Tax Bill Passed by House Could Gut Clean Energy Tax Credits

WASHINGTON (AP) — The multitrillion-dollar tax breaks package passed by the U.S. House of Representatives early Thursday would gut clean energy tax credits that were approved three years ago, while supporting increased mining, drilling, and other traditional energy production.

The bill, which now heads to the Senate, repeals or phases out more quickly clean energy tax credits passed in the 2022 Inflation Reduction Act during former President Joe Biden’s term. Biden’s climate law has been considered monumental for the clean energy transition, but the House bill effectively renders moot much of the law’s incentives for renewable energy, such as wind and solar power.

Clean energy advocates said the bill walks back the largest government investment in clean energy in history.

Abigail Ross Hopper, president and CEO of the Solar Energy Industries Association (SEIA), issued this statement:

“If Congress does not change course, this legislation will upend an economic boom in this country that has delivered an historic American manufacturing renaissance, lower electric bills, hundreds of thousands of good-paying jobs, and tens of billions of dollars of investments primarily to states that voted for President Trump.

“This unworkable legislation is willfully ignorant of the fact that deploying solar and storage is the only way the U.S. power grid can meet the demand of American consumers, businesses, and innovation. If this bill becomes law, America will effectively surrender the AI race to China and communities nationwide will face blackouts.

“But that’s not all: Americans’ electric bills will soar. Hundreds of factories will close. Hundreds of billions of dollars in local investments will vanish. Hundreds of thousands of people will lose their jobs. Families will lose the freedom to control their energy costs. And our electric grid will be destabilized.

“It’s not too late for Congress to get this right. The solar and storage industry is ready to get to work with the U.S. Senate on a more thoughtful and measured approach to unleashing true American energy dominance to create a brighter future for all Americans.”

American Clean Power Association (ACP)’s CEO Jason Grumet stated: “This morning the House voted to immediately end the clean energy tax incentives that provide economic growth, good-paying jobs, and low-cost electricity to millions of Americans. By a margin of one vote, the House voted to retreat in our competition with China for manufacturing jobs and to weaken our technology sector in the global race for digital dominance. For the good of our country’s energy security and energy bills—this cannot stand. We urge the Senate to reject the strident House approach and pass a reasonable energy policy for the American people.” 

Solar Energy Manufacturers for America (SEMA): “Despite many reassurances that Members support domestic manufacturing, a vote for this bill was a vote to close U.S. factories and concede manufacturing jobs of the most important energy resource of the 21st century to China,” said SEMA Coalition Executive Director Michael Carr. “While we appreciate the endorsement of the Advanced Manufacturing Production Tax Credit by the House, this retroactive repeal–with many contracts in place for U.S.-made products through 2030–of the incentives to purchase American-made solar components undermines existing commercial agreements. The result will push developers back to buying overly-subsidized Chinese products evading our trade laws, while raising electricity costs for everyone. If this were to become law, it would be a boon to Chinese manufacturers and a tremendous step backward for American jobs, competitiveness in manufacturing and AI, economic security, and energy security.”

And the Electrification Coalition went into more depth, calling the passage a “Sledgehammer” to the EV Industry:

The U.S. House of Representatives passed the budget reconciliation bill, proposing to dismantle all of the tax credits that are creating momentum and opportunity for the U.S. electric vehicle (EV) industry. The credits that would be cut include:

• Section 30D, which provides up to $7,500 for the purchase of an eligible new EV (the bill provides an exception for vehicles from manufacturers that have not sold 200,000 vehicles placed in service by the end of 2026);
• Section 30C, which provides a 30% credit up to $100,000 per single item or $1,000 for eligible home refueling infrastructure;
• Section 45X, which supports a percentage of the cost of producing certain technologies (the bill would phase it out by 2028 with additional foreign entity of concern [FEOC] requirements);
• Section 45W, which provides up to $7,500 for the purchase of eligible commercial EVs under 14,000 lbs. and up to $40,000 for those over 14,000 lbs. (the bill provides an exception that will allow for tax credits to be taken for purchases with a binding contract signed before May 12, 2025 and placed in service by December 31, 2032); and
• Section 25E, which provides up to $4,000 for the purchase of an eligible used EV.

The bill also creates a new Car Tax targeting owners of electric vehicles and hybrid vehicles with an annual tax of $250 and $100, respectively.

Electrification Coalition Executive Director Ben Prochazka released the following statement:

“When considering the budget reconciliation bill, Congress is faced with a choice: Will the United States continue to lead in the automotive industry, or will we cede control to China?

“The bill passed by the House this morning takes a sledgehammer to the U.S. EV industry and undermines efforts to build robust, secure and reliable access to critical minerals. It would eliminate critical tax credits that are spurring private-sector investments, supporting critical mineral supply chain development, creating American jobs and ensuring the United States remains competitive in the global automotive market. Removing these credits would pull the rug out from under the auto industry and other industries related to EVs at a critical time, immediately putting American jobs at risk. The industry needs policy certainty and consistency to build domestic and allied supply chains.

“In an April 15 executive order, President Trump identified critical minerals and the derivative products that support demand for minerals—including EVs—as ‘foundational to United States national security and defense.’ However, the provisions included in the budget reconciliation bill would reduce U.S. demand for critical minerals, putting our nation at greater risk.

“These tax credits are boosting American innovation and reshoring jobs in the rapidly growing EV sector, having already created over 228,000 jobs and drawn in more than $200 billion in private investments. This bill puts those jobs and investments at risk. States and communities would have benefited from these investments for years to come. As this bill heads to the Senate, we urge a more balanced approach.

“The investments driven by these credits are felt around the country, including states like:

• Tennessee, which is seeing 16,300 EV jobs and $17.6 billion in investments
• Indiana, which is seeing 10,100 EV jobs and $16.2 billion in investments
• Ohio, which is seeing 10,200 EV jobs and $12.6 billion in investments
• Kansas, which is seeing 4,400 EV jobs and $4.5 billion in investments

“China, meanwhile, has been investing hundreds of billions of dollars in the EV sector for nearly 20 years, putting the United States at a competitive disadvantage. Ending these investments now will only put us further behind in the global shift to EVs.

“At the same time, Congress is also considering a $250 annual federal Car Tax on EVs. While all drivers should pay their fair share, this proposal is nearly three times what the average driver pays in federal gas taxes, which have not covered the cost of infrastructure for nearly 20 years. Rather than imposing a punitive tax on a subset of Americans, Congress should identify a fuel-neutral solution to the Highway Trust Fund’s structural insolvency.

“We strongly encourage the Senate to stand up and lead to preserve the 30D, 30C, 45X, 45W, and 25E tax credits to ensure that the United States dominates the global auto market.”