Key Impact Points:
- EV tax credit of up to $7,500 would be fully repealed by end of 2026.
- Clean energy tax credits for wind, solar, and nuclear would expire by 2031.
- Hydrogen, commercial EV, and residential solar credits also face repeal; carbon capture and biofuels incentives remain.
Republicans propose rollback of Biden-era clean energy incentives
House Republicans released draft legislation Monday proposing to eliminate or phase out several key clean energy tax credits to help fund an extension of former President Donald Trump’s tax cuts. The proposal targets credits enacted under President Biden’s Inflation Reduction Act.
President Trump has called the credits part of the “green new scam,” and House tax writers are moving to unwind many of them.
Solar industry spared worst-case scenario
Clean electricity production and investment tax credits, including for solar and wind, would expire by 2031—one year earlier than under current law and without conditions tied to emission reductions.
“The proposal is mostly a win for US solar manufacturers and developers,” said Rob Barnett, senior analyst at Bloomberg Intelligence. “The fear is that the investment and production tax credits could have been gutted sooner.”
Markets reacted positively. First Solar Inc. surged 11% and Sunrun Inc. rose nearly 17%.
Full repeal of EV credit and hydrogen support
A consumer tax credit of up to $7,500 for electric vehicles would be fully eliminated by the end of 2026. Only manufacturers that have sold fewer than 200,000 EVs by the end of this year would be eligible to offer the credit in 2026.
The proposal also ends tax incentives for commercial EVs, used EVs, and residential solar systems.
A tax credit of up to $3 per kilogram for clean hydrogen production would be repealed. Companies like Plug Power Inc. and FuelCell Energy Inc. have closely followed this provision, which is seen as essential for decarbonizing steel, cement, and heavy transport.
An analysis by Capital Alpha Partners projected the 10-year cost of the EV credit could exceed $200 billion—far above the Congressional Budget Office’s original 2022 estimate of $12.5 billion.
Some credits preserved, others altered
The bill retains a carbon capture credit worth up to $85 per ton and extends a per-gallon credit for biofuels by four years.
However, the production tax credit for nuclear energy would also expire by 2031. The proposal further eliminates the transferability of certain tax credits—meaning project sponsors could no longer sell them to third parties—beginning two years after enactment.
Next steps
The legislation is set for a key vote this week in the House Ways and Means Committee. Substantial changes are expected in the Senate.
