Senate Finance proposed IRA text is out

Section-by-section summary available here (IRA stuff starts on page 29)

Full text available here (IRA stuff starts on page 263)

Summary – it's a little less-bad than the House version:

Clean electricity tax credits (45Y & 48E) are phased out, fastest for solar and wind:

  • If construction commences before 12/31/2025, 100%
  • If construction commences between 12/31/2025 and 12/31/2026, 60%
  • If construction commences between 12/31/2026 and 12/31/2027, 20%
  • Zero tax credit for wind and solar thereafter

For all other clean electricity (including batteries, nuclear, geothermal, hydro):

  • If construction commences before 12/31/2033, 100%
  • If construction commences between 12/31/2033 and 12/31/2034, 75%
  • If construction commences between 12/31/2034 and 12/31/2035, 50%
  • Zero tax credit thereafter

Advanced manufacturing tax credit (45X)

  • Terminated for wind energy components after 12/31/2027
  • Phased out for critical minerals produced in 2031 (75%), 2032 (50%), 2033 (25%), zero thereafter
  • The rest seem to largely survive, with some foreign entity of concern restrictions added

EV tax credits are terminated within 3 months of the bill becoming law for used EVs (25E), 6 months for new (30D) and commercial (45W) EVs.

Home efficiency and electrification (25C) and rooftop solar (25D) tax credits are terminated within 6 months of the bill becoming law.

New energy efficient homes and commercial buildings (45L) tax credits are terminated within 12 months of the bill becoming law.

Clean hydrogen tax credit (45V) terminated for projects commencing construction after 12/31/2025 (which is probably all of them).

Existing nuclear production tax credit (45U) is maintained, but they can’t use fuel from a restricted nation (e.g. Russia) after 12/31/2027.

Clean fuels (a.k.a. biofuels) tax credit (45Z) extended through 2031, adds 20% penalty for fuel produced from feedstocks produced or grown outside the U.S.

Carbon capture and storage tax credit (45Q) largely survives, with some foreign entity of concern restrictions added. The direct air capture credit, which was higher than that for carbon capture from a smokestack, would be reduced so they're equal at $17 per ton of CO2.

Senate Finance also made an effort to make the Foreign Entity of Concern (FEOC) language workable. It will be interesting to hear what experts think of it.

The $250 annual EV fee and $100 annual hybrid fee from the House bill was not included in the Senate bill.

Overall, it's not good. There will also be divisions over this, the state and local tax (SALT) deductions, and Medicaid provisions, so expect more negotiations between the Senate and House, and certainly no guarantees that they can get a majority of votes in both chambers.

5 Replies

Thanks for the summary, @Dana Nuccitelli! To the volunteers reading this thread — we'll have a fresh action out for you ASAP so you can contact Senate Republicans with an updated message based on this latest development.

@Flannery Winchester Any chance by tomorrow evening? We have our chapter meeting then.

@Dana Nuccitelli
Jeez, what a mess. Very small improvements on clean energy tax credits, and the quid pro quo for this is being portrayed as further cuts to Medicaid. So they've pitted the climate/clean energy folks against the poor and working class. I'm sorry, but it's very hard to think of what in the world to say to Congressional Republicans these days.

It's worth noting that Republican Senate leaders say they're open to changes, so we have to advocate that those changes move in the right direction.

During a meeting with Senate Republicans on the megabill, Senate Majority Leader John Thune (R-S.D.) emphasized the need to get legislation to the president’s desk. But he and Crapo are also open to changes.

“They’re really patient. They are listening to everyone’s ideas. And they’re still working on it — it’s still a work in progress,” said Sen. John Hoeven (R-N.D.).

@Lynn Dransoff we should have the action out Wednesday morning! You can let folks at your chapter meeting know to watch for the action email in their inboxes and the action alert text on their phones tomorrow.

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