Solar panels

  • Batteries

  • Wind turbines

  • Inverters

  • Other critical clean tech components

The IRS and Department of Energy are expected to issue more detailed guidance, but the intent is clear: domestically sourced and allied-nation components only.


Why This Matters for Small & Mid-Sized Businesses

If you were:

  • Planning to install solar panels on your facility

  • Partnering with a contractor for energy-efficient upgrades

  • Looking into sustainable investments as part of your ESG goals

  • Counting on 30%+ tax savings for clean energy projects

Then this bill could directly impact your return on investment—and your ability to offset costs through federal tax credits.

 


What About Exceptions?

There are a few carve-outs:

  • Nuclear, hydrogen, geothermal, and hydropower projects may still qualify for tax incentives through 2033

  • However, these are generally capital-intensive and come with complex compliance requirements not suitable for every SMB

You’ll also want to check whether your local utility or state offers supplemental incentives.

 


What Your Business Should Do Next

- Start Project Planning Now
If you still want to benefit from federal incentives, your project must begin within the next 12 months.

- Vet Your Supply Chain
Make sure your clean tech vendors don’t source from prohibited countries.

-  Explore Alternative Tax Strategies
Some credits are sunsetting—but others (like the R&D credit or Section 179 deductions) may provide new opportunities to offset costs.

- Consult a Tax Professional
Clean energy tax law is evolving fast. A tailored review of your project timeline, tech specs, and financial goals is essential.

 


Final Thoughts

The clean energy credit landscape is no longer “set and forget.” With the passage of the One Big Beautiful Bill, small and medium-sized businesses must navigate tight deadlines, new restrictions, and narrower eligibility criteria.

At KFM, we’re here to help you stay ahead of these shifts and optimize your strategy accordingly. Whether you're already in the planning stages or just considering your options, let’s talk.

- Schedule a Free Consultation here
- Need more info? Reach out and ask for our updated 2025 Clean Energy Tax Guide.

 

 

 

 

 

 


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