Following the passage of the One Big Beautiful Bill Act (OBBBA) in July, many federal clean energy tax credits and deductions face accelerated expiration timelines or newly imposed restrictions. Below are some of the expiring clean energy incentives and expanded restrictions that could impact builders, landlords, commercial property owners, and real estate investors.
Clean Energy Incentives Set to Terminate
- Section 25D Residential Clean Energy Credit—expires after December 31, 2025
The Residential Clean Energy Credit is a 30% credit that applies to the purchase of new, qualified clean energy property for a primary or secondary residence. Qualifying property includes solar electric panels, solar water heaters, wind turbines, geothermal heat pumps, fuel cells, and battery storage technology. To qualify for the credit, property must be fully installed and placed in service by December 31, 2025.
- Section 25C Energy Efficient Home Improvement Credit—expires after December 31, 2025
The Energy Efficient Home Improvement Credit is a 30% credit (up to $3,200 a year) that applies to qualified energy-efficient improvements to a primary residence. Qualifying improvements include insulation and air sealing materials or systems, exterior doors, exterior windows and skylights, central air conditioners, natural gas/propane/oil water heaters, natural gas/propane/oil furnaces and hot water boilers, electric or natural gas heat pumps, electric or natural gas heat pump water heaters, biomass stoves and boilers, and home energy audits. To qualify for the credit, this property must be placed in service by December 31, 2025.
- Section 45L New Energy Efficient Home Credit—expires for homes acquired after June 30, 2026
The New Energy-Efficient Home Credit is a tax credit of up to $5,000 per home available to eligible contractors who build or substantially reconstruct qualified new energy-efficient homes. This credit expires for homes acquired after June 30, 2026.
- Section 179D Energy Efficient Commercial Buildings Deduction—expires for projects with construction beginning after June 30, 2026
The Energy Efficient Commercial Buildings Deduction is a tax deduction available to qualifying building owners who place in service energy-efficient commercial building property (EECBP) or energy-efficient commercial building retrofit property (EEBRP). The deduction will not apply to any property for which construction begins after June 30, 2026.
- Section 30C Alternative Fuel Vehicle Refueling Property Credit—expires after June 30, 2026
The Alternative Fuel Vehicle Refueling Property Credit is a tax credit available to businesses and individuals who install qualified refueling or recharging property, including electric vehicle charging equipment, in a qualifying location. This credit expires for property placed in service after June 30, 2026.
Expanded FEOC Restrictions
FEOC (Foreign Entity of Concern) restrictions are regulations that limit or prohibit tax credits for entities or projects with significant ties to certain foreign nations—specifically China, Russia, North Korea, and Iran. The OBBBA extends FEOC restrictions to several additional clean energy tax credits, in an effort to reduce U.S reliance on foreign entities. Previously limited to the section 30D Clean Vehicle Credit and the section 48D Advanced Manufacturing Investment Credit, FEOC restrictions will now also apply to the following tax credits:
- 45Y Clean Electricity Production Credit
- 48E Clean Electricity Investment Credit
- 45X Advanced Manufacturing Production Credit
- 45U Zero-Emission Nuclear Power Production Credit
- 45Q Carbon Oxide Sequestration Credit
- 45Z Clean Fuel Production Credit
For most calendar-year taxpayers, the expanded restrictions will take effect beginning January 1, 2026. The new FEOC rules impact the real estate industry by limiting the eligibility of certain projects for renewable energy credits. We recommend that you check with your contractor to see if any of these restrictions apply to you.
Contact RBT CPAs for Additional Guidance
RBT CPAs’ real estate accounting team is here to help you take advantage of these clean energy tax incentives before they expire, and to navigate the new FEOC restrictions. And as always, our experts are available to support all of your other tax, accounting, audit, and advisory needs. Give us a call today and find out how we can be Remarkably Better Together.