On December 31, 2025, the clock runs out on several major IRA clean energy tax credits. The One Big Beautiful Bill Act, signed by President Trump on July 4, 2025, terminated the Residential Clean Energy Credit (Section 25D) and the Energy Efficient Home Improvement Credit (Section 25C) for any expenditure made after this Tuesday.
Here's what most operators don't realize: the IRS doesn't care when you signed the contract. It cares when installation is completed.
That distinction matters enormously right now. If you're a solar installer with jobs in the queue, a homeowner with panels on order, or a business that sells efficiency upgrades, you have until end of day Tuesday to understand your exposure and your options.
What Changed Under the One Big Beautiful Bill
The Credit Terminations
The One Big Beautiful Bill Act (Public Law 119-21), enacted July 4, 2025, made the following changes effective December 31, 2025:
Section 25D (Residential Clean Energy Credit): No credit allowed for any expenditure made after December 31, 2025. This covered solar electric, solar water heating, fuel cells, small wind, geothermal heat pumps, and battery storage for residential properties.
Section 25C (Energy Efficient Home Improvement Credit): No credit allowed for property placed in service after December 31, 2025. This covered heat pumps, insulation, windows, doors, and electrical panel upgrades.
The credits represented up to 30% of installation costs, a substantial incentive that drove years of residential clean energy adoption.
The Placed-in-Service Trap
The critical detail is buried in Section 25D(e)(8)(A) of the Internal Revenue Code: an expenditure is treated as made when the "original installation of the item is completed."
Not when the deposit was paid. Not when the equipment was ordered. Not when the installer showed up. When installation is completed.
Per the IRS FAQs published in November 2025: "If installation is completed after December 31, 2025, the expenditure will be treated as made after December 31, 2025, which will prevent the taxpayer from claiming the section 25D credit."
That's unambiguous. And it's creating a scramble.
What This Means for Operators
For Solar and Battery Installers
The liability exposure here is real. If you sold a system in September with an expected Q1 2026 installation date and told the customer they'd get the 30% credit, you may have a problem.
Customers who contracted based on credit availability have a reasonable expectation. If the credit disappears because installation slipped past December 31, they're going to ask who's responsible for the difference. That's potentially 30% of system cost.
Our read: installers should audit every contract signed after July 4, 2025 for credit-related representations. Any contract that promised or implied credit availability needs to be examined for exposure. If you have completion risk, customer communication should happen immediately, not after January 1.
Some installers are offering to eat the difference for jobs where they control the timeline. Others are renegotiating. A few are hoping customers don't notice.
That last option is the riskiest.
For Homeowners with Pending Installations
If your solar panels aren't on the roof and operational by midnight Tuesday, the credit is gone. There's no "substantial completion" doctrine here. No "good faith" exception. The IRS treats installation completion as a bright line.
If your installer can't finish in time, you have limited options:
Option 1: Push for accelerated completion. Some installers are bringing in extra crews for holiday work. It's expensive, but the credit may be worth it.
Option 2: Negotiate a price reduction. If the installer represented credit availability and can't deliver, the contract terms matter. Review what was promised.
Option 3: Accept the loss and proceed anyway. Solar economics still work in many markets without the federal credit, just not as well.
For Clean Energy Businesses More Broadly
The 25D and 25C sunsets are the most immediate, but they're not the only changes. Several other credits face accelerated phase-outs:
- Used Clean Vehicle Credit (25E): Terminated for vehicles acquired after September 30, 2025. Already gone.
- New Clean Vehicle Credit (30D): Significantly constrained with new FEOC (Foreign Entity of Concern) restrictions after December 31, 2025.
- Section 45Y/48E Credits: Still available for commercial projects, but material assistance restrictions for projects beginning construction after December 31, 2025 now apply if there's any relationship with prohibited foreign entities (China, Russia, Iran, North Korea).
The six-year statute of limitations on material assistance violations means the enforcement exposure extends long after project completion.
The Broader Policy Picture
The One Big Beautiful Bill represents the most significant rollback of clean energy tax incentives since the IRA passed in 2022. The Congressional Budget Office estimated the changes would reduce clean energy tax credit outlays by approximately $400 billion over the next decade.
What's notable is how the residential credits were handled versus the commercial credits. The 48E and 45Y credits for utility-scale and commercial projects remain largely intact through 2027 (for projects beginning construction before July 5, 2026) and in modified form through 2032.
The practical effect: the policy now favors large developers over individual homeowners and small installers. Whether that was intentional or incidental, it reshapes the market.
A counterpoint worth considering: storage-focused developers are actually finding the post-OBBB landscape favorable. Battery storage credits under 48E remain available through 2032, and the standalone storage market is booming. Through November 2025, 31% of new grid capacity came from battery storage, a record share.
MD/DC Considerations
For operators in the mid-Atlantic region, the federal credit sunset lands differently. The DC Sustainable Energy Utility (DCSEU) built much of its residential outreach around IRA credit stacking, combining federal incentives with local rebates. That messaging needs immediate revision.
Maryland operators should watch for state-level action. The proposed Maryland Clean Energy Advantage Act would create a state residential solar credit to partially offset the federal loss. It hasn't moved yet, but the political pressure is building. If you're selling in Maryland, be prepared to explain the gap between federal and (potential) state incentives.
Both jurisdictions are within PJM territory, so the FERC co-location order from December 18 matters here too. Data center demand in Northern Virginia and Maryland is driving significant new load and new generation opportunities for developers who can connect quickly.
Deal Terms and Contract Implications
For any business in the clean energy value chain, the December 31 deadline creates immediate contract issues:
Completion clauses: If your contracts don't specify who bears credit risk, you're exposed. Going forward, every residential installation contract should explicitly address credit eligibility, place the onus of IRS compliance documentation on the appropriate party, and disclaim any guarantee of credit availability.
Customer representations: Contracts should require customers to confirm they understand credit eligibility depends on federal law that can change. Any credit estimate should be labeled as such.
Timeline guarantees: Be careful about promising installation dates that touch credit deadlines. If you guarantee completion by December 31 and miss by a day, the damages calculation is 30% of system cost.
For commercial projects, the new material assistance certification requirements add another layer. The IRS guidance on FEOC restrictions imposes penalties for substantial misstatements in supplier certifications: the greater of 10% of the underpayment or $5,000. That exposure flows to whoever signs the certification.
Practical Takeaways
Your team can assign these actions today:
Audit pending residential installations immediately: Identify every job where completion is uncertain before December 31. Prioritize customer communication for at-risk projects.
Review contract templates for credit-related representations: Flag any language that promises, implies, or estimates credit availability without appropriate disclaimers.
Document completion for any installation finishing this week: Photographs, customer sign-offs, and utility interconnection confirmation create the evidence trail the IRS may require.
Brief your sales team on the new landscape: Starting January 1, residential solar sales pitches can't lead with the federal credit. Retrain before the first pitch of the new year.
Update customer-facing materials: Website claims, brochures, and proposal templates that reference 25D or 25C credits need immediate revision.
Assess commercial project exposure to FEOC restrictions: If any equipment or components have Chinese supply chain ties, the material assistance certification requirements apply for projects beginning construction after December 31.
Calendar the remaining deadlines: Wind and solar projects beginning construction after July 5, 2026 face accelerated placed-in-service requirements (end of 2027). Build that into project planning now.
Watchlist
Dominion Energy TRO hearing (December 29): The outcome could signal how courts will treat administration actions against approved clean energy projects. If Dominion wins, expect more litigation from developers.
PJM co-location tariff filing (due January 19, 2026): FERC's December 18 order requires PJM to propose new transmission services for data center connections. The details will shape where the next wave of clean energy demand lands.
IRS guidance on FEOC certifications (expected Q1 2026): The material assistance restrictions need more clarity. Watch for FAQs or notices addressing common supply chain questions.
Maryland Clean Energy Advantage Act: If the state legislature moves to create a replacement residential credit, timing will matter for sales pipelines. No action yet, but the pressure from installers is building.
The Path Forward
The federal residential credit era is ending. That's the reality.
But here's what hasn't changed: battery storage remains incentivized through 2032. Commercial installations still qualify for meaningful credits under 48E and 45Y. And in most markets, solar payback periods are measured in years, not decades, even without the 30% bump.
For installers, the next few months will be about recalibrating your go-to-market story. For homeowners, it's about running the numbers without the credit and deciding if the investment still pencils out.
The sun still shines. The incentive structure just shifted. Operators who adapt quickly will find the opportunities that remain, and there are plenty.