President Trump signed H.R. 1, the budget reconciliation and tax bill known as the “One Big Beautiful Bill Act” (OBBBA), on July 4, 2025. The bill accelerated the phase-out of certain existing energy-related tax credits and limits tax credits for projects connected to “prohibited foreign entities.” Following the bill's passage, President Trump issued an Executive Order directing the Treasury Department to issue guidance related to the use of tax credits. An earlier Senate draft of the bill proposed a new excise tax on solar projects that would have applied even after credit expiration, but was dropped in the final legislation.
Key Energy-related Tax Credit Impacts for REITs
- Solar or wind projects beginning construction within 12 months of the bill’s enactment will qualify for the investment tax credit under section 48E if “placed in service” within 4 calendar years of the start of construction; projects beginning construction after July 4, 2026 must be placed in service by Dec. 31, 2027, to qualify for the credit.
- Energy storage systems and other non-solar/wind clean energy projects have until the end of 2033 to begin construction to qualify for full tax credits, which phase down to 75% in 2034 and 50% in 2035.
- The bill eliminates the EV charging station credit for property placed in service after June 30, 2026.
- The bill significantly reduces or eliminates tax credits for projects that receive “material assistance” from Foreign Entities of Concern (FEOCs), which is determined based on the percentage of project materials or components sourced from or influenced by a FEOC.
- In general, transferability is retained under current law to the extent the credits are available.
- The bill eliminates the 179D deduction for energy-efficient commercial buildings for projects that begin after June 30, 2026.
Potential Further Impacts Following Executive Order
The EO directs the Department of the Treasury to take action to strictly enforce the termination of the clean electricity production and investment tax credits by issuing new and revised guidance. This includes potential revisions to prevent the broad use of existing safe harbor rules around the “beginning of construction” to prevent the artificial acceleration or manipulation of eligibility. Guidance is to be issued within 45 days of the OBBBA's enactment, i.e., by August 18, 2025. Nareit joined with CRE industry trades in sending a letter to Treasury Secretary Scott Bessent requesting guidance that provides certainty and minimizes disruption for rooftop solar projects seeking to qualify under existing safe-harbor guidance as the market adjusts to the phase-out of energy tax credits.
Nareit members can access Nareit’s Federal Tax Legislation Advocacy page, which includes a detailed summary of the tax bill's full impact on REITs and real estate investment. Additionally, please see tax bill insights from Nareit Industry partners, EY, KPMG, and Goodwin.