Renewable Energy Tax Incentives: Opportunities and Risks in 2025

This tax alert is the first in a series of monthly alerts that I will issue to discuss tax legislation in 2025 and the outlook for the Inflation Reduction Act (IRA) renewable energy tax incentives. This alert is intended to provide an overview of the issues and key players who will be involved in energy tax policy in 2025.  

Future alerts will provide detailed discussions on specific issues in addition to covering developments on tax and energy topics that businesses should consider as they move forward with renewable energy projects. My next tax alert will be issued in mid-February. 

If you have any questions about the information in this Tax Alert or need assistance on energy tax issues, please contact Susan Rogers at srogers@potomaclaw.com. 

Executive Summary 

• One Budget Reconciliation Bill or Two? What is the timetable for enactment?
  

This question cannot be answered with certainty at present, but it appears that the current plan of the House is to proceed as if there will be one Budget Reconciliation bill that will cover tax issues, border issues, and energy issues. The House stated preference has been to advance one budget reconciliation bill with the Senate favoring the two-bill approach. If the House proceeds with the one-bill approach and meets insurmountable challenges, the strategy could always shift to the two-bill approach.  

House Speaker Johnson has said that his goal is to send a completed budget reconciliation bill to incoming President Trump by the end of April.  Conventional wisdom is that would be an ambitious and probably unrealistic goal. A more realistic goal, while still ambitious, would be completion by the August Congressional recess. 

Appendix B includes a detailed explanation of the budget resolution and reconciliation process. 

• Price Tag of the Tax Bill and the Revenue Estimating Process
  

Will the cost of the 2025 tax bill be offset? The current estimated cost to extend the expiring provisions in the 2017 Tax Cuts and Jobs Act (TCJA) is $5.5 trillion according to the Treasury Department in a January release with the cost being $4.6 trillion according to the Congressional Budget Office (“CBO”) in a prior report. 

The incoming Chairman of the Senate Finance Committee (SFC), Senator Crapo (R-ID), is advocating for using an estimate “baseline” based on a continuation of “current policy”, which assumes that the TCJA provisions are permanent tax policy rather than “current law.”  Using a “current law” baseline assumes that the provisions have expired at the end of 2025, and therefore there is a revenue cost to extending them, which must be offset or added to the budget deficit. Using a “current policy” baseline means that the costs of the tax extensions would not be calculated as revenue losses. 

• Government Funding Bill and the Debt Limit Increase
  

In the lame duck session of the 118th Congress in December of 2024, Congress approved a short-term Continuing Resolution (CR) that provides for funding for the federal government for the current fiscal year 2025. That CR will expire on March 14, 2025. Former Treasury Secretary Yellen said that the federal government will hit its debt limit on January 21, 2025, with the government expected to use “extraordinary measures” to avoid default until Congress deals with the issue. 

The issue of increasing the debt limit has been a challenging and increasingly political issue in the last several years.  Current discussion appears to suggest that it is unlikely to be included in budget reconciliation legislation, but that it could be included in the government spending legislation for FY 2025.   

• Outlook for the IRA renewable energy tax incentives: Will they be challenged based on policy or used as revenue offsets for the 2017 tax cuts?
  

The uncertain fate of the IRA energy tax incentives has significant implications for renewable energy projects, including those that have been placed in service, those under construction, and those on the planning board. Tax credits planned for these projects may range from 30-50% representing millions of dollars for many projects. 

The uncertainty arises because of potential legislative changes to the IRA tax incentives as well as repeal or modification of rules and regulations issued by Treasury and the IRS pursuant to the IRA-enacted tax credits. The estimated 10-year costs of the IRA’s energy credits have increased since enactment when the estimate was $271 billion (Joint Committee on Taxation, August 2022) to an estimate of $870 billion according to the CBO for the period from 2026-2035. As more companies achieve compliance with the rules, those costs are expected to continue to increase. This suggests that members of Congress may view these credits as potential revenue offsets and decide to repeal or modify the rules or sunset them earlier than expected. 

Repeal of any of the IRA tax incentives will likely be on a prospective basis, since historically, retroactive repeal of tax laws has been rare (except in cases of perceived tax abuse) due to the economic uncertainty that would result. Transition rules that grandfather projects which have already begun may be considered. 

Even though Republicans will control both houses of Congress, it would seem unlikely that all the provisions of the IRA would be repealed, since many Republican districts have benefited significantly from IRA renewable energy projects. The first opportunity to assess the fate of individual IRA renewable energy tax credits will likely be when the House Ways & Means Committee releases draft legislation for a reconciliation bill or a summary of such a bill. This is not likely to happen until after the Budget Resolution has been approved by the House, which House leadership has targeted for February action. 

House Republicans on the Budget Committee are circulating a list of tax and spending proposals for consideration as the committee prepares to draft a budget resolution bill with reconciliation instructions in February.  The document includes nearly 50 revenue proposals that would either reduce or increase taxes with a 10-year revenue estimate for each proposal.  

It is no surprise that the IRA tax incentives are included on this list. Additional discussion of the list can be found below as well as discussion of the prospects for specific IRA tax credits. 

• Status of Guidance on IRA energy tax incentives: Congressional Review Act 

On January 20, 2025, President Trump issued several Executive Orders, including one that orders a freeze on certain new and pending federal regulations affecting all government agencies including the Treasury Department and the IRS. The Biden Treasury Department issued many pieces of guidance on the IRA in the last two years including Final Regulations on several issues, which would not be affected by the new Trump Executive Order. 

The Congressional Review Act (CRA), however, is a tool Congress can use to overturn certain federal agency actions such as Final Regulations. Senate Majority Leader Thune has stated that there is a list of recent Biden Administration regulations that may be considered for repeal by Republicans in the coming weeks. 

There are many regulations that were finalized after August 1, 2024, which is the date that the Congressional Research Service has identified after which rules might be vulnerable, including some of the IRA regulations. The Final Rules for the Prevailing Wage and Apprenticeship rules, the Direct Pay rules, and the Credit Transfer rules were all issued early in 2024 and will fall outside this CRA window.  

A discussion of the Final Regulations that were issued within the 60-day window for CRA review can be found below as well as the status of other guidance issued in the form of proposed regulations or notices. 

• Key Players in the Trump Administration and the 119th Congress
  

Appendix A below includes a discussion of the key players in the new Trump Administration on tax and energy issues including at Treasury, the IRS, the Department of Energy, and the new National Energy Council.  

Appendix A also includes a discussion of the House and Senate leadership including details on the House Ways & Means Committee and the Senate Finance Committee.  The discussion also covers information on the 2026 mid-term elections.  

What Should Companies Do Now? 

• Companies that are managing or planning renewable energy projects must monitor legislative developments in Congress in 2025 as well as the public debate on these issues. 

• Evaluate how current projects and planned projects could be impacted by changes to tax credits that might be used by these projects and incorporate these risks in project modeling and documents. 

• Consider the impact on the timelines for projects based on potential changes to the IRA tax credits and the ability to accelerate projects should the rules change to take advantage of effective dates for changes and transition rules. 

• Ensure that you understand the current rules for any tax credits you are planning to claim based on the statute and any guidance that was issued by the Biden Administration prior to January 20th. Understand the potential impact of the use of the CRA to repeal or modify guidance that has already been issued and whether that will impact projects for which you plan to claim credits.
  

Background and Discussion 

2025 Tax Bill:  Will there be One Budget Reconciliation Bill or Two? Timeline predictions 

House Speaker Mike Johnson has stated that a major tax bill that addresses the TCJA tax provisions is at the top of the House agenda for the early months of 2025. It is expected that the Trump Administration will summarize their tax priorities in the tax legislative blueprint for the FY 2026 budget, which is typically done through issuance of the Treasury Green Book. 

The budget reconciliation process (summarized in detail below) would allow the Republicans in Congress to move a substantial tax package without the threat of a Senate filibuster and possibly without support from Congressional Democrats. This fast-track procedure does have certain limitations, however, including a rule that it cannot increase the budget deficit outside of the 10-year budget window. 

Will there be one budget reconciliation bill or two? This question cannot be answered with certainty at present, but it appears that the current plan of the House is to proceed as if there will be one Budget Reconciliation bill that will cover tax issues, border issues, and energy issues. The House stated preference has been to advance one budget reconciliation bill with the Senate favoring the two-bill approach. If the House proceeds with the one-bill approach and meets insurmountable challenges, the strategy could always shift to the two-bill approach.  

The House position has reflected the reality of the narrow margin Republicans hold with the belief that it will be challenging to deal with that for two separate bills. Some Republicans are also concerned that pursuing the two-bill approach with tax issues included in the second bill would delay action on the tax bill until much later in 2025. 

House Speaker Johnson has said that his goal is to send a completed budget reconciliation bill to incoming President Trump by the end of April.  Conventional wisdom is that would be an ambitious and probably unrealistic goal. A more realistic goal, while still ambitious, would be completion by the August Congressional recess. 

The House Speaker has suggested this timeline: 

• House Budget Committee marks up the Budget Resolution which the House approves by the end of February (preferably before the House GOP retreat which starts on February 27th). 

• Authorizing committees complete work on the budget reconciliation instructions in March. 

• House votes on the Budget Reconciliation bill in April within the first 100 days of the Trump Administration. 

• Senate approves the Budget Reconciliation bill in May and sends it to the President for signature.
  

The Senate leadership has considered this timeline: 

• In February, Congress passes the first Budget Reconciliation bill covering border, defense, and energy within the first 30 days of the Trump Administration 

• Use the FY 2025 Budget Resolution for the first Budget Reconciliation bill and the FY 2026 Budget Resolution for the second Budget Reconciliation bill 

• Congress completes a Budget Reconciliation bill with tax issues later in 2025.
  

Price Tag for Tax Legislation in 2025 & Revenue Scoring Options 

Will the cost of the 2025 tax bill be offset?  

Typically, Democrats favor including revenue offsets for tax proposals that lose revenue, while many Republicans are willing to forego revenue offsets, except for those Republicans who are deficit hawks. The latter group may be a problem in advancing a budget reconciliation bill due to the very narrow margin in the House. 

The current estimated cost to extend the expiring provisions in the TCJA is $5.5 trillion according to the Treasury Department in a January release with the cost being $4.6 trillion according to the Congressional Budget Office (CBO) in a prior report. The primary reason for the significant difference in the two estimates is that the Treasury estimate begins the 10-year budget window in 2026, rather than 2025. By starting the budget window in 2025, the first-year costs of the 2017 tax cuts are minimal because they do not expire until the end of 2025. When the new fiscal year 2026 starts on October 1, 2025, the Treasury estimate starts the budget window in 2026 running through 2035, which means an extra year of the cost of extending the 2017 tax cuts is included in the 10-year budget window.  

The incoming Chairman of the Senate Finance Committee (SFC), Senator Crapo (R-ID), is advocating for using an estimate “baseline” based on a continuation of “current policy”, which assumes that the TCJA provisions are permanent tax policy rather than “current law.”  Using a “current law” baseline assumes that the provisions have expired at the end of 2025, and therefore there is a revenue cost to extending them, which must be offset or added to the budget deficit. Using a “current policy” baseline means that the costs of the tax extensions would not be calculated as revenue losses. Reportedly, House Ways & Means Chairman Jason Smith (R-Mo) is on board with this approach. 

One procedural issue will be that the CBO and the Joint Committee on Taxation are required to use a current law baseline when doing revenue estimates. The Budget Resolution would have to establish a different way of calculating revenue effects if a different approach is to be used. Yet another challenge might be in the Senate due to the Byrd Rule (discussed below), which requires that any provisions in the budget reconciliation legislation must change the government outlays or revenues, which means that any tax cuts that are extended would have to be modified in some way to result in a change to government revenues if the “current policy” method is used. 

Government Funding Legislation & the Debt Limit 

In the lame duck session of the 118th Congress in December of 2024, Congress approved a short-term Continuing Resolution (CR) that provides for funding for the federal government for the current fiscal year 2025. That CR will expire on March 14, 2025. Former Treasury Secretary Yellen said that the federal government will hit its debt limit on January 21, 2025, with the government expected to use “extraordinary measures” to avoid default until Congress deals with the issue. 

The House and Senate Appropriations Committees must complete their work on the individual appropriations bills before the March 14th date or another spending stopgap CR will be needed or an omnibus spending package to prevent a government shutdown. 

The issue of increasing the debt limit has been a challenging and increasingly political issue in the last several years.  Current discussion appears to suggest that it is unlikely to be included in budget reconciliation legislation, but that it could be included in the government spending legislation for FY 2025.  House Republican conservatives want significant spending cuts included. Senate Majority Leader Thune has also suggested that the Senate is not currently planning to include the debt limit issue in budget reconciliation legislation. 

Republican leadership will likely need Democratic support in the House to pass government spending legislation with the inclusion of a debt limit increase, which is why Republican conservatives do not want the government spending and debt limit issues included in a separate bill, rather than being included in the budget reconciliation bill.  Using the separate bill approach that requires Democratic support means that deals with Democrats on spending issues will be needed to get the necessary support, while the budget reconciliation bill, they believe, would be approved with only Republican support. 

Republican leadership, however, believe that including the spending issues and the debt limit in the budget reconciliation bill will complicate its progress this year.   

Inflation Reduction Act Tax Issues 

Although the focus of this tax alert is the energy tax incentives in the IRA, there were other significant provisions in that legislation, including billions of dollars of funding for the IRS, and several corporate provisions including the stock buyback tax and a corporate alternative minimum tax. 

Republicans are expected to target the IRS funding for partial repeal, although those revenue gains would be modest in comparison to the revenue cost of the energy tax incentives. 

TCJA Tax Issues  

TCJA provisions expiring in 2025 or being phased out include: 

• Individual provisions: Several provisions related to the taxation of individuals will expire including rates and brackets, standard deduction, mortgage interest deduction and charitable deduction, estate and gift tax exemptions, child tax credit, and Section 199A pass-through deductions.  

• R&D expenses: The TCJA phased out the option to immediately expense R&D expenses requiring such expenses to be amortized. 

• Bonus depreciation: The TCJA extended and enhanced the bonus depreciation benefit which allows businesses to immediately expense the full cost of qualifying property but phased it down and then eliminates it.  

• SALT cap: The TCJA included a $10,000 cap on the deduction of state and local income taxes, which is a provision that significantly affects taxpayers in high income tax states, such as New York and California. Members representing those states, including House Republicans, have lobbied against this provision since its enactment, and they are expected to once again be opposed to the cap in a new bill. Because of the narrow margin of control in the House, they will have significant leverage on this issue, but letting the cap lapse would add an extra $1 trillion to the deficit over 10 years. A compromise position could be to extend but increase the cap. 

• Foreign provisions: The TCJA included several foreign-related provisions that are related to the OECD tax framework project, which has generally been opposed by many Congressional Republicans and the incoming Trump Administration.
  

New Trump Tax Proposals 

Republican tax writers will also have to consider the various tax proposals that Trump promised during the campaign. Those include: 

• Lowering the corporate tax rate to 15% (although some Republicans support a corporate tax increase) 

• No taxes on tips, Social Security benefits, overtime pay, Americans living abroad, and service member and police officers’ incomes 

• Tariffs on goods coming from countries such as China, Mexico, and Canada. Although the issue of tariffs does not directly involve tax policy changes, a discussion of tariffs will be part of the ongoing debate about revenue offsets and the budget deficit.
  

IRA Renewable Energy Tax Incentives: General Comments 

The uncertain fate of the IRA energy tax incentives has significant implications for renewable energy projects, including those that have been placed in service, those under construction, and those on the planning board. Most clean energy projects are capital-intensive and have long construction lead times.  Tax credits planned for these projects may range from 30-50% representing millions of dollars for many projects. 

The uncertainty arises because of potential legislative changes to the IRA tax incentives as well as repeal or modification of rules and regulations issued by Treasury and the IRS pursuant to the IRA-enacted tax credits. Republicans and Democrats reportedly have different energy policy agendas, and the incoming Trump Administration has stated a preference for an emphasis on fossil fuels over clean energy policies. It is very possible that energy policy in 2025 will be more in line with an “all of the above” policy that would include incentives for fossil fuels and renewable energy, which was suggested by DOE Secretary nominee, Chris Wright, during his confirmation hearing on January 15, 2025. 

As noted above, the legislative focus in 2025 for tax issues will be the provisions in the TCJA that will expire at the end of 2025. There will be a debate among members of Congress as to whether part or all of an extension of those expiring provisions should be offset rather than add to the federal deficit. 

The estimated 10-year costs of the IRA’s energy credits have increased since enactment when the estimate was $271 billion (Joint Committee on Taxation, August 2022) to an estimate of $870 billion according to the CBO for the period from 2026-2035. As more companies achieve compliance with the rules, those costs are expected to continue to increase. This suggests that members of Congress may view these credits as potential revenue offsets and decide to repeal or modify the rules or sunset them earlier than expected. The incoming Administration could make changes to Treasury guidance that has previously been issued that would make it more difficult for taxpayers to qualify for the tax credits. 

Repeal of any of the IRA tax incentives will likely be on a prospective basis, since historically retroactive repeal of tax laws has been rare (except in cases of perceived tax abuse) due to the economic uncertainty that would result. Transition rules that grandfather projects which have already begun may be considered. 

Even though Republicans will control both houses of Congress, it would seem unlikely that all the provisions of the IRA would be repealed, since many Republican districts have benefited significantly from IRA renewable energy projects. The reality is that there is considerable Republican support for many of the current renewable energy tax incentives, including carbon capture, biofuels, hydrogen, and nuclear energy. 

The first opportunity to assess the fate of individual IRA renewable energy tax credits will likely be when the House Ways & Means Committee releases draft legislation for a reconciliation bill or a summary of such a bill. This is not likely to happen until after the Budget Resolution has been approved by the House, which House leadership has targeted for February action. 

With respect to the Senate, it is possible that the SFC will release materials early on that will provide information on what changes they might be considering to the IRA tax credits, but, if not, we will have to wait for a markup in the SFC of their version of budget reconciliation legislation.  Alternatively, the SFC could choose not to draft their own version of the bill, but rather wait for House approval of their version of the bill, and then the SFC would consider that version and make changes to it. 

Which of the IRA energy tax incentives are at risk? 

House Republicans on the Budget Committee are circulating a list of tax and spending proposals which they compiled for consideration as the committee prepares to draft a budget resolution bill with reconciliation instructions in February.  The document includes nearly 50 revenue proposals that would either reduce or increase taxes with a 10-year revenue estimate for each proposal.  

This type of list representing a menu of options is a typical tool that Congressional committees use for budget and tax legislation drafting, which can signal the possibility that listed revenue raising proposals may be at risk, but such lists are generally viewed as comprehensive lists of all options that do not signal final decisions on specific issues. This list also does not represent an exclusive list of options that may be considered as it is possible that new options will be looked at by the relevant committees of jurisdiction. 

It is no surprise that the IRA tax incentives are included on this list. The list includes: 

Repeal Title I of IRA (Excluding: 45Q Carbon Sequestration, 45U Nuclear Power, 45Z Clean Fuels, and EV Tax Credit)
$404.7 billion in 10-year savings  

• Reducing 45Q, 45U, and 45Z would streamline and reduce government intervention in the energy industry that props up the green energy sector and distorts market competition. 

Close the EV credit leasing loophole  
$50 billion in 10-year savings  

• Closing the EV credit leasing loophole ensures that only EV buyers, not lessees, receive tax credits, preserving integrity of the program and preventing misuse of taxpayer dollars. 

Repeal Green Energy Tax Credits  
Up to $796 billion in 10-year savings  

• This option would repeal credits created and expanded under the Inflation Reduction Act. These credits are related to clean vehicles, clean energy, efficient building and home energy, carbon sequestration, sustainable aviation fuels, environmental justice, biofuel, and more. The full cost of the IRA provisions is about $329 billion, which becomes about $800 billion when paired with the tailpipe emission rule designed to dramatically increase the uptake of EVs and EV credit use. Based on political will, there are several smaller reform options available (starting as low as $3 billion) that would repeal a smaller portion of these credits. 

IRA Technology-Neutral Tax Credits: Section 48E and Section 45Y 

A key question is what the fate will be of the new “technology-neutral tax credits” enacted by the IRA in Sections 48E (ITC) and 45Y (PTC). These new credits are effective from 2025 to 2032, replacing the current law Section 48 ITC and the Section 45 PTC, which terminated at the end of 2024. If these new credits become a target, it is possible that the life of these credits could be shortened so that they are sunset prior to the current expiration date. Alternatively, the rules could be changed so that it is harder for taxpayers to qualify especially for technologies that are not favored by some Republicans, such as offshore wind projects. 

The expiring ITC (Section 48) and PTC (Section 45) credits are only available to projects that “begin construction”¹ before 2025 (even if placed in service after 2024), while those that begin construction and are placed in service after 2024 are transitioned to the new credits, Section 48E and Section 45Y. The new credits benefit facilities/projects that achieve net zero greenhouse gas (GHG) emissions regardless of the technology used, with taxpayers generally required to track emissions to be eligible for the credits. These credits are intended to encompass innovative future technologies. 

Final Regulations that were issued in January of 2025 deem certain longstanding clean energy technologies to be categorized as zero-GHG emissions facilities, including solar and wind projects. On January 15, 2025, the IRS issued Rev. Proc. 2025-14, which provides the first Annual Table for Sections 45Y and 48E. The Annual Table sets forth the greenhouse gas (GHG) emissions rates for certain types of categories or facilities.

With the change in Administration and the control of the new Congress in 2025, the future of these new credits is uncertain. The uncertainty is an issue for companies who will likely qualify but are modeling their plans to determine whether to use the current credits or the new credits as well as companies who are considering new technologies under the new credits.   

EV credits including 30D 

Tax credits for electric vehicles (EVs) have repeatedly been mentioned by the incoming Trump Administration as potential targets for repeal including the tax credits for commercial EVs. 

Bonus Credits: Domestic Content, Low-income Communities, Energy Communities 

There has been little discussion to date of possible repeal of or changes to the bonus credits which were included in the IRA. The Domestic Content Bonus Credit supports the Trump position of encouraging manufacturing in the US. 

Credit Transfers 

The credit transfer market has grown significantly since enactment of the IRA from an estimated $9 billion in 2023 to a forecasted $25 billion by the end of 2024 according to the energy transfer platform company Crux.  

Tax credits must be bought and sold in the year in which the tax credit is generated, which means that current sales involve 2024 and 2025 tax credits. 

Because any legislation enacted in 2025 is not likely to be retroactive, changes to these and other rules are expected to take effect in 2026. 

Due to the popularity of the new credit transfer rules and the fact that they have allowed buyers from non-energy industries to participate in the markets, it seems unlikely that the new rules would be eliminated altogether, especially given the diversity of tax credits that are included in the new rules. If, however, some of the tax credits are repealed or modified, that could impact the overall supply of credits available to buyers. 

Direct Pay 

The Direct Pay provisions of the IRA, which provided another method of monetization of energy tax credits, allow certain tax-exempt and governmental entities to make a direct pay election for a group of specified energy tax credits, which are refundable to those entities. In assessing whether this monetization technique will survive, it is necessary to consider whether some of the credits available for this tool will survive in 2025, and then whether the basic direct pay rules will be modified. It could be argued that making changes to the specific credits themselves rather than the monetization rules is the most effective way to enact policy changes or raise revenue to offset other tax changes. It cannot be ruled out, however, that the need for revenue could result in repeal of this monetization tool or limitations on its use. 

45X – Advanced Manufacturing Production Credit 

Legislation has been filed by two House members to disapprove the Section 45X regulations due to concern that foreign-owned companies are benefiting from the tax credit. Thus, this is an incentive that might be at risk, although this incentive does support the incoming Administration’s support of domestic production. 

Other Issues 

Some Republican lawmakers have expressed support for the Section 45Q Carbon Capture credits, as well as the Section 45V Hydrogen and Section 45U Nuclear credits. The carbon capture credit is favored by oil and gas companies, and Trump has expressed support for more nuclear energy. 

IRA Guidance from 2023-2025: Congressional Review Act 

On January 20, 2025, President Trump issued several Executive Orders, including one that orders a freeze on certain new and pending federal regulations affecting all government agencies including the Treasury Department and the IRS. This action, which is common when a new administration takes control of the government, directs federal agencies to stop proposing or finalizing rules except in emergencies and to withdraw any rules that have not yet been published. 

It is possible that Trump will also reintroduce an Executive Order that requires tax rules to go through another layer of review from the Office of Management and Budget’s Office of Information and Regulatory Affairs, which he required during his first administration in cases where the rules are likely to interfere with actions planned or taken by other federal agencies, raise new legal or policy issues, or have an annual non-revenue economic impact of at least $100 million. 

The Biden Treasury Department issued many pieces of guidance on the IRA in the last two years including Final Regulations on several issues, which would not be affected by the new Trump Executive Order. Generally, Final Regulations can only be modified or revoked through another proposed rule, subject to a notice and comment period.  Some Final Regulations, however, can also be repealed pursuant to the Congressional Review Act (CRA).  

The CRA is a tool Congress can use to overturn certain federal agency actions. The CRA requires agencies, including the Treasury Department and the IRS, to report issuance of “rules” to Congress and provides Congress with special procedures, in the form of a joint resolution of disapproval, under which they can consider legislation to overturn rules. If a CRA joint resolution of disapproval is approved by both houses of Congress and signed by the President, the rule at issue cannot go into effect or continue in effect. 

The CRA only applies to agency actions taken during a 60-days-of-continuous-session period beginning on the day the agency transmits a record of the action to Congress, and the repeal results from a disapproval resolution approved by majority vote in both the House and Senate and signed by the President that happens within 60 legislative days of the issuance of the regulations. Any regulations repealed in this manner cannot be reissued in substantially the same form. 

Senate Majority Leader Thune has stated that there is a list of recent Biden Administration regulations that may be considered for repeal by Republicans in the coming weeks. 

In 2017 and 2018, Republicans used their unified control of government and the CRA to terminate 16 sets of regulations, and there is a real possibility that they will once again view the CRA as a tool to reverse certain policies related to the IRA renewable energy tax incentives. Given the narrow House margin and a slim Senate margin, however, this may be challenging. 

There are many regulations that were finalized after August 1, 2024, which is the date that the Congressional Research Service has identified after which rules might be vulnerable, including some of the IRA regulations. The Final Rules for the Prevailing Wage and Apprenticeship rules, the Direct Pay rules, and the Credit Transfer rules were all issued early in 2024 and will fall outside this CRA window.  

The following Final Regulations were issued within the 60-day window for CRA review.²  

• Final regulations for Section 45X (Advanced Manufacturing Production Credit): October 2024  

• Final regulations for Section 48D (CHIPS Act Manufacturing Investment Tax Credit): October 2024 

• Final Regulations for Section 48, Investment Tax Credit: December 4, 2024 

• Final Regulations for Section 45Y and 48E, Clean Electricity Production and Investment Tax Credits: January 7, 2025 

• Final Regulations for Section 45V, Hydrogen: January 3, 2025 

• Final Regulations for Low-Income Bonus Energy Credit: January 8, 2025
  

Proposed regulations can remain unfinalized or be revoked by the new Administration without notice or comment. Current Proposed Regulations for IRA tax credits include: 

• Qualified Commercial Clean Vehicles (Section 45W): January 10, 2025
  

Other guidance including IRS notices, revenue procedures, and FAQs can usually be revoked or modified at any time without significant process. Guidance only in the form of notices has been issued for: 

• Domestic Content Bonus Credit: Notice 2025-08, January 16, 2025  

• Energy Communities Bonus Credit  

• Clean Fuel Production Credit (45Z): January 10, 2025, Notice 2025-10 and Notice 2025-11) 
  

Appendix A: Key Players in the Trump Administration and in Congress 

Trump Administration – Cabinet Appointees 

Treasury Department and the IRS 

Trump has nominated Scott Bessent to be the Secretary of the Treasury, and his nomination has been approved by the Senate Finance Committee. He is currently the CEO and Chief Investment Officer for Key Square Group LP, an investment partnership he founded in 2015. Bessent has a plan to pursue a “3-3-3 policy: cutting the budget deficit to 3% or GDP by 2028, spurring GDP growth of 3% through deregulation, and producing an additional 3 million barrels of oil or its equivalent per day.” He has also expressed support for Trump’s tariff proposals. He is expected to play a key role in the development of tax legislation in Congress related to the TCJA.  

In a November 6th interview, he said “I think a priority is going to be turning off the IRA … I don’t think anyone is going to have a problem with slowing down or cutting off this IRA.” He also said, “there’s a big appetite for pay-fors so it will be a negotiation.” 

Another key player at Treasury will be Ken Kies, who will be nominated to be Assistant Secretary of Tax Policy. Kies is a former Joint Committee on Taxation Chief of Staff and Minority Chief of Staff for the House Ways & Means Committee. He would be the most senior tax official at Treasury, who would focus on analyzing, developing, and implementing federal tax policies and programs. 

Former Congressman Billy Long has been nominated to be the IRS Commissioner. As a member of Congress, he introduced legislation to eliminate much of the federal tax code and to eliminate the IRS. 

Energy Department 

Trump has nominated Chris Wright to be the Secretary of Energy.  Wright is currently the CEO of Liberty Energy, an oilfield service company. He has disputed the existence of a climate crisis and that the US is in an energy transition, although he does currently sit on the board of an advanced nuclear reactor manufacturing company and his company is an investor in an advanced geothermal energy developer. 

During his confirmation hearing, he softened prior statements on renewable energy suggesting that the US should support renewable energy and fossil fuels. 

It is expected that going forward, the DOE may halt or restrict grant and loan programs for many renewable energy technologies and focus more attention on technologies that enhance fossil fuel production and use. That means that renewable energy companies must look to supporters such as members of Congress, governors, local officials, and local business communities that support their work to weigh in with DOE leadership in Washington in order to keep some funds and spending going to renewable energy projects. 

National Energy Council 

Trump has nominated Doug Burgum to be Secretary of the Interior, but he will also be the Chair of the new National Energy Council (NEC), which will also give him a seat on the National Security Council. 

The NEC will consist of all departments and agencies involved in the permitting, production, generation, distribution, regulation, and transportation, of all forms of energy. 

119th Congress 

The House and Senate will both be controlled by Republicans in the 119th Congress which began on January 3, 2025, and will run for 2 years until January 3, 2027. In both chambers, however, the margin of control is very narrow, which means it may be necessary for the Republicans to work with Democrats on legislation they choose to advance. 

Mid-term elections will take place in November of 2026. Historically, control of one or both chambers has flipped to the party that does not control the White House and the Congress during the prior two years.  For example, the House flipped to Democratic control in 2018 after the first two years of the first Trump Administration. Despite the fact that there will not be a Presidential election in 2026, these elections will be closely watched in order to see whether the Democrats can regain control of either the House or Senate. 

All House members will be up for reelection in 2026, and 33 Senators will be up for reelection including 20 seats held by Republicans and 13 held by Democrats.  In order to regain control of the Senate, Democrats would have to hold those 13 seats and flip 3 of the Republican-held seats. 

House 

The House currently has 219 Republican members and 215 Democratic members. One member of the House, Matt Gaetz, resigned from the House and did not take his seat in the 2025 Congress, although he was re-elected to that seat last November. 

Trump has nominated two members of the House to positions in his Administration, including Elise Stefanik and Michael Waltz. Congresswoman Victoria Spartz (R-IND) has said she will remain a Republican but will not join the Republican conference, so her vote may be in question on some legislation. That drops the total Republican count to 217, which means that until there are special elections to fill the three vacant seats, the Republicans will likely hold a two-vote majority. The special elections in Florida are scheduled for April 1st, while the special election to fill the Stefanik seat has not yet been set.  All three seats are expected to remain Republican.  

Mike Johnson (R-LA) was elected Speaker of the 119th Congress. Hakeem Jeffries (D-NY) was selected by the Democratic Caucus to continue as Minority Leader. 

Ways and Means Committee 

The Chairman of the Ways & Means Committee is Jason Smith (R-MO), and the Ranking Member is Richard Neal (D-MA). 

Senate 

The composition of the Senate in 2025 will be 53 Republicans and 47 Democrats.  Republicans hold the majority, but they are far short of the 60 votes needed to stop a filibuster. 

John Thune (R-SD) has been chosen to be the Majority Leader, and Chuck Schumer (D-NY) will be the Minority Leader. Thune will retain his seat on the SFC, and he has stated that taxes and economic growth will be priorities. He has committed to a return to more normal legislative practices using the committee process to develop legislation and allowing Senate Floor amendments. He has stated opposition to changing the filibuster rules. 

Although Trump has expressed opposition to wind energy and particularly offshore wind, Thune has been a long-time advocate of renewable energy, especially wind energy which provides over 50% of the electricity in his state, and biofuels.  

Senate Finance Committee 

The Chairman of the SFC is Mike Crapo (R-Idaho), and the Ranking Member is Ron Wyden (D-OR). 

Appendix B: Explanation of the Budget Reconciliation Process 

The Congressional Budget Act of 1974 established a congressional budget process for the determination of national budget priorities along with the creation of the budget reconciliation process. Budget reconciliation is a fast-track, budgetary tool that is utilized by Congress to implement policy changes in spending, revenues, and federal debt limits. Budget reconciliation is used to address mandatory or entitlement spending, but certain programs cannot be included, such as Social Security. 

Approval of a budget reconciliation bill is by simple majority in both the House and Senate. It cannot be filibustered in the Senate, thereby avoiding the need to have 60 votes to break the filibuster. 

The House and Senate Budget Committees start the process by adopting concurrent budget resolutions that include reconciliation instructions. These instructions dictate that authorizing committees report legislation that meets specified targets, and those targets can include increasing or decreasing spending or revenues to specific amounts. For example, the TCJA instructed the two tax-writing committees to increase the deficit by not more than $1.5 trillion over 10 years. Budget resolutions are nonbinding, internal blueprints that are not sent to the President to be signed into law. 

Authorizing committees report recommendations that comply with the targets to the Budget Committees by a set deadline, and these recommendations are then combined into one reconciliation bill, which is reported to the House Floor and then the Senate Floor for a vote. In the Senate, the bill is limited to 20 hours of debate at the end of which any amendments are voted on immediately.  A simple majority vote is required in the Senate, and the bill cannot be filibustered. All amendments must be germane to the bill. If changes to the reconciliation bill are made in the Senate, then the two chambers must work out the difference in a conference report, which is then voted on by both chambers and sent to the President for signature. 

The Senate’s “Byrd Rule “ prohibits the inclusion of any extraneous provisions in a reconciliation bill using six tests, including a rule that a provision must have a fiscal impact by producing a change in spending or revenues and a rule that a provision may not increase the deficit outside the budget window, which is typically 10 years. Decisions on extraneous provisions are made by the Senate Parliamentarian, which are subject to a point of order and may result in the provision being removed from the bill unless it is waived by a 3/5 vote of the Senate. 

Three budget reconciliation bills are allowed for each fiscal year’s budget resolution, including one to change spending, one to change revenues, and one for the debt limit.  If any budget reconciliation bill includes more than one of these categories or all three, then there can be only 2 bills or 1 bill for that year. If there are multiple budget resolutions in a calendar year, then there can be additional reconciliation bills, which is what happened with the TCJA (part of the FY 2018 budget resolution) and the American Health Care Act (part of the FY 2017 budget resolution).
 

Note: This publication is distributed with the understanding that the author, publisher and distributor of this publication and/or any linked publication are not rendering legal, accounting, or other professional advice or opinions on specific facts or matters and, accordingly, assume no liability whatsoever in connection with its use. Pursuant to applicable rules of professional conduct, portions of this publication may constitute Attorney Advertising.