Patrick Cohen
Member
Today, House Republicans unveiled their tax reform package through the Ways and Means Committee ahead of a hearing scheduled for tomorrow at 2:30 pm ET. The Committee released full text of the legislation and a section by section summary of the bill.
This legislation is subject to change and still must secure passage in the Ways and Means Committee, followed by House and Senate consideration. Senate Republicans will likely propose different legislation, and the two chambers will likely need to reconcile differences. While not final, this proposed legislation represents a starting point for Republicans to reach a consensus within their House and Senate caucuses for their party-line bill. Major hurdles on State and Local Tax deductions, among others, remain unresolved.
How does the proposed legislation impact clean energy?
This legislation is subject to change and still must secure passage in the Ways and Means Committee, followed by House and Senate consideration. Senate Republicans will likely propose different legislation, and the two chambers will likely need to reconcile differences. While not final, this proposed legislation represents a starting point for Republicans to reach a consensus within their House and Senate caucuses for their party-line bill. Major hurdles on State and Local Tax deductions, among others, remain unresolved.
How does the proposed legislation impact clean energy?
- Timelines: The legislation would roll back many of the existing energy tax credits with some rapidly scheduled for elimination after 2025 and others phased out on a slower timeline beginning in 2029. Read CEBN's summary of these changes.
- Safe Harbor Rules Adjusted: Under existing law, taxpayers could claim energy credits through safe harbor rules triggered through "commence construction." These guardrails have been adjusted to a much more stringent "placed in service" threshold.
- Foreign Entities of Concern restrictions: The bill places restrictions on all energy tax credits for projects that use materials sourced from "foreign entities of concern."
- Transferability Eliminated: The IRA provision known as "transferability," which enables entities without a financial stake in a project to buy energy credits from project developers, will be eliminated after 2027. Notably, the "direct pay" provision, which enables non-tax paying entities to leverage tax credits, is untouched.