Because of the extraordinary efforts of tens of thousands of Californians, state legislators voted in July to protect two million rooftop solar solar contracts.

AB 942, authored by a former SoCal Edison executive, would have broken 2 million rooftop solar contracts and punished solar users just for putting panels on their roof. It would have applied to all solar customers who signed up for solar before April 2023 (NEM1 and NEM2). The bill would have cause many solar owners to lose tens of thousands of dollars when they sell their home.

However, thanks to your phone calls, messages, rallies, and lobby meetings, legislators in the State Senate voted to protect solar users from these threats.

The Senators did this with a move called a “gut and amend.” They got rid of everything in the original bill, and then stuck something else in.

What they took out: Everything in the original bill that specifically targets or discriminates against rooftop solar consumers, including all of the preamble language that disparages rooftop solar.

What they put in: A new rule saying that households with an annual electricity bill that is less than $300 will not get the annual “California Climate Credit.” Most people will not be affected by this change because everyone will be paying a “Utility Tax” of about $300/yr starting in 2026 just to be connected to the grid.

There is plenty to criticize about the amended bill, but it no longer discriminates against solar users, which is absolutely critical to prevent a future Solar Tax. As is often the case, customers of publicly owned utilities like SMUD are not affected by the bill at all.

Also, to be clear, we do not support the Utility Tax, spent all last year fighting it, and will continue to fight it.

Bottom line: your solar contract is safe, and AB 942 no longer targets people just because they have solar panels.

All existing solar contracts remain protected from retroactive changes.

The bill no longer blames rooftop solar users for rising electricity rates.

The bill no longer punishes solar users just because you put panels on your roof.

We want to acknowledge the leadership of Senator Josh Becker, Chair of the Senate Energy Committee, where these changes were made. Senator Becker led the effort to ensure the bill would not target solar consumers, and took time to thank solar users for their investments.

In addition, every member of the Senate Energy Committee voted to protect your solar contract. This is a highly unusual case in which every type of vote is pro-solar. A “Yes” vote helped pass a bill that no longer threatens solar. A “No” or “NVR” vote would have prevented the bill from passing in any form. Either outcome would have removed the threat to solar. See how they voted.

A special thank you to everyone who met with their elected official about this bill, and to all the people who came to Sacramento yesterday and over the last few months to testify against this terrible bill (including those pictured above). These folks waited for hours before being allowed to speak. Thank you!

Special thank you to the more than 100 other organizations who worked side-by-side with us to defeat this threat, including the California Realtors Association, Sierra Club, Environment California, Environmental Working Group, Consumer Watchdog, and CALPIRG.

Finally, we hope that solar consumers and supporters are darn proud of themselves and their fellow Californians who spoke out against this bill. The most powerful special interests in California tried to go after your investment, with the backing of powerful lawmakers. You prevailed because you spoke up loudly and persistently to defend your solar rights.

The sun belongs to everyone, and you have the right to make energy from the sun without unreasonable interference or unfair punishment from the utilities or the government. We will continue to fight for these common sense principles and we hope you do as well.

A bill that would substantially expand solar and home improvement financing requirements is making its way through the California legislature. Senate Bill 784 (“SB 784”) passed the California Senate on June 2, and is now under consideration by the California Assembly. The bill, which would impose new consumer protection requirements for solar and home improvement lending in addition to the state’s existing statutes regulating consumer lending, home solicitation sales, and home improvement contractors, represents an escalation of state interest in the industry. If enacted in the current legislative session without amendment, the bill would become effective January 1, 2026. California’s consideration of the bill follows increased regulatory and private action pressure on solar and home improvement dealer oversight and financing company economics that have been building at the state and federal level over several years, and seeks to codify substantive and procedural constraints on certain aspects of the market that consumer advocates have targeted for reform.

This Legal Update examines SB 784 in market context and provides a summary of how its requirements could affect the solar and home improvement financing industry going forward. We will continue to monitor updates to the bill—as well as other state actions in the solar and home improvement financing space—and provide additional updates as warranted.

Market Context

Financing sources in the solar and home improvement financing industry often rely on third-party contractors and dealers for consumer-facing solicitation, customer acquisition, and document execution. As a result, the consumer-facing practices of these contractors and dealers have attracted recent regulatory scrutiny of whether contractors and dealers have engaged in improper sales practices or other misconduct. Regulators and private plaintiffs have alleged fairly frequently, for example, that dealers may sell defective equipment or fail to complete proper installations, resulting in consumers having loan repayment obligations for home improvements that are non-functioning or underperforming. Similarly, allegations that dealers have misrepresented financing terms as they engage in high-pressure tactics to complete sales have become more common over time. Through enforcement, litigation, or legislation, parties have sought to constrain these alleged abuses, including through attempt to impose liability or control obligations on parties other than the dealers themselves (such as lenders, sales finance companies, program managers, or investors).

Another issue that has received significant attention from the Consumer Financial Protection Bureau (“CFPB”), state attorneys general, and consumer advocacy groups is the role that “dealer fees” play in the market for solar and home improvement financing. Dealer fees typically refer to costs that are imposed by financing sources on dealers in exchange for permitting dealers to participate in a financing program. Regulators and consumer advocacy groups have alleged that the presence of dealer fees, which may range between an equivalent of 10% and 30% of the cash price of the financed equipment in solar financing transactions, increases the cost of a financed project above a potential “cash sale price” (i.e., the price at which the same products and services would otherwise be available if the transaction were not financed). Regulators and private plaintiffs have alleged that dealers charge more for financed transactions than cash transactions (even if agreements between financing sources and dealers prohibit such pricing differences) or that dealer fees result in pricing increases across all transactions as dealers account for such costs in their overhead. Regulators have also alleged that the fact that dealer fees have been included in the price of the financed equipment is not adequately disclosed to consumers and represents a “hidden finance charge” or undisclosed interest under federal1 or state laws. Other allegations made by regulators in prior actions and public statements include allegations of dealers making misleading claims about energy savings from solar systems based on overstatements about the amount of electricity that panels will produce and/or assumptions that homeowners will qualify for federal tax credits, without considering whether the consumer actually has tax liability or qualifies for the tax credit.

We discussed regulatory and private actions in the solar industry in greater detail in our prior Legal Update, “Regulatory Clouds on the Horizon for Solar Financing? Programs Face Headwinds, but the Future Still Looks Bright.”

Current Text of SB 784

Scope

SB 784 mostly applies to “home improvement loans,” which it defines as a consumer loan that will be disbursed to a contractor in connection with a home solicitation contract to finance a home improvement, but excluding Property Assessed Clean Energy financing and certain mortgage loans. However, the right to cancel period applies more generally to home improvement contracts, which could include both retail installment contracts (“RICs”) as well as contracts for the sale of home improvement goods or services that are not financed. Under the home improvement loan model, a consumer borrows directly from a lender who disburses loan proceeds for the project to the contractor or dealer. Under the RIC model, the consumer purchases the goods or services on credit with the seller, who may later sell or assign the RIC to a lender.

Requirements

The California legislation intends to address many of the consumer regulatory risks alleged in prior regulatory actions, private litigation, and consumer advocacy research.

Provisions addressing home improvement loans impose new obligations and liabilities on the lender or restrictions on the loan itself. Provisions addressing home improvement contracts impose new obligations on contractors. Other parties that may be involved in financing activities, such as brokers, salespeople, investors, servicers, and collectors, are not directly regulated by the new provisions (though activities by brokers or salespeople may be relevant to determinations of lender liability in certain cases, as summarized below regarding “Borrower Claims and Defenses”)).

Key provisions of the bill include:

Requirement of lender confirmation call : The version of SB 784 that has passed through the California State Senate would require a home improvement lender to obtain a copy of the home improvement contract between the dealer and buyer, and complete a video or telephone confirmation call with the buyer that confirms that all property owners have received a copy of the home improvement contract, reviews key terms of the loan agreement, and ensures that the buyer understands terms of the loan and the underlying contract for home improvement services before the buyer executes a home improvement loan. An amended version under consideration by the California State Assembly varies these requirements slightly by limiting the confirmation regarding parties that have received a copy of the home improvement contract to the consumer, rather than all property owners. Such calls have not previously been formal regulatory requirements, though some financing providers have implemented welcome call processes for at least a portion of their originations as one of several possible controls against consumer misunderstanding and certain forms of fraud or improper dealer behavior.

: The version of SB 784 that has passed through the California State Senate would require a home improvement lender to obtain a copy of the home improvement contract between the dealer and buyer, and complete a video or telephone confirmation call with the buyer that confirms that all property owners have received a copy of the home improvement contract, reviews key terms of the loan agreement, and ensures that the buyer understands terms of the loan and the underlying contract for home improvement services before the buyer executes a home improvement loan. An amended version under consideration by the California State Assembly varies these requirements slightly by limiting the confirmation regarding parties that have received a copy of the home improvement contract to the consumer, rather than all property owners. Such calls have not previously been formal regulatory requirements, though some financing providers have implemented welcome call processes for at least a portion of their originations as one of several possible controls against consumer misunderstanding and certain forms of fraud or improper dealer behavior. Extension of a buyer’s right to cancel a home improvement transaction : Existing California law provides a buyer the right to cancel certain home solicitation contracts—meaning those entered into outside of the seller’s usual place of business—until midnight of the third business day after the day on which the buyer signs an agreement to purchase goods or services, and five business days for buyers who are senior citizens. SB 784 extends the cancellation period to five days and seven days, respectively. Federal law provides a three-day cancellation period for home solicitation sales (subject to various exemptions), and many states mirror that timeframe even if they extend cancellation rights to a broader set of sales—such as all home improvement contracts rather than just home solicitation sales. If SB 784 were enacted in its current form, California would join a relatively short list of states with longer cancellation periods. This requirement applies to the home improvement contract between the seller and the consumer, rather than to the home improvement loan between the consumer and the lender. The extended rescission period would apply to contracts entered into on or after January 1, 2026. Current rescission periods would apply to contracts entered into before January 1, 2026, even is such rescission period ran into the first few days of 2026.

: Existing California law provides a buyer the right to cancel certain home solicitation contracts—meaning those entered into outside of the seller’s usual place of business—until midnight of the third business day after the day on which the buyer signs an agreement to purchase goods or services, and five business days for buyers who are senior citizens. SB 784 extends the cancellation period to five days and seven days, respectively. Federal law provides a three-day cancellation period for home solicitation sales (subject to various exemptions), and many states mirror that timeframe even if they extend cancellation rights to a broader set of sales—such as all home improvement contracts rather than just home solicitation sales. If SB 784 were enacted in its current form, California would join a relatively short list of states with longer cancellation periods. This requirement applies to the home improvement contract between the seller and the consumer, rather than to the home improvement loan between the consumer and the lender. The extended rescission period would apply to contracts entered into on or after January 1, 2026. Current rescission periods would apply to contracts entered into before January 1, 2026, even is such rescission period ran into the first few days of 2026. Disclosure of dealer fees: SB 784 requires home improvement lenders to provide both oral and written disclosures about “dealer fees” before a consumer executes a home improvement loan. It defines “dealer fee” as a charge associated with a home improvement loan that is treated by the lender as seller’s points pursuant to the Truth in Lending Act (“TILA”) and its implementing Regulation Z (i.e., fees imposed by a creditor on a non-creditor seller of financed goods or services, even if the fee is passed through to the borrower, in whole or in part, at the non-creditor seller’s discretion). The bill prescribes specific language and formatting requirements for the disclosure as provided below, requires consumers to initial the disclosure acknowledging receipt, and requires the lender to obtain a copy of the signed disclosure statement from the buyer before executing a home improvement loan. The disclosure required by the version of the bill that has passed through the California State Senate is as follows: The amount of your loan may include a dealer fee that is not included as a finance charge for the purpose of calculating the annual percentage rate (APR) of the loan. This means that the true cost of this loan may be higher than indicated by the APR. If you seek financing from another lender that does not have a relationship with your contractor, the loan is unlikely to include a dealer fee but may have a higher interest rate or other finance charges. For this reason, you are encouraged to shop around and compare the costs of different loans before deciding which to use for this project.

The dealer fee for this loan is $____. You will be required to pay this back. The dealer fee in addition to the payment or payments made by the lender to the contractor for their work on this project, which for this loan is $____.

A slightly amended version of this language is under consideration by the California State Assembly. The amended language would clarify that the consumer will be required to pay back dealer fees only if the contractor added any portion of the dealer fees to the underlying home improvement contract, rather than stating a requirement to pay back dealer fees as universal.

While TILA and Regulation Z require disclosure of the finance charge on a consumer credit transaction, “seller’s points,” which could include dealer fees, are excluded from the finance charge even if the seller passes on the fees to the buyer in the form of a higher sale price for the financed property.2 Certain aspects of the language required by SB 784 may be open to challenge under an argument grounded in TILA’s preemption standards, which displaces state laws and regulations that are inconsistent with Regulation Z, including through use of terms to refer to other concepts. In particular, the statement that inclusion of a dealer fee means “that the true cost of this loan may be higher than indicated by the APR” could be read to conflict with Regulation Z’s treatment of APR as the primary disclosed “cost of credit” and/or to overshadow required disclosures. This could be true even if the remainder of the disclosure is not preempted—though whether the disclosure will be finalized as-is or challenged on this ground upon becoming effective remains to be seen.

Loan Payment Schedules Tied to Project Completion : The version of SB 784 that has passed through the California State Senate would prohibit lenders from requiring a borrower to make a payment on a home improvement loan until the lender has confirmed that have all permitting agencies have issued final approval of all home improvements financed under the loan and that the improvements are operational. An amended version under consideration by the California State Assembly varies these requirements slightly, requiring confirmations regarding permitting and operational status only for home improvements not involving a solar energy system and treating a confirmation that Permission to Operate has been granted as the sole requirement for a home improvement project involving a solar energy system. Under either version of the bill, the lender would be prohibited from reporting the consumer’s payment obligation on the loan to consumer reporting agencies until the consumer’s repayment obligations have started, in accordance with SB 784.

: The version of SB 784 that has passed through the California State Senate would prohibit lenders from requiring a borrower to make a payment on a home improvement loan until the lender has confirmed that have all permitting agencies have issued final approval of all home improvements financed under the loan and that the improvements are operational. An amended version under consideration by the California State Assembly varies these requirements slightly, requiring confirmations regarding permitting and operational status only for home improvements not involving a solar energy system and treating a confirmation that Permission to Operate has been granted as the sole requirement for a home improvement project involving a solar energy system. Under either version of the bill, the lender would be prohibited from reporting the consumer’s payment obligation on the loan to consumer reporting agencies until the consumer’s repayment obligations have started, in accordance with SB 784. Borrower Claims and Defenses: The version of SB 784 that has passed through the California State Senate expands a lender’s vicarious liability for certain violations of law by a contractor, salesperson or broker. In particular, a consumer could assert any claim or defense regarding misrepresentation of loan terms that a consumer could have brought against such persons against the lender as well. This provision is similar to the Federal Trade Commission’s (“FTC”) Holder Rule, which eliminates “holder in due course” protection from defenses and claims that a consumer could have asserted against the original seller of goods or services for any assignee of a purchase-money consumer loan or RIC. Unlike the FTC Holder Rule, however: (i) liability is not limited to amounts paid by the consumer; (ii) expanded vicarious liability appears to apply only to the initial lender and not to subsequent holders of the loan; and (iii) a lender may not be held vicariously liable if it has cured the third party’s misrepresentation through a telephone or video call. An amended version under consideration by the California State Assembly strips this provision from the bill, such that its ultimate inclusion remains uncertain.

Broader Regulatory Movement on Solar and Home Improvement Financing Issues

California’s proposal follows steps taken by other states to further regulate solar financing.

For example, effective June 6, 2024, Washington adopted the Solar Consumer Protection Act (“SCPA”), which—like portions of California’s SB 784—also focused on dealer fee disclosure issues. The SCPA requires a solar energy contractor or salesperson to provide consumers a written contract that includes material terms and disclosures regarding the installation of a solar energy system. Among other requirements, the contract must disclose the exact amount a contractor or salesperson paid to any lender or third-party financing company in the form of a “dealer fee” or other similar inducement to obtain financing.3 The SCPA defines “dealer fee” as the “amount paid by a solar energy contractor or solar energy salesperson to a lender in order to offer a customer credit to finance the purchase and installation of a solar energy system.”4 The contract must also include a separate line item disclosing any financing that is incorporated directly into the contract, including terms, conditions, interest rates, annual percentage rate, the amortization schedule, and information about how the loan is secured.5 Additionally, solar energy installation contracts must include notices, some of which consumers must acknowledge and initial, including those regarding the consumer’s right to cancel a contract within three business days, the use of residential clean energy tax credits, and a payment schedule based on project completion milestones.6 While the coverage of the Washington SCPA is limited to solar contractors and salespersons, the statute addresses regulatory scrutiny of dealer fees in a manner similar to California’s SB 784.

Similarly, effective March 1, 2025, Rhode Island’s Residential Solar Energy Disclosure and Homeowners Bill of Rights Act7 requires solar retailers to register with the Rhode Island Department of Business and submit their roster of employees and third-party sales representatives engaged in selling solar systems, provide specific disclosures to consumers that include projected estimates of savings and the bases of such calculations, and provide consumers with a right to cancel the transaction within seven business days. Unlike SB 784 and the Washington SCPA, the Rhode Island law applies to persons who originate solar leases and power purchase agreements, rather than persons who provide financing for the solar systems, and suggests that regulatory concerns around dealer practices extend to the leasing and power purchase arrangements.

Additionally, Nevada Senate Bill 379, which becomes effective October 1, 2025, will impose new consumer protections for solar installations and applies to solar loans, leases, and power purchase arrangements. The Nevada legislation will require a solar financing company to ensure that its dealers hold the requisite contractors’ licenses, and that failure to confirm licensing results in the solar contract being voidable by the consumer. The Nevada legislation will also prohibit solar lenders from making certain payments to dealers prior to PTO, extends the cancellation period for consumers who are 60 years of age or older, among other requirements.

These states’ movement on this issue may signal the early stages of a trend as regulatory scrutiny in the solar and home improvement financing space intensifies over time.

1 Treatment of dealer fees under federal law depends on the structure of the financing offered, as well as how such dealer fees are imposed. In particular, the “finance charge” determined under the federal Truth in Lending Act and its implementing regulation, Regulation Z, excludes “seller’s points,” which are fees imposed by a creditor on a non-creditor seller of goods or services rather than on the consumer. This exclusion covers dealer fees in loan transactions (under typical models in which the lender does not require the fee to be passed through to the consumer) even if the seller chooses to recoup some or all of the cost of the fee by passing it through to the consumer as an element of pricing or as a separate fee. The same treatment does not apply where the seller is the creditor, as would be the case in a program implemented through retail installment transactions. 12 C.F.R.§ 1026.4(c)(5) (and associated Official Interpretations).

2 12 C.F.R. § 1026.4(a).

3 See Wash. Rev. Code Ann. § 19.95.020(4)(c).

4 Id. § 19.95.010(2).

5 See id. § 19.95.020(4)(b).

6 See e.g., id. § 19.95.020(4)(f), (r), and (t).

7 R.I. Gen. Stat. §§ 5-93-1 et seq.

Below are details of many of the tax provisions in the act commonly known as the One Big Beautiful Bill Act, which was signed into law Friday by President Donald Trump.

The House approved the measure Thursday in a 218-214 vote, after the Senate approved it Tuesday by a 51-50 vote, with Vice President JD Vance casting the tie-breaking vote.

The act, H.R. 1, P.L. 119-21, extends many of the expiring provisions from the Tax Cuts and Jobs Act (TCJA), P.L. 115-97. It also addresses other tax priorities of the Trump administration, including providing deductions to eliminate income taxes on certain tips and overtime pay.

The act also revamps some of the TCJA’s provisions on the taxation of corporations’ foreign income and terminates a large number of clean energy tax incentives.

In a statement, AICPA President and CEO Mark Koziel, CPA, CGMA, called the act “a win for millions of businesses, taxpayers, and tax practitioners across the country.”

Additionally, Koziel said in the statement: “No bill is perfect — however, there are many beneficial tax provisions in this bill that I believe support the business community and will help grow our economy. The tax provisions in this bill will help facilitate tax planning earlier in the year, which can help reduce the anxiety of the unknown for many taxpayers.”

The AICPA has published charts comparing tax and personal financial planning provisions of the act with current law (free site registration required).

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Provisions for individuals

Tax rates: The act generally makes the tax rates enacted in 2017 in the TCJA permanent. The act adds an additional year of inflation adjustment for determining the dollar amounts at which any rate bracket higher than 12% ends and at which any rate bracket higher than 22% begins.

Standard deduction: The act makes the TCJA’s increased standard deduction amounts permanent. For tax years beginning after 2024, the standard deduction increases to $15,750 for single filers, $23,625 for heads of household, and $31,500 for married individuals filing jointly. The standard deduction will be adjusted for inflation after that. These changes have been made retroactive to include 2025.

SALT cap: The act temporarily increases the limit on the federal deduction for state and local taxes (the SALT cap) to $40,000 (from the current $10,000) and adjusts it for inflation. In 2026, the cap will be $40,400, and then will increase by 1% annually, through 2029. Starting in 2030, it will revert to the current $10,000.

The amount of the deduction available to a taxpayer phases down for taxpayers with modified adjusted gross income (MAGI) over $500,000 (in 2025). The MAGI threshold will be adjusted for inflation through 2029. The phasedown will reduce the taxpayer’s SALT deduction by 30% of the amount the taxpayer’s MAGI exceeded the threshold, but the limit on a taxpayer’s SALT deduction could never go below $10,000.

The version of the bill that passed the House in May also increased the SALT cap to $40,000, but included provisions to limit taxpayers’ attempt to circumvent the cap, including not allowing specified service trades or businesses (SSTBs) to deduct state and local income taxes. This provision would limit the usefulness of state passthrough entity taxes (PTETs) in avoiding the SALT cap. The Senate Finance Committee’s version of the bill took a different tack and would have limited all passthrough entity owners’ PTET SALT deduction to the unused portion of their SALT deduction plus the greater of $40,000 of their allocation of the PTET or 50% of their allocation of the PTET.

The adopted version of the act merely increases the SALT cap and does not attempt to limit or address the various workarounds that taxpayers are currently using to avoid the SALT cap. The AICPA had advocated against limiting the use of PTETs.

In the AICPA statement, Koziel said: “We are thankful to the members of Congress who supported millions of businesses’ ability to retain pass-through entity tax SALT deduction and our partners throughout the state CPA societies and other professional service businesses for their diligent advocacy on this important issue.” (For more on this, see “Senate Budget Bill Would Preserve PTET SALT Deduction.”)

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Personal exemptions and senior deduction: The act permanently sets the deduction for personal exemptions at zero. However, it provides a temporary $6,000 deduction under Sec. 151 for individual taxpayers who are age 65 or older. This senior deduction begins to phase out when a taxpayer’s MAGI exceeds $75,000 ($150,000 in the case of a joint return). It will be in effect for the years 2025 through 2028.

Child tax credit: The act increases the amount of the nonrefundable child tax credit to $2,200 per child beginning in 2025 and indexes the credit amount for inflation. The act also makes permanent the $1,400 refundable child tax credit, adjusted for inflation. It in addition makes permanent the increased income phaseout threshold amounts of $200,000 ($400,000 in the case of a joint return), as well as the $500 nonrefundable credit for each dependent of the taxpayer other than a qualifying child.

QBI deduction: The act makes the Sec. 199A qualified business income (QBI) deduction permanent and keeps the deduction rate at 20% (the bill passed by the House would have raised it to 23%). The act expands the Sec. 199A deduction limit phase-in range for SSTBs and other entities subject to the wage and investment limitation by increasing the $50,000 amount for non-joint returns to $75,000 and the $100,000 amount for joint returns to $150,000.

The act also introduces an inflation-adjusted minimum deduction of $400 for taxpayers who have at least $1,000 of QBI from one or more active trades or businesses in which they materially participate.

Estate and gift tax exemption amounts: The act amends Sec. 2010 to permanently increase the estate tax exemption and lifetime gift tax exemption amounts to $15 million for single filers ($30 million for married filing jointly) in 2026 and index the exemption amount for inflation after that.

Alternative minimum tax exemption: The act permanently extends the TCJA’s increased individual alternative minimum tax (AMT) exemption amounts and reverts the exemption phaseout thresholds to their 2018 levels of $500,000 ($1 million in the case of a joint return), indexed for inflation. However, in a change from the Senate Finance Committee’s version of the bill, the act increases the phaseout of the exemption amount from 25% to 50% of the amount by which the taxpayer’s alternative minimum taxable income exceeds the threshold amount.

Mortgage interest deduction: The act permanently extends the TCJA’s provision limiting the Sec. 163 qualified residence interest deduction to the first $750,000 in home mortgage acquisition debt. It also makes permanent the exclusion of interest on home-equity indebtedness from the definition of qualified residence interest. The act also treats certain mortgage insurance premiums on acquisition indebtedness as qualified residence interest.

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Casualty loss deductions: Under the act, the TCJA’s provision limiting the itemized deduction for personal casualty losses to losses resulting from federally declared disasters becomes permanent, but the act expands the provision to include certain state-declared disasters.

A letter to four Senate leaders dated June 28 reiterated the AICPA’s appreciation for multiple provisions in the bill (Senate substitute amendment) and noted the AICPA’s “continued concern” regarding the permanency of the TCJA limitation on such deductions.

“We hope to continue to work with you to find improvements on this issue in any future tax legislation,” the letter said. “That being said, on balance, the legislation that the Senate will consider makes significant improvements to the OBBB that truly promote business growth. With that in mind, we express our strong support for the Senate tax provisions and urge their inclusion in any final version of the OBBB that becomes law.”

Miscellaneous itemized deductions: The act makes permanent the TCJA’s suspension of the Sec. 67(g) deduction for miscellaneous itemized deductions but removes unreimbursed employee expenses for eligible educators from the list of miscellaneous itemized deductions.

Itemized deductions limitation: The act permanently removes the Sec. 68 overall limitation on itemized deductions (known as the Pease limitation) and replaces it with a new overall limitation on the tax benefit of itemized deductions. The amount of itemized deductions otherwise allowable would be reduced by 2/37 of the lesser of (1) the amount of the itemized deductions or (2) the amount of the taxpayer’s taxable income that exceeds the start of the 37% tax rate bracket.

Bicycle commuting reimbursements: The act permanently excludes qualified bicycle commuting reimbursements from the list of qualified transportation fringe and other commuting benefits, making them taxable to employees.

Moving expense deduction: The act permanently eliminates the Sec. 217 deduction for moving expenses, except for members of the armed forces and certain members of the intelligence community.

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Wagering losses: The act amends Sec. 165(d) to clarify that the term “losses from wagering transactions” includes any deduction otherwise allowable under Chapter 1 of the Code incurred in carrying on any wagering transactions. The act limits the term “losses from wagering transactions” to 90% of the amount of those losses, and losses will be deductible only to the extent of the taxpayer’s gains from wagering transactions during the tax year.

ABLE accounts: The act makes various changes to Sec. 529A ABLE accounts, including making permanent the TJCA’s increased limitation on contributions to ABLE accounts. The act also makes permanent the inclusion of ABLE account contributions as eligible Sec. 25B saver’s credit contributions, but after 2026 only ABLE account contributions will be eligible saver’s credit contributions. The credit amount increases from $2,000 to $2,100. (This increase was not included in the Senate Finance Committee’s version of the bill.)

Student loan debt discharge: The act makes permanent and makes some adjustments to the Sec. 108(f)(5) provision excluding from gross income student loans that are discharged on account of death or disability. The act also requires the inclusion of the taxpayer’s Social Security number (SSN) on the relevant income tax return when a student loan is discharged.

No tax on tips: The act provides a temporary deduction of up to $25,000 for qualified tips received by an individual in an occupation that customarily and regularly receives tips. The deduction will be allowed for both employees receiving a Form W-2, Wage and Tax Statement, and independent contractors who receive Form 1099-K, Payment Card and Third Party Network Transactions, or Form 1099-NEC, Nonemployee Compensation, or who report tips on Form 4317, Social Security and Medicare Tax on Unreported Tip Income. The deduction would be available for taxpayers who claim the standard deduction or itemize deductions. The deduction begins to phase out when the taxpayer’s MAGI exceeds $150,000 ($300,000 in the case of a joint return). This temporary deduction will be available for tax years 2025 through 2028. A transition rule will allow employers required to furnish statements enumerating an individual’s tips for tax year 2025 to use “any reasonable method” to estimate designated tip amounts.

The act also extends the Sec. 45B credit for a portion of employer Social Security taxes paid with respect to employee cash tips to certain beauty service businesses.

No tax on overtime: The act provides a temporary deduction of up to $12,500 ($25,000 in the case of a joint return) for qualified overtime compensation received by an individual during a given tax year. The deduction begins to phase out when the taxpayer’s MAGI exceeds $150,000 ($300,000 in the case of a joint return). The act defines qualified overtime compensation as overtime compensation paid to an individual required under Section 7 of the Fair Labor Standards Act of 1938 that is in excess of the regular rate (as used in that section) at which the individual is employed. Overtime deductions would only be allowed for qualified overtime compensation if the total amount of qualified overtime compensation is reported separately on Form W-2 (or Form 1099, if the worker is not an employee). This temporary deduction will be available for tax years 2025 through 2028 and would be available to non-itemizers.

Car loan interest: For the years 2025 through 2028, the act excludes qualified passenger vehicle loan interest from the definition of personal interest in Sec. 163(h). Qualified passenger vehicle loan interest is defined as interest paid or accrued during tax year on indebtedness incurred by the taxpayer after Dec. 31, 2024, for the purchase of, and that is secured by a first lien on, an applicable passenger vehicle for personal use. Among other restrictions, applicable passenger vehicles must have had their final assembly in the United States.

The exclusion is capped at $10,000 per year and will phase out for taxpayers with MAGI in excess of $100,000 ($200,000 for married taxpayers filing jointly).

Adoption credit: The act makes a portion (up to $5,000) of the Sec. 23 adoption credit refundable. That amount will be adjusted for inflation.

Dependent care assistance programs: The maximum annual amount excludable from income under a Sec. 129 dependent care assistance program increases from $5,000 to $7,500 under the act.

Child and dependent care credit: The act permanently increases the amount of the child and dependent care tax credit from 35% to 50% of qualifying expenses. The credit rate phases down for taxpayers with adjusted gross income (AGI) over $15,000. It will be reduced by 1 percentage point (but not below 35%) for each $2,000 that the taxpayer’s AGI exceeds $15,000. It will then be further reduced by (but not below 20%) 1 percentage point for each $2,000 ($4,000 for joint returns) that their AGI exceeds $75,000 ($150,000 for joint returns).

Trump accounts: The act takes the House bill’s concept of tax-free savings accounts for minors, called Trump accounts, and revises it to make them a form of individual retirement account (IRA) under Sec. 408(a). Under the act, Trump accounts will be IRAs (but not Roth IRAs) for the exclusive benefit of individuals under 18. Contributions can only be made in calendar years before the beneficiary turns 18 and distributions can only be made starting in the calendar year the beneficiary turns 18. Trump accounts will have to be designated as such when they are set up, and the act does not allow Trump account contributions until 12 months after the date of enactment of the act.

Under the act, Treasury can set up Trump accounts for individuals that it identifies as eligible and for which no Trump account has already been created.

Eligible investments in Trump accounts would generally be mutual funds and indexed ETFs. Contributions (other than qualified rollover contributions) will be capped at $5,000 a year (adjusted for inflation after 2027). State, local, and tribal governments and charitable organizations could make “general funding contributions,” which would be contributions made to a specified qualified class of Trump account beneficiaries. Qualified classes include beneficiaries under the age of 18, and the general funding contribution can specify geographical areas or specific birth years of beneficiaries whose accounts will receive the contributions.

The act creates a new Sec. 128 that allows for employer contributions to Trump accounts. These contributions will not be included in the employee’s income.

A new Sec. 6434 creates a Trump accounts contribution pilot program that provides a $1,000 tax credit for opening a Trump account for a child born between Jan. 1, 2025, and Dec. 31, 2028. The act appropriates $410 million, to remain available through Sept. 30, 2034, to fund Trump accounts.

Credit for contributions to scholarship-granting organizations: The act enacts a new Sec. 25F that provides a credit of $1,700 for charitable contributions to scholarship-granting organizations. (Earlier versions of this article misstated the credit amount and included details of a cap on the credit that was in an earlier version of the bill but is not in the final act.)

The provision also creates a Sec. 139K, which excludes from income scholarships for the qualified secondary or elementary education expenses of eligible students.

Sec. 529 plans: The act allows tax-exempt distributions from Sec. 529 savings plans to be used for additional educational expenses in connection with enrollment or attendance at an elementary or secondary school. The act also allows tax-exempt distributions from 529 savings plans to be used for additional qualified higher education expenses, including “qualified postsecondary credentialing expenses.”

Charitable contribution deduction: The act creates a charitable contribution deduction for taxpayers who do not elect to itemize, allowing nonitemizers to claim a deduction of up to $1,000 for single filers or $2,000 for married taxpayers filing jointly for certain charitable contributions. For itemizers, the act imposes a 0.5% floor on the charitable contribution deduction: The amount of an individual’s charitable contributions for a tax year is reduced by 0.5% of the taxpayer’s contribution base for the tax year. For corporations, the floor will be 1% of the corporation’s taxable income, and the charitable contribution deduction cannot exceed the current 10%-of-taxable-income limit.

Business provisions

Bonus depreciation: The act permanently extends the Sec. 168 additional first-year (bonus) depreciation deduction. The allowance is increased to 100% for property acquired and placed in service on or after Jan. 19, 2025, as well as for specified plants planted or grafted on or after Jan. 19, 2025.

Sec. 179 expensing: The act increases the maximum amount a taxpayer may expense under Sec. 179 to $2.5 million, reduced by the amount by which the cost of qualifying property exceeds $4 million.

Research-and-development expenses: The act allows taxpayers to immediately deduct domestic research or experimental expenditures paid or incurred in tax years beginning after Dec. 31, 2024. However, research or experimental expenditures attributable to research that is conducted outside the United States will continue to be required to be capitalized and amortized over 15 years under Sec. 174.

Small business taxpayers with average annual gross receipts of $31 million or less will generally be permitted to apply this change retroactively to tax years beginning after Dec. 31, 2021. And all taxpayers that made domestic research or experimental expenditures after Dec. 31, 2021, and before Jan. 1, 2025, will be permitted to elect to accelerate the remaining deductions for those expenditures over a one- or two-year period.

Limitation on business interest: The act reinstates the EBITDA limitation under Sec. 163(j) for tax years beginning after Dec. 31, 2024. Therefore, for purposes of the Sec. 163(j) interest deduction limitation for these years, adjusted taxable income would be computed without regard to the deduction for depreciation, amortization, or depletion. The act would also modify the definition of “motor vehicle” to allow interest on floor plan financing for certain trailers and campers to be deductible.

Paid family and medical leave credit: Under the act, Sec. 45S is amended to make the employer credit for paid family and medical leave permanent.

Special depreciation allowance for qualified production property: The act allows an additional first-year depreciation deduction equal to 100% of the adjusted basis of “qualified production property.” Qualified production property is generally nonresidential real property used in manufacturing.

Advanced manufacturing investment credit: Under the act, the advanced manufacturing investment credit rate increases from 25% to 35%, effective for property placed in service after Dec. 31, 2025. (The Senate Finance Committee version of the bill had proposed increasing the rate to 30%.)

Spaceports: The act amends Sec. 142(a)(1) to ensure spaceports are treated like airports under the exempt-facility bond rules. A spaceport is defined as a facility close to a launch or reentry site that is used to manufacture, assemble, or repair spacecraft or space cargo or is used for flight control operations, to provide launch or reentry services, or to transfer crew, spaceflight participants, or space cargo to or from a spacecraft. This is a new provision that was not in the Senate Finance Committee’s version of the bill.

Employer-provided child care credit: The act increases the amount of qualified child care expenses taken into account for purposes of the Sec. 45F employer-provided child care credit from 25% to 40%. The maximum amount of the credit increases from $150,000 to $500,000 ($600,000 for eligible small businesses) and will be adjusted for inflation.

Opportunity zones: The act makes opportunity zones permanent but with several changes, including narrowing the definition of “low-income community.” The changes would generally take effect Jan. 1, 2027.

New markets tax credit: The act makes the Sec. 45D new markets tax credit permanent.

Percentage-of-completion method: The act provides an exception to the Sec. 460(e) requirement to use the percentage-of-completion accounting method for certain residential construction contracts entered into after the date of the act’s enactment.

Qualified small business stock: The act increases the Sec. 1202 exclusion for gain from qualified small business stock. For qualified small business stock acquired after the date of enactment of the act and held for at least four years, the percentage of gain excluded from gross income will rise from 50% to 75%. If it is held for five years or more, the exclusion percentage will go up to 100%.

Excess business losses: The act makes Sec. 461(l)(1) limitation on excess business losses of noncorporate taxpayers permanent. It was scheduled to expire after 2028. Language in the Senate Finance Committee version of the bill would have treated carried over excess business losses as excess business losses, and therefore subject to the Sec. 461(l) limitation, rather than as net operating losses (NOLs), which are not subject to Sec. 461(l). That language was dropped from the final act.

Clean energy incentives

The act terminates a large number of clean energy tax incentives:

Sec. 25E previously owned clean vehicle credit (terminates after Sept. 30, 2025);

Sec. 30D clean vehicle credit (terminates for vehicles acquired after Sept. 30, 2025);

Sec. 45W qualified commercial clean vehicle credit (terminates after Sept. 30, 2025);

Sec. 30C alternative fuel vehicle refueling credit (terminates after June 30, 2026);

Sec. 25C energy-efficient home improvement credit (terminates after Dec. 31, 2025);

Sec. 25D residential clean energy credit (terminates for expenditures made after Dec. 31, 2025);

Sec. 179D energy-efficient commercial buildings deduction (terminates for property the construction of which begins after June 30, 2026);

Sec. 45L new energy-efficient home credit (terminates after June 30, 2026);

Sec. 45V clean hydrogen production credit (terminates after Jan. 1, 2028); and

Sec. 6426(k) sustainable aviation fuel credit (terminates after Sept. 30, 2025).

The Sec. 168(e)(3)(B)(vi) provision allowing cost recovery for certain energy property and qualified clean energy facilities, property, and technology will be terminated after Dec. 31, 2025, for energy property and after the date of enactment for qualified clean energy facilities, property, and technology.

The act places restrictions on claiming the Sec. 45U nuclear power production credit for foreign entities and for facilities that use imported nuclear fuel.

The Sec. 45Y clean electricity production credit is terminated for wind and solar facilities placed in service after Dec. 31, 2027. No credit will be allowed to facilities that are owned or controlled by certain foreign entities. The Sec. 48E clean electricity investment credit is also terminated for wind and solar facilities placed in service after Dec. 31, 2027. Restrictions are also placed around claims by facilities owned or controlled by certain foreign entities.

The Sec. 45Z clean fuel production credit is extended through 2029, and prohibitions are placed on the use of foreign feedstocks.

International provisions

Foreign tax credit limitation: The Senate Finance Committee version of the bill would have limited the deductions of a U.S. shareholder allocable to income in the global intangible low-tax income (GILTI) category when determining its foreign tax credit limitation. It would also have modified the determination of deemed paid credit for taxes properly attributable to tested income and change the rules for sourcing certain income from the sale of inventory produced in the United States. The adopted act revises that provision and treats those deductions as allocable to “net CFC tested income” (which is what the act turns GILTI into, see below).

Deemed paid credit: The act amends Sec. 960(d)(1) to increase the deemed paid credit for Subpart F inclusions from 80% to 90%.

GILTI and FDII: The act decreases the Sec. 250 deduction percentage for tax years beginning after Dec. 31, 2025, to 33.34% for foreign-derived intangible income (FDII) and 40% for GILTI, resulting in an effective tax rate of 14% for both FDII and GILTI. The act also proposes changing the definition of deduction-eligible income for purposes of determining FDII. The act also eliminates the use of a corporation’s deemed tangible income return for determining FDII and the use of net deemed tangible income return in determining GILTI. These changes result in the elimination of the terms FDII and GILTI, which will be renamed “foreign-derived deduction eligible income” and “net CFC tested income,” respectively.

BEAT: The act increases the base-erosion and anti-abuse tax (BEAT) rate from 10% to 10.5% (the Senate Finance Committee version would have increased it to 14%). Other BEAT changes that were included in the Senate Finance Committee version have been eliminated.

Business interest limitation: The act provides that the Sec. 163(j) business interest limitation will be calculated prior to the application of any interest capitalization provision.

Remedies against unfair foreign taxes: The provision of the Senate Finance Committee version of the bill that would have enacted a new Sec. 899 to impose increased rates of tax (up to 15%) on certain affected taxpayers connected to countries that are deemed to impose unfair foreign taxes was dropped from the final act.

Administrative provisions and excise taxes

Third-party network transaction reporting threshold: The act reverts to the prior rule for Form 1099-K reporting, under which a third-party settlement organization is not required to report, unless the aggregate value of third-party network transactions with respect to a participating payee for the year exceeds $20,000 and the aggregate number of such transactions with respect to a participating payee exceeds 200. The threshold had been phasing down and was scheduled to be $600 starting next year.

Form 1099 reporting threshold: The act increases the information-reporting threshold for certain payments to persons engaged in a trade or business and payments of remuneration for services to $2,000 in a calendar year (from $600), with the threshold amount to be indexed annually for inflation in calendar years after 2026.

Firearms transfer tax: The act reduces the Sec. 5811 transfer tax on certain firearms.

Farmland sales: The act adds a new Sec. 1062 that allows income tax resulting from the sale of farmland to a qualified farmer to be paid in four annual installments. This is a new provision.

Litigation financing: The bill as originally considered would have imposed a 31.8% tax on “qualified litigation proceeds” received by a “covered party,” as defined in the bill. That provision was dropped from the final act.

Remittance transfer tax: The act imposes a 1% tax on “remittance transfers,” imposed on the sender. A remittance transfer for these purposes is a transfer of cash, a money order, a cashier’s check, or similar physical instrument. It does not include funds withdrawn from an account held with a financial institution or charged to a credit or debit card.

Under Section 919(g) of the Electronic Fund Transfer Act, a remittance transfer is an electronic transfer of funds requested by a sender to a designated recipient that is initiated by a remittance transfer provider. A remittance transfer provider is any person or financial institution that provides remittance transfers for consumers in the normal course of its business, whether or not the consumer holds an account with the financial institution.

The Senate Finance Committee version of the bill would have imposed a 3.5% tax on such transfers.

Employee retention credit enforcement: The act requires employee retention credit (ERC) promoters to comply with due diligence requirements with respect to a taxpayer’s eligibility for (or the amount of) an ERC. The act applies a $1,000 penalty for each failure to comply. It also extends the penalty for excessive refund claims to employment tax refund claims. It also prevents the IRS from issuing any additional unpaid claims under Sec. 3134, unless a claim for a credit or refund was filed on or before Jan. 31, 2024.

SSN requirements: The act imposes an SSN requirement for claiming an American opportunity or lifetime learning credit under Sec. 25A.

EITC program: The Senate Finance Committee version of the bill proposed creating an earned income tax credit (EITC) certification program to allow the IRS to detect and manage duplicative EITC claims. That proposal was dropped from the act.

Penalties for unauthorized disclosure of taxpayer information: A proposal in the Senate Finance Committee version of the bill to increase the Sec. 7213 penalties for unauthorized disclosure of taxpayer information was also removed.

— Alistair M. Nevius, J.D., is a freelance writer in North Carolina. To comment on this article or to suggest an idea for another article, contact Neil Amato at Neil.Amato@aicpa-cima.com. Updates on individual tax and business tax are among the many topics on the agenda at the AICPA & CIMA National Tax Conference, Nov. 17–18 in Washington, D.C., and online

Immigration detention capacity Expand capacity to detain immigrants taken into custody $45 bil.

Border wall Fund border barrier system construction and related activities $45 bil.

U.S. Immigration and Customs Enforcement Funding for hiring, training, transportation, facilities and legal resources to carry out immigration enforcement and removals $31 bil.

State and local grants Funding for border security, immigration enforcement and major event security $13 bil.

Homeland Security Department funding For border security and immigration enforcement $12 bil.

U.S. Customs and Border Protection Funding to expand workforce and purchase new vehicles and technology $12 bil.

Border surveillance technology $6.2 bil.

Department of Justice grants For state and local immigration and law enforcement $3.5 bil.

Department of Justice funding For immigration and other law enforcement $3.3 bil.

Fund vetting for sponsors of unaccompanied alien children Through the Office of Refugee Resettlement $0.3 bil.

Presidential residence protection Fund reimbursements to local law enforcement for protecting the president’s private residences $0.3 bil.

Special Immigrant Juvenile fee A new minimum $250 fee to apply for this visa for noncitizens under 21 who are living in the United States and have been abused, abandoned or neglected by a parent —

Temporary Protected Status fee increase Increase in application fee to $500 from $50. This status is made available to nationals from certain countries undergoing an armed conflict or disaster. —

Apprehension fee A new minimum $5,000 fee for any inadmissible noncitizen who is apprehended between ports of entry —

Immigration parole fee A new minimum $1,000 fee for immigrants granted temporary entry on the grounds of “humanitarian or significant public interest” —

Fee for certain nonimmigrants from China A new $30 Electronic Visa Update System fee for certain Chinese nationals who must maintain biographic and travel information in an online system —

Fee for those arrested after being ordered removed for missing a hearing A new minimum $5,000 fee –$0.1 bil.

Fees related to adjustment of immigration status Additional fees, from $500 to $1,500, for adjustment of status granted by a judge or to file appeals –$0.5 bil.

Asylum fee A new $100 minimum fee for anyone who applies for asylum, and an additional $100 per year while an application remains pending –$1.2 bil.

Work permit fee A new $550 minimum fee to submit an employment authorization application. Would apply to asylum applicants, those on parole and those granted Temporary Protected Status. An additional $275 fee would be imposed to renew or extend an authorization. –$2.4 bil.

Electronic travel authorization fee Increase in the fee paid by nationals of countries who are not required to have a visa to visit the U.S., to $40 from $21 –$3.1 bil.

Nonimmigrant visitor fee increase Increase in fee to $30 from $6. This fee is paid when applying for Form I-94, which serves as an arrival and departure record for certain temporary visitors –$9.5 bil.

Tax credits for clean energy and home energy efficiency would still be phased out, albeit less quickly, under Senate Republicans’ latest proposed changes to a massive tax bill. Electric vehicle incentives and other provisions intended to move the United States away from fossil fuels would be gutted rapidly.

Senate Republicans cast their version of the bill as less damaging to the clean energy industry than the version House Republicans passed last month, but Democrats and advocates criticized it, saying it would still have significant consequences for wind, solar and other projects.

Ultimately, wherever Congress ends up could have a big impact on consumers, companies and others that were depending on tax credits for green energy investments. It could also impact long-term how quickly America transitions to renewable energies.

“They want everybody to believe that after the flawed House bill, that they have come up with a much more moderate climate approach,” said Sen. Ron Wyden of Oregon, the top Democrat on the finance committee, during a conference call with reporters Tuesday.

“The reality is, if the early projections on the clean energy cuts are accurate, the Senate Republican bill does almost 90%” as much damage as the House proposal, added Wyden, who authored clean energy tax credits included in the 2022 Inflation Reduction Act passed during former President Joe Biden’s term. “Let’s not get too serious about this new Senate bill being a kinder, gentler approach.”

The Edison Electric Institute, a trade association representing investor-owned electric companies, issued a statement applauding the Senate proposal for including “more reasonable timelines for phasing out energy tax credits.”

“These modifications are a step in the right direction,” said the statement from Pat Vincent-Collawn, the institute’s interim chief executive officer, adding that the changes balance “business certainty with fiscal responsibility.”

Whether all of the changes will be enacted into law isn’t clear yet. The Senate can still modify its proposals before they go to a vote. Any conflicts in the draft legislation will have to be sorted out with the House as the GOP looks to fast-track the bill for a vote by President Donald Trump’s imminent Fourth of July target.

Notably, many Republicans in Congress have advocated to protect the clean-energy credits, which have overwhelmingly benefited Republican congressional districts. A report by the Atlas Public Policy research firm found that 77% of planned spending on credit-eligible projects are in GOP-held House districts.

The clean energy tax credits stem from Biden’s climate law, which aimed to boost to the nation’s transition away from planet-warming greenhouse gas emissions and toward renewable energy such as wind and solar power.

The House version of the bill took an ax to many of the credits and effectively made it impossible for wind and solar providers to meet the requirements and timelines necessary to qualify for the incentives. After the House vote, 13 House Republicans lobbied the Senate to preserve some of the clean energy incentives that GOP lawmakers had voted to erase.

Renewables and reaction

Language included Monday in the reconciliation bill from the Senate Finance Committee would still phase out — though more slowly than House lawmakers envisioned — some Biden-era green energy tax breaks.

The Senate proposal further “achieves significant savings by slashing Green New Deal spending and targeting waste, fraud and abuse in spending programs while preserving and protecting them for the most vulnerable,” said Sen. Mike Crapo, R-Idaho and chairman of the committee.

On the chopping block are tax credits for residential rooftop solar installations, ending within 180 days of passage, and a subsidy for hydrogen production. Federal credits for wind and solar would have a longer phaseout than in the House version, but it would still be difficult for developers to meet the rules for beginning construction in order to receive the credit.

At the same time, it would boost support for geothermal, nuclear and hydropower projects that begin construction by 2033.

“The bill will strip the ability of millions of American families to choose the energy savings, energy resilience, and energy freedom that solar and storage provide,” said Abigail Ross Hopper, president and CEO of the Solar Energy Industries Association. “If this bill passes as is, we cannot ensure an affordable, reliable and secure energy system.”

Opponents of the Senate’s text also decry domestic manufacturing job and economic losses as a result.

“This is a 20-pound sledgehammer swung at clean energy. It would mean higher energy prices, lost manufacturing jobs, shuttered factories, and a worsening climate crisis,” said Jackie Wong, senior vice president for climate and energy at the Natural Resources Defense Council.

Home energy efficiency credits and EVs

The bill would also cancel incentives such as the Energy Efficient Home Improvement credit — which helps homeowners make improvements such as insulation or heating and cooling systems that reduce their energy usage and energy bills — 180 days after enactment. An incentive for builders constructing new energy-efficient homes and apartments would end 12 months after signing. The House’s proposed end date for both is Dec. 31.

“Canceling these credits would increase monthly bills for American families and businesses,” Steven Nadel, executive director of the nonprofit American Council for an Energy-Efficient Economy said in a statement.

The Senate proposal moves up the timeline for ending the consumer electric vehicle tax credit from the end of this year to 180 days after passage. It also cuts the provision that would have extended until the end of 2026 a credit for automakers that had not made 200,000 qualifying EVs for U.S. sale. It would also immediately eliminate the $7,500 credit for leased EVs.

This administration has staunchly gone after EVs amid Trump’s targeting of what he calls a “mandate,” incorrectly referring to a Biden-era target for half of new vehicle sales by 2030 be electric.