The Internal Revenue Service (IRS) has issued FAQs (FS-2025-05, Aug. 21, 2025) providing initial guidance on modifications to various energy-related tax provisions under Public Law 119-21, 139 Stat. 72 (July 4, 2025), commonly known as the One, Big, Beautiful Bill Act (OBBBA). These FAQs are intended to offer general information to taxpayers and tax professionals expeditiously. While these FAQs have not been published in the Internal Revenue Bulletin and thus will not be relied upon by the IRS to resolve cases, taxpayers who reasonably and in good faith rely on them will not be subject to certain penalties, such as negligence or other accuracy-related penalties, to the extent such reliance results in an underpayment of tax.

These modifications specifically impact sections 25C, 25D, 25E, 30C, 30D, 45L, 45W, and 179D of the Internal Revenue Code. Future guidance is anticipated on other provisions affected by OBBBA.

Accelerated Termination of Energy Credits and Deductions

OBBBA has significantly accelerated the termination dates for several energy credit and deduction provisions. Tax professionals should be aware of the following revised expiration schedules:

Section 25C, Energy Efficient Home Improvement Credit: This credit will not be allowed for any property placed in service after December 31, 2025.
Section 25D, Residential Clean Energy Credit: This credit will not be allowed for any expenditures made after December 31, 2025.
Section 25E, Previously-Owned Clean Vehicles Credit: This credit will not be allowed with respect to any vehicle acquired after September 30, 2025.
Section 30C, Alternative Fuel Vehicle Refueling Property Credit: This credit will not be allowed for any property placed in service after June 30, 2026.
Section 30D, New Clean Vehicle Credit: This credit will not be allowed for any vehicle acquired after September 30, 2025.
Section 45L, New Energy Efficient Home Credit: This credit will not be allowed for any qualified new energy efficient home acquired after June 30, 2026.
Section 45W, Qualified Commercial Clean Vehicle Credit: This credit will not be allowed for any vehicle acquired after September 30, 2025.
Section 179D, Energy Efficient Commercial Buildings Deduction: This deduction will not be allowed with respect to any property the construction of which begins after June 30, 2026.

Defining "Acquired" for Clean Vehicle Credits

For the purposes of the expiring clean vehicle credits under sections 25E, 30D, and 45W, a vehicle is considered "acquired" as of the date a written binding contract is entered into and a payment has been made. It is important to note that a "payment" for this purpose includes even a nominal downpayment or a vehicle trade-in.

Impact of Acquisition on Claiming Vehicle Credits

While "acquisition" of a vehicle is a necessary initial step, it does not immediately entitle a taxpayer to claim a credit under sections 25E, 30D, and 45W. These Code sections (specifically 25E(a), 30D(a), and 45W(a)) mandate that the vehicle must also be "placed in service" for the respective credit to be claimed.

Despite the September 30, 2025, termination date for acquisition for these credits, if a taxpayer satisfies the acquisition requirement (i.e., enters into a written binding contract and makes a payment) on or before September 30, 2025, they will still be entitled to claim the credit when they place the vehicle in service. "Placed in service" generally refers to when the taxpayer takes possession of the vehicle. Dealers are expected to provide a time of sale report at the time of or within three days of the taxpayer taking possession of the vehicle. Additional requirements for these credits are available on IRS.gov.

Transferring Clean Vehicle Credits at Acquisition

An election to transfer a clean vehicle credit cannot be made at the time of acquisition alone because acquisition does not immediately confer entitlement to the credit. Taxpayers are advised to wait until the time of sale to make the credit transfer election. The transfer election typically occurs when the taxpayer takes possession of the vehicle (the "time of sale"). Relevant authoritative guidance for this position includes Treas. Reg. sections 1.25E-1(b)(19), 1.25E-3(b)(7), 1.30D-2(b)(47), and 1.30D-5(b)(10), as well as Rev. Proc. 2023-33.

Energy Credits Online Portal Changes

The new user registration for the Clean Vehicle Credit program through the Energy Credits Online portal will close on September 30, 2025. However, the portal will continue to be accessible beyond this date for limited usage by previously registered users. This ongoing access is specifically for the submission of time of sale reports and any necessary updates to such reports, such as instances where a vehicle has been returned.

Manufacturer Reporting for Section 25C

Regarding the energy efficient home improvement credit under section 25C, qualified manufacturers are no longer required to make periodic written reports to the IRS concerning specified property. This change is due to the accelerated termination of the section 25C credit, and it applies even for property placed in service before January 1, 2026. It is important to note that a manufacturer is still obligated to register with the IRS to be recognized as a qualified manufacturer for their specified property to be eligible for the credit.

Claiming Section 25D Credit Based on Completion Date

For the residential clean energy credit under section 25D, a credit cannot be claimed for property installed or constructed after December 31, 2025, even if the taxpayer made payment for the property on or before December 31, 2025.

Installation: Section 25D(e)(8)(A) provides that an expenditure related to an item is treated as made when the original installation of that item is completed. Therefore, if the installation is completed after December 31, 2025, the expenditure will be deemed made after that date, thereby precluding the taxpayer from claiming the section 25D credit.
Construction/Reconstruction: Similarly, for expenditures connected to the construction or reconstruction of a structure, Section 25D(e)(8)(B) stipulates that such an expenditure is treated as made when the taxpayer’s original use of the constructed or reconstructed structure begins. If the construction or reconstruction is completed and the taxpayer’s original use commences after December 31, 2025, the expenditure will be treated as made after December 31, 2025, thus preventing the claim of the section 25D credit.

Prepared with assistance from NotebookLM.