FAQTemplates.net

Key Takeaway: Major Credits End Sooner Than Expected

The Internal Revenue Service (IRS) has released FAQs providing immediate guidance on the "One Big Beautiful Bill" (OBBB), Public Law 119-21. The most critical information is the accelerated termination of nearly all major clean energy tax credits, which were previously set to run much longer.

Taxpayers must act quickly. The IRS emphasizes that while these FAQs provide penalty relief for reasonable reliance, the law controls, and strict deadlines apply.

📅 Accelerated Termination Dates for Energy Incentives

The following table summarizes the new, earlier termination dates for the primary energy credits and deductions impacted by the OBBB:

🚗 Critical Rules for Clean Vehicle Credits (Sections 25E, 30D, 45W)

The deadline for acquiring clean vehicles is rapidly approaching on September 30, 2025. The IRS guidance provides crucial clarification on what "acquired" means and how to secure your eligibility.

What Constitutes "Acquired"?

For the purpose of securing the credit before the September 30, 2025, deadline, a vehicle is considered "acquired" when two conditions are met:

A written binding contract is entered into.
A payment has been made (this can include a nominal downpayment or a vehicle trade-in).

Placing the Vehicle "In Service" is Key

Acquisition alone does not allow you to claim the credit immediately. The credit is claimed when the vehicle is "placed in service" (i.e., when you take possession).

Crucial Exception: If you meet the "acquired" test (binding contract + payment) on or before September 30, 2025, you will be entitled to claim the credit when the vehicle is delivered, even if you take possession after the September 30, 2025, termination date.

Credit Transfer and Reporting

Transfer Election: You cannot elect to transfer the credit to the dealer at the time of acquisition. The election to transfer the credit must be made at the time of sale (when you take possession).
Dealer Portal Closing: New dealer registration for the Clean Vehicle Credit program via the Energy Credits Online portal will close on September 30, 2025. The portal remains open only for previously registered users to submit final reports.

🏡 Homeowner & Builder Deadlines (Sections 25C & 25D)

The deadlines for residential and construction credits are less flexible and involve a major trap for homeowners.

Residential Clean Energy Credit (Section 25D) Trap

This credit covers solar panels, battery storage, and other clean energy systems. The expenditure is treated as made when the original installation is completed.

WARNING: If you pay for your solar system or construction project on or before December 31, 2025, but the installation is not completed (or the original use of the structure does not begin) until after December 31, 2025, you will not be able to claim the Section 25D credit.

Reporting Relief for Manufacturers

Due to the accelerated termination of the Energy Efficient Home Improvement Credit (Section 25C), qualified manufacturers are no longer required to submit periodic written reports to the IRS regarding specified property. Manufacturers must still register to qualify their property for the credit.

✅ Action Items for Taxpayers

The immediate termination dates require taxpayers to finalize transactions promptly:

Vehicle Buyers (30D, 25E): To secure your credit, you must enter a written binding contract and make a payment by September 30, 2025.
Homeowners (25D): Ensure your solar or clean energy installation is fully completed before December 31, 2025, regardless of when you made the initial payment.
Tax Professionals: Be aware that reliance on these FAQs provides penalty relief, but the underlying law controls the tax liability.

Disclaimer: These FAQs do not constitute a Revenue Ruling and may be updated. Consult a qualified tax professional to discuss your specific facts and circumstances.

URGENT TAX ALERT OBBB Accelerates Termination of Major Energy Credits