The House and Senate tax titles for the One Big Beautiful Budget Act (OBBBA, H.R. 1) both make deep cuts to clean energy credits under the Inflation Reduction Act that have implications for different energy types, but differences between the two proposals will need to be reconciled before stakeholders can plan accordingly.
In 2022, Democrats used their majority control of Congress and the White House to pass the Inflation Reduction Act, which both amended existing green energy tax incentives and added new sections of the Tax Code. Now as Republican majority leaders deliberate on the fiscal year 2025 budget package to send to President Trump’s desk with the debt ceiling looming, taxwriters are looking to terminate, phase out, or otherwise restrict clean energy programs to offset the costs of extending expiring Tax Cuts and Jobs Act provisions.
The House passed its version of the OBBBA before its Memorial Day deadline, but the timing on the Senate bill remains an open question as the self-imposed deadline of July 4 becomes more ambitious by the day. The Senate Finance Committee released the tax provisions to be included in the larger budget reconciliation package. For a section-by-section comparison of the two versions’ treatment of IRA energy credits, see Energy Credit Cuts: House, Senate Bills Compared (06/18/2025).
Senate Finance Committee Ranking Member Ron Wyden (D-OR), who authored the language of the IRA credits, told reporters June 17 the Senate bill “does almost 90% as much damage as the House proposal” would.
“Hundreds of thousands of manufacturing jobs in the U.S. are now in danger,” said Wyden, denouncing both Republican proposals. He believes “projects all over the country” are already “being canceled.”
The OBBBA is poised to be “a stake in the heart of solar manufacturing” specifically, the top Democrat taxwriter said, adding that manufacturing will see a shift towards China. Consequently, domestic makers of machinery and components, particularly steel, “are going to get clobbered as well.”
U.S.-based energy production will see “a big cut” under the OBBBA regardless of whether it takes shape more closely to the House version or Senate version, Wyden continued. “And when energy production goes down in America, energy prices go up” and are passed onto consumers.
Jon Powers, founder and president of CleanCapital, said an “unparalleled amount of energy demand growth” is happening now, and there is not “enough new supply coming on to meet those demands.” He agreed with Wyden that “everyone’s electricity bills” will increase because “Congress is tying our hands behind our back instead of empowering us.”
The IRA credits have helped spur new projects and growth stateside, according to Powers. For example, he said solar energy storage accounted for “over 84% of energy capacity additions to the grid in 2024,” represented by “over $270 billion in private investment.” Powers noted that tax incentives for alternative energies are not new nor a “novel concept.”
Kristina Costa, former deputy assistant to the president and director of the Office of Clean Energy Innovation and Implementation, on the same call last Tuesday added that the OBBBA “imposes an absurd, aggressive” phase-out for wind incentives as well as solar. It “slaps all clean energy technologies, both in generation and in manufacturing, with a thicket of red tape restrictions around sourcing and financing that simply don’t apply to any other sector of the economy.”
Costa said if passed, the bill risks “freezing investment across the board.”
Timothy Wingate Jr., Intuit ProConnect ambassador, in comments provided to Checkpoint noted that the Senate version “is the only one keeping other credits through 2033-2036, like geothermal, hydropower, and nuclear.”
“This seems bigger than saving or losing tax dollars,” said Wingate. “These changes can most affect the construction and engineering fields. It looks like there could be a lot of jobs on the line in the next three years, depending on which way we go.”
Norton Rose Fulbright Partner David Burton also observed that it is “very clear” the Senate version is “more taxpayer favorable” by a “material degree.” Burton told Checkpoint in an interview both are “still painful for the industry,” but the Senate’s treatment of energy storage is noticeably less severe than the House bill. Both make heavy cuts to wind and solar, but the Senate bill is more hands-off with “all the technologies that qualify for the tech-neutral credits,” he said.
This is because the Senate bill would, except for wind or solar, largely not phase credits before 2032. This is “much better than the House bill, whereby you had to start construction within 60 days of enactment. So that’s a big difference, in that storage is clearly more favorable than wind and solar.”
The Senate version provides more clarity on restrictions for so-called prohibited foreign entities, Burton pointed out, but there are “still ambiguities and things that need to be addressed in administrative guidance” after enactment by the Treasury Department and the IRS. While the industry will “still have a bunch of questions,” it is “a big improvement from the House bill.”
For context, he said, the Senate’s language on foreign entities is twice the length of the House’s.
Still, either proposal “would be a huge setback for the U.S. renewables industry,” said Burton. Given the “huge increase in demand,” however, he is reserving some optimism for the “future of renewables in the United States, even with these legislative challenges.”
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