The Inflation Reduction Act after the One Big Beautiful Bill: which business tax credits still exist

When the Inflation Reduction Act became law on 16 August 2022, European manufacturers and energy developers looked at it with a mix of envy and appetite. Generous, long-running federal credits for clean electricity, batteries, vehicles and efficient buildings made the US the place to build. The One Big Beautiful Bill Act of 4 July 2025 rewrote that program. Some credits ended in September 2025, others on 30 June 2026, and the big wind and solar credits now hinge on a date that has just passed.

Two laws, one program

The Inflation Reduction Act of 2022 did three things on the tax side. It created or extended a long list of clean energy credits, it made most of them sellable or refundable so that companies without a tax bill could still benefit, and it introduced two new taxes on very large corporations to help pay for them.

The One Big Beautiful Bill Act, Public Law 119-21, approved on 4 July 2025, left the structure standing but cut its lifespan. Consumer and vehicle credits were ended early, building and charging credits were given a June 2026 cut-off, wind and solar received a hard end date, and almost every surviving credit gained new restrictions on Chinese, Russian, Iranian and North Korean involvement. The two corporate taxes were left in place.

For a European company with a US subsidiary, the practical question in late 2026 is therefore narrower than it was in 2023. You are no longer choosing among a buffet of incentives. You are checking whether a project already underway still qualifies, and whether a manufacturing or fuels business falls into one of the credits Congress kept.

The status table on 29 October 2026

The IRS published the cut-off dates for the credits that ended early in its frequently asked questions of August 2025. Combined with the statute for the rest, the picture looks like this:

For a 45W vehicle, the IRS treats a vehicle as acquired when a written binding contract is signed and a payment, even a small down payment or a trade-in, has been made. A truck ordered and paid on account in September 2025 can therefore still qualify even if it was delivered later.

Wind and solar: the line that has just been crossed

Sections 45Y and 48E are the technology-neutral successors of the old production and investment credits. For wind and solar facilities the statute now says plainly that the credits do not apply to a facility placed in service after 31 December 2027. The effective date provision of the 2025 law softens that: the new termination applies only to facilities whose construction begins more than twelve months after the date of enactment. A wind or solar project that began construction by 4 July 2026 is outside the 2027 deadline and keeps the older timetable.

Three projects, three outcomes

• A rooftop and carport solar array at a warehouse in San Antonio, construction begun in May 2026 with physical work of a significant nature: outside the 2027 deadline, provided construction continues and the project follows the IRS's beginning of construction rules.
• A similar array where construction starts in November 2026: it qualifies only if it is placed in service by 31 December 2027. Miss that date by a day and the credit is gone.
• A battery storage system at the same site: energy storage is excepted from the wind and solar termination and runs on the general schedule, but it is exposed to the prohibited foreign entity rules for construction beginning after 31 December 2025.

On 15 August 2025 the IRS tightened what counts as beginning construction for wind and solar in Notice 2025-42: physical work of a significant nature is now generally the only method, and planning, financing or permits do not count. We always ask clients for the paper trail: contracts, invoices for physical work and evidence of continuous progress. Without it the start date is an assertion, and the IRS can test it.

The credit amounts themselves are unchanged in structure. The base rate of the production credit is 0.3 cents per kilowatt hour and rises fivefold, to 1.5 cents, for facilities under one megawatt or those that meet the prevailing wage and apprenticeship rules. Domestic content and energy community bonuses add further increments.

The credits Congress kept

Outside wind and solar, the 2025 law was gentler, and some of the most valuable credits for manufacturers survived.

45X, advanced manufacturing

The production credit for components such as battery cells and modules, solar components, inverters and critical minerals continues. Components sold through 2029 earn the full credit; the percentage then falls to 75 percent for 2030, 50 percent for 2031, 25 percent for 2032 and zero thereafter. Wind energy components produced and sold after 31 December 2027 no longer qualify. Metallurgical coal was added as a critical mineral, with its own end date after 2029.

45Z, clean fuel production

The credit for low-emission transportation fuels was extended to fuel sold through 31 December 2029. From fuel produced after 2025, the feedstock must be produced or grown in the United States, Mexico or Canada, which closes the door to imported European used cooking oil and similar feedstocks.

45V and 45Q

Clean hydrogen facilities must now begin construction before 1 January 2028, five years earlier than the original deadline. The carbon capture credit under 45Q continues.

We see the strongest European interest in 45X. A US plant producing battery or solar components receives a credit per unit produced and sold, which can transform the economics of a factory in Texas. It is also one of the few credits a normal taxable company can take as a direct payment from the IRS (elective pay).

Foreign ownership: who is shut out and who is not

The 2025 law added a dense layer of rules on specified foreign entities and foreign-influenced entities. They sound as if they target every foreign owner. They do not.

The definitions are built around foreign entities of concern and covered nations, and the statute defines covered nations as North Korea, China, Russia and Iran. A US subsidiary owned by a German, Swedish or Italian parent is not a specified foreign entity because of that ownership. A US company becomes a foreign-influenced entity, and loses the credits, if for example a single specified foreign entity owns at least 25 percent of it, specified foreign entities own at least 40 percent together, or at least 15 percent of its debt is held by them.

The second test looks at the supply chain. For 45Y and 48E facilities and storage whose construction begins after 31 December 2025, and for 45X components in taxable years beginning after 4 July 2025, material assistance from a prohibited foreign entity disqualifies the project. A European manufacturer whose battery cells or inverters come from a Chinese supplier has to look at this before ordering, not at year end.

For the ordinary European owner, then, ownership is not the problem. Sourcing can be.

Selling a credit or taking it in cash

Many US subsidiaries of European groups have little federal tax to offset in their first years. The IRA anticipated this with two monetization routes that survive.

Transfer. Under section 6418 a company can sell all or part of an eligible credit to an unrelated US taxpayer for cash. The eligible list covers 30C, 45, 45Q, 45U, 45V, 45X, 45Y, 45Z, 48, 48C and 48E, plus a small biodiesel producer credit. The cash received is not taxable income for the seller and not deductible for the buyer. Since the 2025 law, several of these credits may not be sold to a buyer that is a specified foreign entity.

Elective pay. Under section 6417, the IRS treats the credit as a tax payment and refunds any excess. Tax-exempt organizations, states and municipalities, tribal governments and rural electric cooperatives may do this for the whole list. An ordinary taxable company may elect it only for 45V, 45Q and 45X, for the year the facility or production starts and the four following years, ending before 2033.

Both routes require pre-filing registration with the IRS, and the registration number must appear on the return. Credit pricing in a transfer is negotiated between the parties. The tax return that carries the credit, usually the Form 1120 of a US corporation, is where any mistake shows.

The two IRA taxes that never went away

The financing side of the IRA is still in force, and it reaches some European groups through their US subsidiaries.

• Corporate alternative minimum tax. A 15 percent minimum tax on adjusted financial statement income, for taxable years beginning after 31 December 2022. It applies to corporations whose average annual financial statement income over three years exceeds $1 billion. For a US member of a foreign-parented multinational group, the group's income counts for the $1 billion test, and the US corporation's own three-year average must be $100 million or more.
• Stock buyback excise tax. One percent of the fair market value of stock repurchased by a domestic corporation whose stock is traded on an established securities market. It does not apply in a year when repurchases do not exceed $1 million.

Neither touches a family-owned European business with a US sales company. They matter for listed groups and large private equity platforms, where the US tax team will already know them. Our guide to the taxation of business profits in the US puts the regular 21 percent corporate rate in context.

Claiming what was earned in the first half of 2026

The cut-off of 30 June 2026 creates a filing task that many small companies overlook. A charging station placed in service in April 2026, a commercial building whose construction began before July, or homes acquired by buyers before the 45L cut-off still produce a credit or deduction, and it is claimed on the return for the 2026 tax year, filed in 2027.

1. Collect the placed-in-service or construction start evidence now, while the people and contractors are reachable.
2. For 179D, the savings calculation must come from qualified software and the certification from a qualified individual; both are far harder to recreate later.
3. For any project of one megawatt or more, document prevailing wages and apprenticeship hours, because the higher credit rate depends on them.
4. If the company will have no tax to offset, register for a transfer early in 2027 and line up a buyer.

Keep the wider picture in view too. The 2025 law also restored the immediate deduction of domestic research and experimental spending for tax years beginning after 2024, which for many manufacturers now matters more than the energy credits; our page on the Trump tax cuts for businesses covers that side. State incentives remain a separate layer, often negotiated directly with the state, as our page on state business incentives explains. For the federal tax picture of a foreign-owned company as a whole, start with our overview of US taxes for businesses, and for the non-tax rules that apply to the same plant, our guide to federal and state business regulations.