Remaining Clean Energy Tax Credits

Note: Many of the clean energy tax credits established by the Inflation Reduction Act (IRA) were reduced or eliminated in 2025 with the enactment of H.R. 1. The table below summarizes the impact to each credit and identifies credits still available to local governments as of June 1, 2026.

Clean Commercial Vehicles Sec. 45W

Deadline: Credit is no longer available for vehicles acquired after Sept 30, 2025.

Approximate Amount: Credit terminated (0%) - was up to 30% of vehicle cost for qualifying commercial EVs.

Bonus Credits: N/A

Eligible Entities: Fleet operators such as school districts that were electrifying bus fleets. Credit has ended and is included for reference only. 

Additional Information and Resources: Credit ended with H.R. 1.

Clean Hydrogen Production Sec. 45V

Deadline:

  • Construction must begin by Dec 31, 2027.

  • No place-in-service deadline.

  • Credit applies for 10 years from place-in-service data.

Approximate Amount:

  • Credit of $0.60/kg × applicable percentage, based on the lifecycle greenhouse gas emissions of the hydrogen produced. 

  • Credit is earned over a 10-year period from the facility’s placed-in-service date.

Bonus Credits: N/A

Eligible Entities: Larger municipalities, universities, or public utilities with infrastructure to produce clean hydrogen (e.g., for fleet fueling or industrial use).

Additional Information and Resources:

  • PFE rules do not apply. 

  • This is not an upfront credit; instead, it is a production tax credit paid over 10 years. 

Commercial Energy Efficient Buildings Sec. 179D

Deadline:No longer available for projects commencing construction after Jun 30, 2026.

Approximate Amount: Deduction (not a tax credit): $0.50–$1.00/SF based on energy savings achieved; $2.50–$5.00/SF if prevailing wage/apprenticeship requirements met.

Bonus Credits: N/A

Eligible Entities: Commercial building owners, and architects or engineers working on projects for tax-exempt entities such as schools or governments, who can receive the deduction as a transferred benefit from the tax-exempt owner. 

Additional Information and Resources: Deduction (not credit) - trickier for local governments; can assign to an engineering firm.

Energy Storage / Thermal Storage / Geothermal Power Plants* / Hydroelectric Sec. 48E

(*electricity- generating; see below for geothermal heat pumps)

Deadline:

Energy Storage/Thermal Storage: 

  • Begin construction by Dec 31, 2035.

  • Credit is reduced for projects beginning construction in 2034 and 2035:

    • 100% of credit available through CY2033.

    • 75% of credit available through CY2034

    • 50% of credit available through CY2035

    • 0% of credit amount available in CY2036

Geothermal/Hydroelectric: 

  • Begin construction by Dec 31, 2033 for full credit; reduced credit in 2034-2035.

Approximate Amount:

  • Projects < 1MW: 30% credit

  • Projects > 1MW: 6% credit unless prevailing wage & apprenticeship met.

Bonus Credits:

  • Domestic content: 10%

  • Brownfield: 10%

  • Energy community: 10%

Eligible Entities:

  • Schools and municipalities pairing battery or thermal storage with solar, as well as larger public power entities investing in geothermal or hydroelectric generation. 

Additional Information and Resources:

  • No changes to current phaseout schedule. 

  • Subject to PFE rules for construction beginning after Dec 31, 2025.

EV Charging Equipment Sec. 30C

Deadline:

  • Property must be placed in service by Jun 30, 2026. 

  • No safe harbor provision.

Approximate Amount:

  • Credit of 6% to 30% of cost if prevailing wage/apprenticeship met.

  • Up to $100,000 per charging port.

Bonus Credits:

  • N/A

Eligible Entities:

  • Municipalities, schools, or commercial property owners installing EV chargers, provided the site is in a qualifying low-income or non-urban census tract. 

Additional Information and Resources:

Ground Source Heat Pumps (GHP) (AKA Geothermal Heat Pumps) Sec. 48

Deadline:

  • To receive full credit, construction must begin by Dec 31, 2032. 

  • Construction beginning in 2033 or 2034 will be eligible for phased down (reduced) credits.

  • All credits expire after Dec 31, 2032.

Approximate Amount:

  • Projects < 1MW: 30% credit (enhanced rate)

  • Projects > 1MW: 6% base credit unless prevailing wage & apprenticeship met.

  • Credit phases down to a 5.2% base rate (26% enhanced rate) in 2033; and a 4.4% base rate (22% enhanced rate) in 2034.

Bonus Credits:

  • Energy Community: 10%

Eligible Entities:

  • Schools, municipalities, hospitals, and commercial building owners. Also relevant to ESCOs and third-party installers who finance and own systems on behalf of institutions. 

Additional Information and Resources:

  • Unlike Sec. 48E, Prohibited Foreign Entity (PFE) rules do NOT apply to GHPs.

  • Note: GHPs are heating/cooling systems, not electricity generators; they fall exclusively under Sec. 48, not Sec. 48E. 

  • H.R. 1 removed a barrier to third-party ownership/leasing of GHPs by clarifying that GHP property is eligible for the ITC regardless of whether it is usable by someone other than the lessee.

  • https://www.undauntedk12.org/energy-tax-credits-ground-source-heat-pumps

Solar and Wind Projects Sec. 48E

Deadline:

  • Begin construction by Jul 4, 2026 → 4 years to complete.

  • Begin after Jul 4, 2026 → must be placed in service by Dec 31, 2027

Approximate Amount:

  • Projects < 1MW: 30% credit

  • Projects > 1MW: 6% credit unless prevailing wage & apprenticeship met.

Bonus Credits:

  • Domestic content (“Buy American”): 10%

  • Brownfield: 10%

  • Energy community: 10%

Eligible Entities:

  • Schools, local governments, and nonprofits. Also relevant to commercial solar developers.

Additional Information and Resources:

Definitions

Begin Construction: The point at which a taxpayer starts significant physical work on a project. Establishing this date locks in the applicable credit rate. Additional information can be found here.

Domestic Content Bonus: An additional 10% credit for projects where steel, iron, and manufactured components are produced in the United States. Additional information can be found here.

Elective Pay (Direct Pay): A mechanism that allows tax-exempt entities (schools, municipalities, nonprofits) to receive the value of a tax credit as a cash reimbursement from the IRS, since they have no tax liability to offset. Additional information can be found here.

Energy Community: A census tract or area defined by its historical connection to fossil fuel industries (e.g., closed coal mines or plants, or areas with significant oil/gas employment) that qualifies projects sited there for an additional 10% bonus credit. Additional information can be found here.

Investment Credit: A one-time tax credit based on a percentage of the upfront cost to build or install an energy system. Claimed in the year the system is placed in service. Additional information can be found here.

Placed in Service: The date a system is fully installed, operational, and ready for its intended use. This date determines which tax year a credit can be claimed. Additional information can be found here.

Prevailing Wage: The federally determined minimum wage rate (set by the Department of Labor) that must be paid to workers on a project to qualify for enhanced tax credit rates. Additional information can be found here.

Production Credit: A tax credit based on the amount of energy a system produces over time, typically earned per kilowatt-hour over a 10-year period after the system is placed in service. Additional information can be found here.

Prohibited Foreign Entity (PFE): A foreign company or entity whose involvement in a project’s materials, ownership, or financing can disqualify the project from certain tax credits under H.R. 1. Additional information can be found here.

Transferability: The ability for a project owner to sell their tax credit to an unrelated third party for cash, useful for entities that cannot fully use the credit themselves. 

Additional Resources

Clean Energy Tax Navigator: An interactive tool created by Lawyers for Good Governance that allows users to estimate a project's eligibility for certain clean energy tax credits. 

To view this information in table format, click here.

Legal Disclaimer: This document is for informational purposes only and should not be considered legal advice.