Wolfram Pohl

On August 15, 2025, the IRS and the Treasury Department released Notice 2025-42 (the Notice), providing critical guidance on the beginning of construction requirements for wind and solar facilities in light of the One Big Beautiful Bill Act (the OBBBA) and Executive Order 14315 (the Executive Order).

Introduction The House of Representatives has passed a sweeping tax reconciliation bill that makes significant changes to the U.S. energy tax credit regime. The bill, as originally reported out of the House Ways and Means Committee, proposed accelerated phaseouts, new transferability restrictions, and stringent foreign entity limitations for a range of energy credits. At the floor vote, substantial amendments were proposed and incorporated into the bill that will now be considered by the Senate.

The U.S. Department of the Treasury (“Treasury”) and the Internal Revenue Service (“IRS”) have modified a framework relating to renewable energy projects that qualify for the domestic content bonus tax credit (the “DC Adder”) under Sections 45, 45Y, 48 and 48E of the Internal Revenue Code (the “Code”). The guidance also offers a new safe harbor (the “New Elective Safe Harbor”) for taxpayers to qualify their energy projects for the DC Adder.