Here is our briefing on the current proposals to end the IRA tax credits within the congressional reconciliation bill process.

Background

As we move into the heart of the first year of the Trump administration, it is not surprising that the administration seeks to pass legislation to extend and expand the tax cuts enacted in 2017, which are due to expire at the end of 2025. With Republicans controlling both the U.S. Senate and the U.S. House, an infrequently used tool is available to them: the “reconciliation process”. As long as Trump is able to get his party to deliver 50 votes he can pass his agenda without support from any Democrats. 

However, this is far from over. Lawmakers in both parties are concerned about the growing deficit, and cutting key programs that are popular in their districts. 

The 2017 tax law changed personal tax codes to favor the rich at the expense of everyone else. Here’s another resource on that law: The 2017 Trump Tax Law Was Skewed to the Rich, Expensive, and Failed to Deliver on Its Promises. 

Giving tax breaks to the richest Americans comes with a high price tag for all of us – namely debt that we will be handing to future generations. Extending these tax cuts would add close to $4 trillion to national debt over the next 10 years, even with significant cuts to existing federal spending. Some resources: 

• Trump tax cuts would add $3.8 trillion to debt: CBO
• 2025 Tax Cuts Tracker
• More on the full reconciliation bill

Why is Congress using this “Reconciliation” approach?

Given that:

1. A bill needs to pass through Congress and be signed into law in order make the 2017 extension a reality;
2. The Democratic party opposes extending the 2017 cuts in full;
3. The Republicans hold slim majorities in the House and Senate; and
4. The Senate filibuster rules mean 60 votes are realistically required to pass a bill normally;

 …the current administration is trying to pass the new tax extension through the process of reconciliation.  See more info on that at the link below, but in general, you may have heard it referred to recently as the “The One Big, Beautiful Bill Act,” which narrowly passed the US House 215-214-1 on May 22, 2025. The bill includes spending cuts to try to enable extension of the 2017 tax cuts. But even after many cuts to core social safety net programs, it would still add $3.8 trillion to the national debt over the next 10 years. The bill would need a majority vote from both chambers of Congress in order to reach reconciliation.

IRA Clean Energy Tax Provisions

In May we learned from the initial proposal from the US House over how the clean energy tax credits from the Inflation Reduction Act (IRA) of 2022 would fare within this process, and the initial answer is – very, very poorly.  Here are the latest assessments from Crux, and here is a summary:

The Good: Not much – except that as written right now the residential credit changes are not planned to go into effect until 2026. (A good reason to get your projects and purchases done this year!) Also, there is no change to the Direct Pay benefit provision for non-profits.

The Bad: The proposal aims to stop or phase out most clean energy tax credits at the end of this year, except nuclear, carbon capture, biofuels, and mining, which have real phaseouts and more lenient guidelines. Biofuels (ethanol) got a time extension. 

The Ugly: That would be bad enough, but they’ve also inserted some provisions that make the credits that remain from the process “unworkable,” meaning that they’d create so much uncertainty and risk that those remaining credits wouldn’t get used much, if at all, for the limited time they have left. They:

1. phase out the transferability of the credits in most cases, thus greatly shrinking the capital markets open to those credits; 
2. impose a “beginning of construction” deadline of 60 days after this bill is passed into law to qualify for the commercial credits, then also require them to be placed into service by the end of 2028 (except for nuclear facing credits). This would functionally kill the credit availability for most solar and wind projects not already underway. Does not apply to nuclear, biofuels, carbon capture, mining, and some other credits and technology.
3. impose a “foreign entity of concern” requirement on the credits that is so broad as to potentially disqualify or question virtually any potential credit claim for clean energy. The requirements of this definition are far more lenient for nuclear, carbon capture, biofuels, and mining credits.

The Effects

Modeling of the proposed changes to IRA clean energy tax provisions show that they would significantly increase carbon emissions, put a lot of people out of work in the US, drastically decrease US GDP, and increase the price of energy for all American consumers.  

• Rhodium Report
• Innovation Report
• Net Zero Report
• Trump’s Energy Price Hike: A Timeline of Broken Promises
• SEIA estimates budget bill could wipe out almost 300K clean energy jobs
• Clean energy projects are already being canceled in anticipation of cuts
• And in Minnesota as well

Those provisions have already had significant and broad impacts within the US economy, and their repeal risks the US fading as a global power in the clean tech sector. However, this doesn’t seem to be a priority of the current federal administration.  

What Next?

It’s very important to remember that while this has passed the House of Representatives, this is still a proposal and has not passed into law yet. It now goes to the Senate to be taken up for debate and vote. If it changes there in any way and passes, it would have to go back to the House for a confirmation vote of those changes. It would then require the signature of the President to be signed into law. 

And, of course, the bill, and the IRA clean energy tax credit proposals within, could be significantly improved in regards to clean energy. Or the bill could fail generally, after which no changes to the IRA tax credits would occur at this time. And incidentally, if it doesn’t pass, our already inadequate social support programs would not be cut any further, and the federal government would have enough money to pay for supporting its existing policies, structures, and programs without substantial national debt being incurred.

At this time, the best thing you can do is to contact your Senator, and let them know that these IRA clean energy tax credits matter to you, and that you want to see them preserved. MNIPL has an action alert to help you contact your Senator and let them know why you want to see the clean energy tax credits saved.

For more resources, see the L4GG sign-on letter to Senators.