By David Diaz, CSO, Walker Blue, LLC
On August 21, 2025, the IRS released Fact Sheet FS-2025-05, providing answers to frequently asked questions (FAQs) about the impact of the One Big Beautiful Bill Act (OBBBA) on several energy credits and deductions. While the fact sheet is not binding legal authority, it does provide important clarity for taxpayers and advisors.
For Walker Blue clients, the biggest takeaways are the accelerated sunset of 179D, the elimination of certain residential credits, and the continued viability of the tech-neutral incentives under §48E.
Key Termination Dates
According to the IRS FAQ, the following incentives now end earlier than expected:
- 25C – Energy Efficient Home Improvement Credit: expires for property placed in service after 12/31/25.
- 25D – Residential Clean Energy Credit (solar, geothermal heat pumps, etc.): expires for expenditures made after 12/31/25.
- 25E – Previously-Owned Clean Vehicle Credit: expires for vehicles acquired after 9/30/25.
- 30C – Alternative Fuel Refueling Property Credit: expires for property placed in service after 6/30/26.
- 30D – New Clean Vehicle Credit: expires for vehicles acquired after 9/30/25.
- 45L – New Energy Efficient Home Credit: expires for homes acquired after 6/30/26.
- 45W – Commercial Clean Vehicle Credit: expires for vehicles acquired after 9/30/25.
- 179D – Energy Efficient Commercial Buildings Deduction: ends for property whose construction begins after 6/30/26.
Geothermal – Residential vs. Commercial
The FAQ confirms that residential geothermal heat pumps fall under 25D and therefore sunset at the end of 2025.
It’s important to note, however, that this does not apply to commercial or utility-scale geothermal projects. Those remain fully eligible under the tech-neutral ITC/PTC framework in §48E and §45Y, which OBBB did not eliminate.
Vehicles – Acquisition vs. Placed in Service
For clean vehicle credits (25E, 30D, 45W), the FAQ clarifies:
- A vehicle is “acquired” when there is a binding written contract and a payment (even a downpayment or trade-in).
- But the credit is only claimable when the vehicle is “placed in service” (delivered and in the taxpayer’s possession).
- Acquiring before September 30, 2025 secures eligibility, even if the vehicle is delivered later.
179D – Deadline Now Confirmed
The FAQ reiterates that 179D will not be allowed for projects whose construction begins after June 30, 2026.
For ESCOs, architects, and building owners, this is a hard deadline. Projects that break ground before then can still claim the deduction, but later projects cannot.
48 and 48E – The Long-Term Framework
While the FAQ itself did not address §48/§48E, nothing in it changes the fact that:
- §48 legacy ITC still applies for projects that begin construction before January 1, 2025.
- §48E tech-neutral ITC governs projects placed in service after December 31, 2024, covering solar, wind, geothermal generation, energy storage, and other zero-emission technologies. However, for applicable wind and solar facilities, if construction begins after July 4, 2026, the credit does not apply if placed in service after December 31, 2027.
These projects must meet prevailing wage, apprenticeship, domestic content, and prohibited foreign entity restrictions to access full credit amounts.
What This Means for Walker Blue Clients
- 179D: The countdown is on. Projects need to begin construction before July 1, 2026 to qualify.
- Residential Credits: Homeowner-level incentives (25C, 25D, 25E, 30D) are winding down rapidly.
- Commercial/Utility-Scale Credits: 48E remains the long-term path forward. Geothermal, storage, solar, and wind projects are still viable if structured correctly.
- Developers and Investors: Secure eligibility now with binding contracts, physical work, and compliance with prevailing wage and domestic content rules.
Final Thoughts
The IRS FAQs confirm the accelerated sunset of many familiar residential credits, and they reinforce the importance of timing for 179D. At the same time, commercial-scale incentives under §48E remain in place, giving developers and institutional clients a clear pathway forward.
At Walker Blue, we’re helping clients move quickly to capture near-term 179D deductions while planning strategically for long-term opportunities under §48E.
