June 18, 2025
On May 22, 2025, the U.S. House of Representatives passed the One Big Beautiful Bill Act (OBBBA) by a narrow margin of 215–214, with one member voting present. The OBBBA proposes significant amendments to the Inflation Reduction Act (IRA) of 2022, most notably by substantially accelerating the phase-out of the Investment Tax Credit (ITC) and Production Tax Credit (PTC) for clean energy projects.
On June 16, 2025, the Senate Finance Committee (SFC) released its own version of the legislation, proposing revisions that soften, but do not entirely reverse, the steep rollbacks introduced by the House. While the Senate plan extends certain credits relative to the House’s version, it still accelerates phase-outs well ahead of the original timelines set by the IRA. While nothing is final, the release of the SFC text signals the beginning of formal negotiations. Many industry observers anticipate that the final legislation will fall somewhere between the House-passed version and the SFC proposal.
It is worth noting that the House-passed OBBBA and the SFC text both propose changes to other tax credits and regulations, but this article will primarily focus on proposed changes to the ITC (Section 48E) and PTC (Section 45Y) for wind, solar, and battery energy storage system (BESS) projects.
The House-passed OBBBA proposes to eliminate eligibility for the ITC and PTC for solar, wind, and battery storage facilities if construction begins more than 60 days after the OBBBA's enactment. It further requires that qualifying projects be placed in service no later than December 31, 2028. Facilities that fail to meet either the construction start deadline or the placed-in-service requirement would be ineligible for any associated tax credits.
This marks a significant departure from the original structure of the IRA. Under the IRA, the ITC and PTC were intended to stay at their full value (100% of the base credit) until either 2032 or the first year that U.S. power sector emissions drop to 25% of what they were in 2022, whichever comes later. Once either milestone is reached, the credits would begin to phase down gradually: the first year maintains the full 100% value, followed by a reduction to 75% in the second year, and a final drop to 25% in the third year, after which the credits would expire entirely.
See the chart below for a full breakdown:
The SFC text proposes to push back the phase-out of ITC and PTC incentives compared to the OBBBA, although it still speeds up the phase-out compared to the IRA for wind and solar technologies.
For wind and solar facilities, the SFC text proposes the following phase-out schedule for ITC and PTC incentives:
Notably, the SFC text proposes no such phase-out for BESS projects, meaning that the original phase-out schedule of the IRA still applies to all BESS facilities.
See the graphic below for a comparison of the IRA, House-passed OBBBA, and SFC text proposal:
Now, the SFC text will be reviewed alongside contributions from other Senate committees and compiled into a full reconciliation package by the Senate Budget Committee. From there, it heads to the Senate floor for debate and a vote, where it can pass with a simple majority under reconciliation rules. Additionally, Senators may propose amendments during the process, which could result in the final Senate-passed bill including language that differs from the original SFC text. Once the bill passes the Senate, there are several possibilities for what happens next:
Option 1: Senate Passes Bill, House Accepts Without Changes
If the Senate passes its revised version of the bill and the House votes to adopt it as-is, the legislation could proceed swiftly to the President’s desk for signature. While this scenario is unlikely, it remains possible.
Option 2: Senate Passes Bill, House Seeks Changes
More likely, the House will push back on the Senate’s proposal. In that case, a conference committee will be formed to reconcile the differences. Once a compromise is reached, both chambers will need to vote again on the final negotiated version before it is sent to the President’s desk.
What to Expect
Although the outcome is far from certain, most signs point toward a compromise that lands somewhere between the House’s rapid rollback and the Senate’s slightly more phased approach. Regardless of where negotiations land, industry stakeholders should be prepared for significant departures from the ITC and PTC structures established under the IRA.
