The Republican-led House of Representatives passed a reconciliation bill on Thursday that reverses many provisions of the Inflation Reduction Act (IRA). The bill, which passed with a vote of 218-214, now awaits President Donald Trump’s signature. Under the new legislation, solar, wind, and clean hydrogen will lose incentives, while nuclear and geothermal will retain some benefits from the IRA.
Solar and wind developers must either connect to the grid by the end of 2027 or break ground on new projects within 12 months of the bill’s passage to access tax credits. The data center sector, which has relied on solar, wind, and batteries for quick and inexpensive power, may face challenges. Green hydrogen startups are also likely to be affected, with tax credits worth up to $3 per kilogram set to expire at the end of 2027, five years earlier than planned under the IRA.
Geothermal, nuclear, and battery storage tax incentives will survive through the end of 2033.
House reverses key IRA incentives
However, restrictions related to “foreign entities of concern” could make acquiring these tax credits more difficult.
The bill reflects a significant shift in energy policy that could impact the growth of various clean energy sectors and efforts to address climate change. Ways and Means Committee Chairman Jason Smith (MO-08) stated, “This legislation will not only be transformational for the American economy, ensuring that it works for working-class Americans, not against them, but it also provides the largest one-time investment in border security in American history.”
The bill promises tax cuts for families, workers, and small businesses, with the typical family expected to see up to $10,900 in additional take-home pay. It also aims to protect and create up to 7.2 million jobs and eliminate taxes on tips, overtime pay, and car loan interest.
The legislation includes provisions to expand education savings accounts, support working families through child care credits and paid leave tax credits, and enhance the Adoption Tax Credit. It also aims to put American families in control of their health care by expanding health savings accounts and eliminating fraud and waste in Obamacare. The nation now awaits President Trump’s signature to enact these sweeping reforms, which supporters claim will usher in a “Golden Age of America.”