2026 Midterms: What Changes for 179D and the ITC?

by Josh Howes, CEO, Walker Blue, Energy Tax Incentives firm

The bottom line

Nothing changed for your projects this week. Democrats will control the House and Senate in January, but the One Big Beautiful Bill Act remains the law. Changing §179D or the clean energy credits would require new legislation to pass both chambers and receive the President’s signature.

Neither chamber will have a veto-proof Democratic majority. Republican support and agreement with the White House would be necessary for any restoration to become law.

Our advice to owners, designers and developers is to plan under current law, protect the claims they already have, and treat any restoration as a possibility rather than a reason to delay a project.

Where the law stands today

The deadlines established in July 2025 remain in effect. The IRS guidance on §179D, IRS termination FAQs and §48E statutory text provide the current rules.

Incentive	Date that matters	Where it stands
§179D deduction	Construction of the qualifying property began on or before June 30, 2026	The deduction can still be available when the property is placed in service later, if the other requirements are met. Construction beginning after that cutoff is not eligible under current law.
§§45Y and 48E solar and wind	Construction began on or before July 4, 2026, or the facility is placed in service by December 31, 2027	Projects beginning construction after July 4, 2026 must be placed in service no later than December 31, 2027. Those that began on or before July 4 are outside that accelerated deadline, subject to the applicable beginning-of-construction and continuity rules.
§48E energy storage, geothermal electricity and advanced nuclear	Technology-specific eligibility and applicable construction-start phaseout rules	These technologies do not share the accelerated wind and solar termination. Qualifying projects may remain eligible under §48E’s separate phaseout framework.
§48 commercial geothermal heat pumps	Construction beginning through 2034	The base credit rate is 6% for starts through 2032, 5.2% in 2033 and 4.4% in 2034. The increased rates are generally 30%, 26% and 22%, respectively, where prevailing wage and apprenticeship requirements or an applicable exception are satisfied.

A §179D project that met the June 30, 2026 construction-start cutoff can still produce a deduction in a later tax year. Buildings placed in service in 2028 or 2029, and qualifying retrofit projects that require a full year of post-retrofit energy data, may keep §179D work active well beyond the cutoff.

Prevailing wage and apprenticeship requirements generally determine whether the increased §179D deduction is available. They are not a blanket condition for receiving the base deduction. Energy modeling, certification, allocation where applicable, and other eligibility requirements still matter.

For newer §48E projects, prohibited foreign entity and material assistance restrictions can affect whether the credit is available. Domestic content is a separate consideration, including for bonus credit amounts and certain elective-pay situations, not a universal requirement for the base ITC.

What changed on Election Day

Democrats secured control of both chambers, with at least 54 Senate seats and a House majority. Some races were still uncalled as of November 5. Sen. Ron Wyden is expected to chair Senate Finance and Rep. Richard Neal is expected to chair House Ways and Means, giving Democrats control of the two tax-writing committees in the new Congress.

Several proposals from the 119th Congress offer a starting point for discussion, although none has become law and the measures would need to be reintroduced in the 120th Congress if they do not pass before the current Congress ends.

Energy Bills Relief Act. Introduced in March by Reps. Sean Casten and Mike Levin, H.R. 7977 proposes restoring clean energy tax incentives among broader energy affordability measures.
Wyden’s electricity-demand proposal. S. 4175, introduced in March by Sen. Wyden, would extend the §§45Y and 48E credits using electricity prices and demand as part of the framework.
The June 29 Min and Olszewski letter. Reps. Dave Min and Johnny Olszewski Jr., co-chairs of the House Sustainable Energy and Environment Coalition’s Building Resilient Housing Task Force, urged House tax leaders to preserve §179D. Their letter identified Rep. Mike Thompson’s American Energy Independence and Affordability Act and Rep. Brian Fitzpatrick’s American Energy Dominance Act as possible legislative vehicles. Thompson’s H.R. 5862, introduced October 28, 2025, listed incoming Ways and Means chair Richard Neal as its first original cosponsor. Walker Blue supported that effort in its June 30 statement. Min and Olszewski won reelection. Thompson’s race remained uncalled as of November 4.
American Energy Dominance Act. Introduced in April by Republican Reps. Brian Fitzpatrick, Mike Lawler, Max Miller and Mike Carey with support from North America’s Building Trades Unions, this proposal would restore §179D without a scheduled expiration and remove the accelerated deadlines for the §§45Y and 48E clean electricity credits.

All four original Republican sponsors of the American Energy Dominance Act lost their seats in Tuesday’s election. That does not eliminate the policy proposal, but any renewed Republican effort in the next Congress would need new sponsors. The Min and Olszewski letter offers a separate, continuing point of contact on §179D, without establishing that an extension has enough votes to pass.

Why a full restoration faces major obstacles before 2029

A bill reversing the 2025 energy provisions would need President Trump’s signature. The new Democratic majorities fall short of the two-thirds vote needed in both chambers to override a veto. Budget reconciliation does not avoid that requirement because a reconciliation bill also goes to the President.

Tax policy specialists quoted by Accounting Today on November 4, including leaders from Deloitte, Grant Thornton and KPMG, described broad tax code changes over the next two years as unlikely, while identifying room for narrower bipartisan agreements.

Cost is another constraint. Restoring deductions and credits has a federal revenue impact, so lawmakers would need to address the budgetary implications of any package.

Treasury and the IRS also remain part of the Trump administration. They retain responsibility for guidance on beginning of construction, prohibited foreign entities, material assistance and domestic content under existing law. Congress can hold hearings and pursue oversight, but a change to the statute would still face the same legislative and presidential hurdles.

Where §179D and the ITC could still move

Section 179D has a documented history of support from members of both parties and the building trades. Its role in lowering operating costs for public buildings, schools and commercial owners gives lawmakers a concrete subject for a narrower discussion about energy affordability and construction investment. The June 29 Min and Olszewski letter and the April Republican proposal show that members on both sides of the aisle raised the issue before the election. They do not establish that a deal is imminent.

Solar and wind face an additional challenge because their accelerated deadlines were a central change in the 2025 law. Storage, geothermal electricity and advanced nuclear are differently situated because §48E continues to offer a credit framework for those technologies.

Negotiations on must-pass legislation, including government funding, the debt limit or expiring tax provisions, may provide opportunities for targeted tax measures. That is a possible route, not a legislative commitment. The year-end session is expected to concentrate on funding and defense, and energy credit restoration is not currently a leading item on that agenda.

If §179D were restored, the effective date would matter as much as the extension itself. A change that applies only to construction beginning after enactment would not help a building that started in the second half of 2026. A retroactive restoration reaching back to July 1, 2026 might. No such retroactive relief has been enacted.

What to do now

Preserve beginning-of-construction evidence for §179D property started by June 30, 2026. Collect dated contracts, invoices, work records and other support for how the applicable start-of-construction test was met. Continue documenting energy performance, certifications and any requirements for the increased deduction.
Keep records for buildings that started after June 30, 2026. Retain design documents, energy models, construction records and cost information in case Congress eventually adopts retroactive relief. Do not assume a future restoration will occur.
Manage solar and wind schedules under current law. Projects that started after July 4, 2026 generally need to be placed in service by December 31, 2027. Projects that established a start on or before July 4 still need to support the applicable beginning-of-construction and continuity requirements.
Evaluate §48E compliance separately for each project. Review prohibited foreign entity and material assistance restrictions, eligible basis, and prevailing wage and apprenticeship requirements. Evaluate domestic content where it affects the available bonus credit or the intended monetization approach.
Budget using today’s law. Treat any restoration as potential upside, not as an assumption in project economics or construction schedules.

Frequently asked questions

Did the 2026 election automatically restore Section 179D?

No. An election result does not amend the Internal Revenue Code. A restoration would require enacted legislation. As of November 5, 2026, the construction-start cutoff remains in effect. [1, 7, 9]

Can projects that began before the Section 179D cutoff still qualify?

Property for which construction began on or before June 30, 2026 may remain eligible, depending on project qualification, timing and applicable requirements. The cutoff concerns the beginning of construction; meeting it does not eliminate certification, energy-performance or other requirements. [1, 9]

Should project owners delay construction while waiting for tax legislation?

Our recommendation is to budget and schedule using current law. Retain relevant project records, but do not assume Congress will adopt an extension or make any relief retroactive.

Do geothermal heat pumps and geothermal electricity use the same ITC provision?

No. Geothermal heat pump equipment is addressed under Section 48, while qualifying geothermal electricity projects may fall under Section 48E. Eligibility depends on the technology, project timing and applicable requirements. [2, 8]

About the author

Josh Howes is CEO of Walker Blue, an energy tax incentive firm. This article presents Walker Blue’s perspective on project planning and energy tax policy.

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Walker Blue will monitor the committee agenda in January and any new legislation affecting §179D and the ITC. If a project is close to one of these dates, we can help assess the records and eligibility under current law.

This article reflects information available November 5, 2026 and is intended for general information rather than legal or tax advice. Eligibility depends on project-specific facts and applicable law.

What the 2026 Midterms Mean for §179D and the ITC