Federal Court Restores Solar and Wind Tax Credits

Federal Court Ends Trump Administration’s Limits on Solar and Wind Tax Credits

The U.S. District Court of the District of Columbia overturned the Internal Revenue Service’s (IRS) limits on solar and wind tax credits that were put into place last summer.

Catch up: The One, Big Beautiful Bill phased out clean energy tax credits last summer; however, definition changes at the IRS further limited access to these credits. The agency eliminated a previous convention that required companies to have invested 5% of the project’s total cost to qualify for credits 45Y and 48E. Instead, the Administration required proof that physical construction had begun.

Court’s Reasons: The Court ruled that the IRS failed to justify its elimination of the previous provision, consider reasonable alternatives, and demonstrate the change was not due to bias against wind and solar.

Exceptions: Solar and wind energy projects that use Chinese imports will still not be able to access these tax credits. In addition, these credits are only available for another month until July 4, 2026.

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