What Clean Energy Tax Credit Could Go Away in 2025?
Many people seek out and use clean energy tax incentives, but that might be history soon. A new Republican tax plan in the U.S. House of Representatives could eliminate many federal energy-efficient tax benefits, including electric vehicle (EV), solar panel, and clean energy home improvement credits.
According to the Kelley Blue Book, a record-breaking 1.3 million EVs were sold in the U.S. last year, with 87% taking advantage of the federal tax credit. Meanwhile, the U.S. Treasury Department reports that over 3.4 million households have received $8.4 billion in tax credits for energy efficiency upgrades.
But the GOP’s latest proposal, called the “One Big Beautiful Bill Act,” might end affordability for many wanting to use clean energy tax incentives. (Though the U.S. Senate has yet to weigh in.)
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Which credits could be eliminated? And in what ways might you still “go green” if the tax breaks do disappear?
Read on.
Clean energy tax credits in the House bill
During the Biden presidency, many clean energy tax credits were created, expanded, or extended under the Inflation Reduction Act (IRA). As a result of that legislation, the federal government offered several tax credits promoting energy efficiency:
- The electric vehicle (EV) tax credit, worth up to $7,500 for new qualifying “clean vehicle” EVs.
- The previously-owned clean vehicle credit, worth up to $4,000 or 30% of the sales price (whichever is less), for used EVs.
- The alternative fuel vehicle refueling property credit, also called the “EV charger tax credit,” worth up to 30% of the cost of qualifying “green” equipment (maximum $1,000).
- The energy efficient home improvement credit, worth up to $3,200 on qualifying items like doors, windows, and natural gas heat pumps.
- The residential clean energy credit, worth up to 30% of qualifying expenditures, like solar panels.
…there were also various other energy credits included in the IRA. Together, those tax breaks have helped many Americans afford to “go green” and cut their tax bills when installing certain energy-efficient home upgrades.
Most IRA-sponsored clean energy initiatives expire at the end of 2032. However, under the new GOP tax bill, many provisions could be eliminated as early as December 31, 2025.
GOP tax bill on energy tax credits
The latest House GOP tax bill calls for the early termination of many clean energy tax breaks. However, the party seems to be split on the issue:
- In March of this year, 21 House Republicans sent a letter to Jason Smith, the Chairman of the House Ways and Means Committee, advocating for preserving the clean energy tax breaks.
- In May 2025, thirteen House Republicans warned that suddenly slashing IRA tax credits, including clean energy incentives, could harm new energy investment, according to a joint statement. Among the concerns cited were calls for “additional time” on certain tax credit phase-out schedules.
However, the House recently voted to pass its version of Trump’s one big, beautiful reconciliation bill to the Senate, with slashes to clean energy tax breaks in tow. Yet some still speculate whether energy-efficient tax breaks will be eliminated.
Just last month, four Republican Senators voiced concerns about ending federal clean energy tax credits and other incentives in the reconciliation process.
“…We caution against the full-scale repeal of current credits, which could lead to significant disruptions for the American people and weaken our position as a global energy leader,” wrote Rep. Lisa Murkowski (R-Alaska), John R. Curtis (R-Utah), Thom Tillis (R-North Carolina), and Jerry Moran (R-Kansas) in a letter to Senate Majority Leader John Thune of South Dakota.
The letter highlights the divide within the party, as some Republicans view clean energy tax credits as “reckless.”
Sen. John Barrasso (R-Wyo.) proposed a bill in February calling for the complete elimination of electric vehicle tax credits. In a release regarding the bill, Barrasso said that repeal of the tax credits would “…stop Washington from giving handouts to our adversaries and high-income individuals.”
Energy bill cost if tax credits go away
Tax incentives help people afford clean energy upgrades like solar panels and EVs. By eliminating energy tax breaks, fewer people may obtain the benefits they offer, like lower energy bills.
According to a recent analysis by Energy Innovation, a non-partisan policy firm, repeal of federal clean energy tax credits could make electricity bills rise across the U.S.. The average American household could see an increase in its annual energy bill of:
- About $40 to $60 by 2030
- By about $56 to $150 in 2035
- And about $140 to $220 in 2040
In total, repealing these tax credits could cost taxpayers $6 billion annually over the next five years. By 2040, American households could lose $25 billion per year.
Notably, that analysis doesn’t include any current or potential Trump tariffs.
Parts for clean energy initiatives, like EVs and solar panel pieces, are typically made abroad in countries like Mexico and China. When a tariff war occurs, as happened earlier this year (and continues to progress), consumers generally pay the price.
Consequently, energy-efficient tax breaks would be needed to combat raised prices from tariffs on imported energy products.
Otherwise, the hit to energy incentives would be twofold: Raised prices from tariffs, and elimination of tax credits that could have helped absorb the higher prices.
‘Go green’ clean energy ideas: Rebates and state tax programs
While many clean energy initiatives are under fire from the latest GOP tax plan, it’s important to remember the bill is still in its early days. The Senate will take up the bill and has already signaled that it plans to make revisions. Which provisions will be impacted remains to be seen.
In the meantime, there are ways you may be able to “go green” even if a potential elimination of energy tax credits occurs:
- Apply for the High-Efficiency Electric Home Rebate Program, which offers qualifying homeowners rebates on stoves, heat pump water heaters, electric wiring, and more.
- Check out the Low Income Home Energy Assistance Program (LIHEAP), which helps eligible households pay heating or cooling bills.
- Regularly schedule maintenance on your HVAC, purchase “smart” energy usage appliances, or look around your interiors for potential air leaks in windows, doors, or attics. Timely repairs may save you up to 15% on heating and cooling costs, according to Energy Star.
Finally, check your state’s Department of Revenue website for energy-related tax credits or rebate programs. Several states have decided to stand against potential federal reform on the clean energy front.
For example, California Gov. Gavin Newsom announced last year that if the EV tax credit is eliminated, the Golden State would provide rebates for eligible EV purchases. States like New Mexico and North Carolina have also set goals for 100% clean energy by 2045 and 2050, respectively.
The House version of the GOP tax bill heads to the Senate next, where it will likely face revisions before final legislation may be reached. Republicans have said their goal for passing major legislation is July 4. Stay tuned.
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