One Big Beautiful Bill Act (July 2025)
Client Briefings
A series of briefings on the implications of the One Big Beautiful Bill Act for energy tax credits.
Share
The One Big Beautiful Bill Act (OBBBA), signed by President Trump into law on July 4, 2025, includes sweeping changes for many of the existing energy tax credits implemented or expanded under the Inflation Reduction Act.
The good news for the U.S. nuclear industry is that (i) the OBBBA largely leaves intact the existing tax credits available for electricity produced by existing (non-advanced) nuclear power facilities codified in Section 45U of the Internal Revenue Code (the Code), and (ii) makes it easier for advanced nuclear facilities to qualify for the 10% energy community adder to the clean electricity production tax credit (the PTC) codified in Section 45Y of the Code (see below for a summary of these changes to Sections 45U and 45Y).
On July 4, 2025, President Trump signed into law An Act to provide for reconciliation pursuant to title II of H. Con. Res. 14, better known as the One Big Beautiful Bill Act (OBBBA).
Among the many changes made by the OBBBA to federal tax credit regimes are key updates to the carbon oxide sequestration credit (Section 45Q Tax Credit) available under 26 U.S. Code § 45Q (Section 45Q). Specifically, the OBBBA adds credit value parity for certain types of carbon oxide utilization where facilities or equipment are placed into service after the date of the OBBBA, and introduces new limitations on the availability of Section 45Q Tax Credits for certain foreign or foreign-influenced entities.
Additionally, the OBBBA expands the definition of "qualifying income" under Section 7704 to include income derived from hydrogen storage, carbon capture, advanced nuclear, hydropower and geothermal energy. This change creates opportunities for new forms of investment in renewable energy projects, particularly those owned and developed by master limited partnerships that enjoy broad access to capital markets while retaining tax advantaged status.
On July 4, 2025, President Trump signed into law the One Big Beautiful Bill Act (the OBBBA), which significantly curtails and, in some cases, terminates, clean energy tax incentives introduced or expanded under the Inflation Reduction Act of 2022 (the IRA). This includes the clean electricity production credit under Section 45Y (the PTC) of the Internal Revenue Code of 1986 (the Code) and the clean electricity investment credit under Section 48E of the Code (the ITC). The OBBBA also expands upon the existing foreign entity of concern (FEOC) rules under the IRA by imposing new "prohibited foreign entity" restrictions on U.S. taxpayers and qualified facilities.
Below is a summary of the notable provisions in sections 70512 and 70513 of the OBBBA, which relate to the ITC and PTC. The Clifford Chance team will continue to monitor any guidance or executive orders as they are published.
