Republicans Plan To End Biden Green Energy Tax Breaks

In a major political gesture, Republicans on the U.S. House Ways and Means Committee released a new tax plan targeting the elimination of most of the green-energy incentives enacted during the Biden presidency. The plan is part of the Trump administration's planned "One, Big, Beautiful Bill" — an ambitious tax and spending bill that aims to remake some of the most important federal energy and economic policy.

At the core of this plan is a call to repeal or sunset a broad range of President Biden's tax credits and subsidies enacted in his historic Inflation Reduction Act (IRA), signed into law in 2022. That law had dedicated close to $270 billion toward clean energy deployment, tax credits, loans, and grants aimed at speeding America's low-carbon economic transition. The IRA has been widely seen as among the most ambitious federal initiatives to address climate change and spur the renewable energy industry.

But the new Republican plan takes a sharply different tone. It aims to phase out a number of high-profile tax incentives by the end of 2025. Included is the $7,500 clean vehicle tax credit for new cars, which would only be offered to automakers who haven't yet sold 200,000 of them yet. The $4,000 credit for used clean vehicles and the up-to-$40,000 tax credit for big commercial clean vehicles would also be canceled under the proposal.

The proposal also aims at consumer-oriented energy efficiency incentives. Tax credits for investments in home energy efficiency upgrades — like the costs of installing efficient windows, doors, and insulation — would end. Home purchases of renewable energy systems, like solar electric and solar water heater systems, small wind turbines, geothermal heat pumps, storage batteries, and even fuel cells, would lose their eligibility for credits after 2025.

Large-scale and industrial clean energy projects are also in the sights. The proposal calls for a phase-out of tax credits on the production or investment in zero-emission electricity, including solar, wind, and nuclear sources. These credits would fall by 20% in 2029 and entirely be phased out by 2031. Additionally, a tax credit aiding the production and use of clean hydrogen — by many regarded as an exciting piece in the arsenal for decarbonizing heavy industry — would be scrapped.

The plan is in keeping with the previously stated energy policy objectives of former President Trump. Trump has vowed to unravel Biden-era climate laws and, if he is re-elected, has said he would re-withdraw the U.S. from the Paris Agreement on his inaugural day in office. He has also repeatedly vowed to "end the Green New Deal," which he uses as a term to describe climate-focused laws such as the IRA, even though the Green New Deal itself never made it through Congress.

Representing the Ways and Means Committee, Chairman Jason Smith denounced the current green tax credits as instruments that unfairly favor "the wealthy and well-connected." He characterized the Republican plan as a corrective action to put an end to "special interest giveaways" and to hold what he referred to as "the woke elite" accountable.

But the proposed cuts have also come under withering attacks from environmental groups, clean energy companies, and business groups who say the repeal of such tax credits would seriously undercut efforts toward U.S. energy independence and sustainability. The changes would discourage the investment in renewable energy, boost the cost of energy for families, and decelerate the creation of new technology required to satisfy increasing energy needs, critics say.

Rich Powell, the Clean Energy Buyers Association CEO, stressed the dangers of retreating at a moment when energy needs are at an all-time high. "Maintaining the federal technology-neutral energy tax credits is important for providing the energy necessary to power the 21st-century industries of America and to fuel American innovation and energy leadership," he stated. "While electricity demand is growing extremely fast today and in the future, we require additional options, not fewer."

Powell further observed that reducing these incentives would slow the advancement of important emerging technologies like geothermal and advanced nuclear power, both of which need continuous encouragement in order to become commercially viable.

As the bill advances, it is likely to become a central battleground in the fight over America's energy future. The conflict between Republican attempts to favor traditional energy and deregulation, and Democratic backing for clean technology and climate action, indicates that the result could have long-term implications for the environment and the economy.