Congress Cuts Clean Energy Tax Credits in Budget Bill

Congress Cuts Clean Energy Tax Credits in Budget Bill \ Newslooks \ Washington DC \ Mary Sidiqi \ Evening Edition \ Congress passed a bill cutting clean energy tax credits, threatening solar, EV, and wind growth. The legislation favors fossil fuels and nuclear while rolling back Biden-era green incentives. Experts warn of higher energy costs and slowed climate progress

Quick Looks

• Solar and energy-efficiency tax credits to end by late 2025, raising home upgrade costs
• Electric vehicle credits eliminated after September 30, hurting EV sales growth
• Big solar and wind projects face stricter deadlines, risking cancellation
• Bill supports oil, gas, coal, and nuclear, undercutting climate goals
• Experts project $100–$200/year energy cost increase per household by next year

Deep Look

In a move that significantly alters America’s energy policy, Congress has passed a sweeping tax and spending bill that slashes funding for clean energy initiatives and incentives. Awaiting President Donald Trump’s signature, the legislation dramatically reverses many climate-focused policies from the Biden era and shifts federal support back toward traditional fossil fuels like oil, gas, and coal—despite their well-documented role in global warming and extreme weather patterns.

The legislation terminates or accelerates expiration dates on a host of clean energy tax credits, particularly those designed to help homeowners and developers adopt technologies that reduce carbon emissions. Under the Inflation Reduction Act passed during Joe Biden’s presidency, tax credits covered up to 30% of the cost of installing solar panels, heat pumps, and energy-efficient windows. The average rooftop solar system, often costing over $20,000, became significantly more accessible with these incentives.

Those credits now expire at the end of the year. The U.S. Treasury reports that more than 1.2 million families claimed $6 billion in solar and battery storage credits in 2023 alone, with another 2 million claiming energy efficiency upgrades like insulation and heat pumps. Climate advocates warn that without these incentives, homeowners will be discouraged from adopting green technologies due to high upfront costs, increasing long-term utility expenses.

Electric vehicle adoption will also take a direct hit. The new legislation eliminates federal credits of up to $7,500 for new EVs and $4,000 for used ones, effective after September 30. That’s a serious blow to a sector already facing price challenges—average EV prices hovered around $57,700 in May 2025 compared to $48,800 for gasoline vehicles. Transportation remains the largest single contributor to U.S. greenhouse gas emissions, making the rollback of EV incentives a direct challenge to emissions reduction goals.

Large-scale wind and solar developers face perhaps the biggest hurdles. The bill imposes sharply compressed timelines for when clean energy projects must break ground and become operational to qualify for federal tax credits. Industry experts say this change jeopardizes roughly 28 gigawatts of planned projects across states like Texas, Colorado, and Arizona. Without financial incentives, many of these developments may be delayed or scrapped, stalling national efforts to reach 30% solar and 20% wind energy targets by 2030.

Proponents of the bill, such as Sen. Mike Crapo (R-Idaho) and Sen. Shelley Moore Capito (R-W.Va), argue the legislation boosts energy reliability by backing fossil fuels and nuclear power. “The wind doesn’t always blow and the sun doesn’t always shine,” Capito noted, emphasizing the need for stable base-load energy. They claim the reforms will cut federal spending and give taxpayers relief.

But critics say the long-term effects could be economically and environmentally damaging. As climate change intensifies, more frequent extreme weather events are putting unprecedented stress on the U.S. power grid. Simultaneously, AI-powered data centers are driving up electricity demand, making clean energy expansion all the more critical.

Without tax credits, utility-scale renewable investments become riskier. Fewer wind and solar projects entering the grid could lead to energy shortages or higher dependency on foreign oil. Nonpartisan estimates suggest that average household electricity bills could rise by over $100 annually as early as 2026, with households in solar-heavy states like Arizona and California seeing increases closer to $200.

“This bill would raise energy costs, make the grid less reliable, and threaten our power supply just when we need it most,” said Lori Lodes of Climate Power, a climate advocacy group. “It’s a major setback for America’s clean energy future.”

While the full effects won’t be immediate, analysts say the long-term consequences are clear: fewer clean energy projects, higher emissions, higher bills, and slower progress on climate goals. And as the U.S. officially withdraws again from the Paris Agreement under Trump’s leadership, this legislative pivot marks a definitive end to one of the most ambitious federal climate pushes in U.S. history.

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