SUBCHAPTER A—TERMINATION OF GREEN NEW DEAL SUBSIDIES
SEC. 70501. Termination of previously-owned clean vehicle credit.
Section 25E(g) is amended by striking “December 31, 2032” and inserting “September 30, 2025”.
SEC. 70502. Termination of clean vehicle credit.
(a) In general.—Section 30D(h) is amended by striking “placed in service after December 31, 2032” and inserting “acquired after September 30, 2025”.
(b) Conforming amendments.—Section 30D(e) is amended—
(1) in paragraph (1)(B)—
(A) in clause (iii), by inserting “and” after the comma at the end,
(B) in clause (iv), by striking “, and” and inserting a period, and
(C) by striking clause (v), and
(2) in paragraph (2)(B)—
(A) in clause (ii), by inserting “and” after the comma at the end,
(B) in clause (iii), by striking the comma at the end and inserting a period, and
(C) by striking clauses (iv) through (vi).
SEC. 70503. Termination of qualified commercial clean vehicles credit.
Section 45W(g) is amended by striking “December 31, 2032” and inserting “September 30, 2025”.
SEC. 70504. Termination of alternative fuel vehicle refueling property credit.
Section 30C(i) is amended by striking “December 31, 2032” and inserting “June 30, 2026”.
SEC. 70505. Termination of energy efficient home improvement credit.
(a) In general.—Section 25C(h) is amended by striking “placed in service” and all that follows through “December 31, 2032” and inserting “placed in service after December 31, 2025”.
(b) Conforming amendment.—Section 25C(d)(2)(C) is amended to read as follows:
“(C) Any oil furnace or hot water boiler which—
“(i) meets or exceeds 2021 Energy Star efficiency criteria, and
“(ii) is rated by the manufacturer for use with fuel blends at least 20 percent of the volume of which consists of an eligible fuel.”.
SEC. 70506. Termination of residential clean energy credit.
(a) In general.—Section 25D(h) is amended by striking “to property placed in service after December 31, 2034” and inserting “with respect to any expenditures made after December 31, 2025”.
(b) Conforming amendments.—Section 25D(g) is amended—
(1) in paragraph (2), by inserting “and” after the comma at the end,
(2) in paragraph (3), by striking “ and before January 1, 2033, 30 percent,” and inserting “30 percent.”, and
(3) by striking paragraphs (4) and (5).
SEC. 70507. Termination of energy efficient commercial buildings deduction.
Section 179D is amended by adding at the end the following new subsection:
“(i) Termination.—This section shall not apply with respect to property the construction of which begins after June 30, 2026.”.
SEC. 70508. Termination of new energy efficient home credit.
Section 45L(h) is amended by striking “December 31, 2032” and inserting “June 30, 2026”.
SEC. 70509. Termination of cost recovery for energy property.
(a) Energy property.—Section 168(e)(3)(B)(vi), as amended by section 13703 of Public Law 117–169, is amended—
(1) by striking subclause (I), and
(2) by redesignating subclauses (II) and (III) as subclauses (I) and (II), respectively.
(b) Effective date.—The amendments made by subsection (a) shall apply to property the construction of which begins after December 31, 2024.
SEC. 70510. Modifications of zero-emission nuclear power production credit.
(a) Restrictions relating to prohibited foreign entities.—Section 45U(c) is amended by adding at the end the following new paragraph:
“(3) RESTRICTIONS RELATING TO PROHIBITED FOREIGN ENTITIES.—
“(A) IN GENERAL.—No credit shall be determined under subsection (a) for any taxable year beginning after the date of enactment of this paragraph if the taxpayer is a specified foreign entity (as defined in section 7701(a)(51)(B)).
“(B) OTHER PROHIBITED FOREIGN ENTITIES.—No credit shall be determined under subsection (a) for any taxable year beginning after the date which is 2 years after the date of enactment of this paragraph if the taxpayer is a foreign-influenced entity (as defined in section 7701(a)(51)(D), without regard to clause (i)(II) thereof).”.
(b) Effective date.—The amendments made by this section shall apply to taxable years beginning after the date of enactment of this Act.
SEC. 70511. Termination of clean hydrogen production credit.
Section 45V(c)(3)(C) is amended by striking “January 1, 2033” and inserting “January 1, 2028”.
SEC. 70512. Termination and restrictions on clean electricity production credit.
(a) Termination for wind and solar facilities.—Section 45Y(d) is amended—
(1) in paragraph (1), by striking “The amount of” and inserting “Subject to paragraph (4), the amount of”, and
(2) by striking paragraph (3) and inserting the following new paragraphs:
“(3) APPLICABLE YEAR.—For purposes of this subsection, the term ‘applicable year’ means calendar year 2032.
“(4) TERMINATION FOR WIND AND SOLAR FACILITIES.—
“(A) IN GENERAL.—This section shall not apply with respect to any applicable facility placed in service after December 31, 2027.
“(B) APPLICABLE FACILITY.—For purposes of this paragraph, the term ‘applicable facility’ means a qualified facility which—
“(i) uses wind to produce electricity (within the meaning of such term as used in section 45(d)(1), as determined without regard to any requirement under such section with respect to the date on which construction of property begins), or
“(ii) uses solar energy to produce electricity (within the meaning of such term as used in section 45(d)(4), as determined without regard to any requirement under such section with respect to the date on which construction of property begins).”.
(b) Restrictions relating to prohibited foreign entities.—Section 45Y is amended—
(1) in subsection (b)(1), by adding at the end the following new subparagraph:
“(E) MATERIAL ASSISTANCE FROM PROHIBITED FOREIGN ENTITIES.—The term ‘qualified facility’ shall not include any facility for which construction begins after December 31, 2025, if the construction of such facility includes any material assistance from a prohibited foreign entity (as defined in section 7701(a)(52)).”, and
(2) in subsection (g), by adding at the end the following new paragraph:
“(13) RESTRICTIONS RELATING TO PROHIBITED FOREIGN ENTITIES.—
“(A) IN GENERAL.—No credit shall be determined under subsection (a) for any taxable year if the taxpayer is—
“(i) a specified foreign entity (as defined in section 7701(a)(51)(B)), or
“(ii) a foreign-influenced entity (as defined in section 7701(a)(51)(D), without regard to clause (i)(II) thereof).
“(B) EFFECTIVE CONTROL.—In the case of a taxpayer for which section 7701(a)(51)(D)(i)(II) is determined to apply for any taxable year, no credit shall be determined under subsection (a) for such taxable year if such determination relates to a qualified facility described in subsection (b)(1).”.
(c) Definitions relating to prohibited foreign entities.—Section 7701(a) is amended by adding at the end the following new paragraphs:
“(51) PROHIBITED FOREIGN ENTITY.—
“(A) IN GENERAL.—
“(i) DEFINITION.—The term ‘prohibited foreign entity’ means a specified foreign entity or a foreign-influenced entity.
“(ii) DETERMINATION.—
“(I) IN GENERAL.—Subject to subclause (II), for any taxable year, the determination as to whether an entity is a specified foreign entity or foreign-influenced entity shall be made as of the last day of such taxable year.
“(II) INITIAL TAXABLE YEAR.—For purposes of the first taxable year beginning after the date of enactment of this paragraph, the determination as to whether an entity is a specified foreign entity described in clauses (i) through (iv) of subparagraph (B) shall be made as of the first day of such taxable year.
“(B) SPECIFIED FOREIGN ENTITY.—For purposes of this paragraph, the term ‘specified foreign entity’ means—
“(i) a foreign entity of concern described in subparagraph (A), (B), (D), or (E) of section 9901(8) of the William M. (Mac) Thornberry National Defense Authorization Act for Fiscal Year 2021 (Public Law 116–283; 15 U.S.C. 4651),
“(ii) an entity identified as a Chinese military company operating in the United States in accordance with section 1260H of the William M. (Mac) Thornberry National Defense Authorization Act for Fiscal Year 2021 (Public Law 116–283; 10 U.S.C. 113 note),
“(iii) an entity included on a list required by clause (i), (ii), (iv), or (v) of section 2(d)(2)(B) of Public Law 117–78 (135 Stat. 1527),
“(iv) an entity specified under section 154(b) of the National Defense Authorization Act for Fiscal Year 2024 (Public Law 118–31; 10 U.S.C. note prec. 4651), or
“(v) a foreign-controlled entity.
“(C) FOREIGN-CONTROLLED ENTITY.—For purposes of subparagraph (B), the term ‘foreign-controlled entity’ means—
“(i) the government (including any level of government below the national level) of a covered nation,
“(ii) an agency or instrumentality of a government described in clause (i),
“(iii) a person who is a citizen or national of a covered nation, provided that such person is not an individual who is a citizen, national, or lawful permanent resident of the United States,
“(iv) an entity or a qualified business unit (as defined in section 989(a)) incorporated or organized under the laws of, or having its principal place of business in, a covered nation, or
“(v) an entity (including subsidiary entities) controlled (as determined under subparagraph (G)) by an entity described in clause (i), (ii), (iii), or (iv).
“(D) FOREIGN-INFLUENCED ENTITY.—
“(i) IN GENERAL.—For purposes of subparagraph (A), the term ‘foreign-influenced entity’ means an entity—
“(I) with respect to which, during the taxable year—
“(aa) a specified foreign entity has the direct authority to appoint a covered officer of such entity,
“(bb) a single specified foreign entity owns at least 25 percent of such entity,
“(cc) one or more specified foreign entities own in the aggregate at least 40 percent of such entity, or
“(dd) at least 15 percent of the debt of such entity has been issued, in the aggregate, to 1 or more specified foreign entities, or
“(II) which, during the previous taxable year, made a payment to a specified foreign entity pursuant to a contract, agreement, or other arrangement which entitles such specified foreign entity (or an entity related to such specified foreign entity) to exercise effective control over—
“(aa) any qualified facility or energy storage technology of the taxpayer (or any person related to the taxpayer), or
“(bb) with respect to any eligible component produced by the taxpayer (or any person related to the taxpayer)—
“(AA) the extraction, processing, or recycling of any applicable critical mineral, or
“(BB) the production of an eligible component which is not an applicable critical mineral.
“(ii) EFFECTIVE CONTROL.—
“(I) IN GENERAL.—
“(aa) GENERAL RULE.—Subject to subclause (II), for purposes of clause (i)(II), the term ‘effective control’ means 1 or more agreements or arrangements similar to those described in subclauses (II) and (III) which provide 1 or more contractual counterparties of a taxpayer with specific authority over key aspects of the production of eligible components, energy generation in a qualified facility, or energy storage which are not included in the measures of control through authority, ownership, or debt held which are described in clause (i)(I).
“(bb) GUIDANCE.—The Secretary shall issue such guidance as is necessary to carry out the purposes of this clause, including the establishment of rules to prevent entities from evading, circumventing, or abusing the application of the restrictions described subparagraph (C) and subclauses (II) and (III) of this clause through a contract, agreement, or other arrangement.
“(II) APPLICATION OF RULES PRIOR TO ISSUANCE OF GUIDANCE.—During any period prior to the date that the guidance described in subclause (I)(bb) is issued by the Secretary, for purposes of clause (i)(II), the term ‘effective control’ means the unrestricted contractual right of a contractual counterparty to—
“(aa) determine the quantity or timing of production of an eligible component produced by the taxpayer,
“(bb) determine the amount or timing of activities related to the production of electricity undertaken at a qualified facility of the taxpayer or the storage of electrical energy in energy storage technology of the taxpayer,
“(cc) determine which entity may purchase or use the output of a production unit of the taxpayer that produces eligible components,
“(dd) determine which entity may purchase or use the output of a qualified facility of the taxpayer,
“(ee) restrict access to data critical to production or storage of energy undertaken at a qualified facility of the taxpayer, or to the site of production or any part of a qualified facility or energy storage technology of the taxpayer, to the personnel or agents of such contractual counterparty, or
“(ff) on an exclusive basis, maintain, repair, or operate any plant or equipment which is necessary to the production by the taxpayer of eligible components or electricity.
“(III) LICENSING AND OTHER AGREEMENTS.—
“(aa) IN GENERAL.—In addition to subclause (II), for purposes of clause (i)(II), the term ‘effective control’ means, with respect to a licensing agreement for the provision of intellectual property (or any other contract, agreement or other arrangement entered into with a contractual counterparty related to such licensing agreement) with respect to a qualified facility, energy storage technology, or the production of an eligible component, any of the following:
“(AA) A contractual right retained by the contractual counterparty to specify or otherwise direct 1 or more sources of components, subcomponents, or applicable critical minerals utilized in a qualified facility, energy storage technology, or in the production of an eligible component.
“(BB) A contractual right retained by the contractual counterparty to direct the operation of any qualified facility, any energy storage technology, or any production unit that produces an eligible component.
“(CC) A contractual right retained by the contractual counterparty to limit the taxpayer’s utilization of intellectual property related to the operation of a qualified facility or energy storage technology, or in the production of an eligible component.
“(DD) A contractual right retained by the contractual counterparty to receive royalties under the licensing agreement or any similar agreement (or payments under any related agreement) beyond the 10th year of the agreement (including modifications or extensions thereof).
“(EE) A contractual right retained by the contractual counterparty to direct or otherwise require the taxpayer to enter into an agreement for the provision of services for a duration longer than 2 years (including any modifications or extensions thereof).
“(FF) Such contract, agreement, or other arrangement does not provide the licensee with all the technical data, information, and know-how necessary to enable the licensee to produce the eligible component or components subject to the contract, agreement, or other arrangement without further involvement from the contractual counterparty or a specified foreign entity.
“(GG) Such contract, agreement, or other arrangement was entered into (or modified) on or after the date of enactment of this paragraph.
“(bb) EXCEPTION.—
“(AA) IN GENERAL.—Item (aa) shall not apply in the case of a bona fide purchase or sale of intellectual property.
“(BB) BONA FIDE PURCHASE OR SALE.—For purposes of item (aa), any purchase or sale of intellectual property where the agreement provides that ownership of the intellectual property reverts to the contractual counterparty after a period of time shall not be considered a bona-fide purchase or sale.
“(IV) PERSONS RELATED TO THE TAXPAYER.—For purposes of subclauses (I), (II), and (III), the term ‘taxpayer’ shall include any person related to the taxpayer.
“(V) CONTRACTUAL COUNTERPARTY.—For purposes of this clause, the term ‘contractual counterparty’ means an entity with which the taxpayer has entered into a contract, agreement, or other arrangement.
“(iii) GUIDANCE.—Not later than December 31, 2026, the Secretary shall issue such guidance as is necessary to carry out the purposes of this subparagraph, including establishment of rules to prevent entities from evading, circumventing, or abusing the application of the restrictions against impermissible technology licensing arrangements with specified foreign entities, such as through temporary transfers of intellectual property, retention by a specified foreign entity of a reversionary interest in transferred intellectual property, or otherwise.
“(E) PUBLICLY TRADED ENTITIES.—
“(i) IN GENERAL.—
“(I) NONAPPLICATION OF CERTAIN FOREIGN-CONTROLLED ENTITY RULES.—Subparagraph (C)(v) shall not apply in the case of any entity the securities of which are regularly traded on—
“(aa) a national securities exchange which is registered with the Securities and Exchange Commission,
“(bb) the national market system established pursuant to section 11A of the Securities and Exchange Act of 1934, or
“(cc) any other exchange or other market which the Secretary has determined in guidance issued under section 1296(e)(1)(A)(ii) has rules adequate to carry out the purposes of part VI of subchapter P of chapter 1 of subtitle A.
“(II) NONAPPLICATION OF CERTAIN FOREIGN-INFLUENCED ENTITY RULES.—Subparagraph (D)(i)(I) shall not apply in the case of any entity—
“(aa) the securities of which are regularly traded in a manner described in subclause (I), or
“(bb) for which not less than 80 percent of the equity securities of such entity are owned directly or indirectly by an entity which is described in item (aa).
“(III) EXCLUSION OF EXCHANGES OR MARKETS IN COVERED NATIONS.—Subclause (I)(cc) shall not apply with respect to any exchange or market which—
“(aa) is incorporated or organized under the laws of a covered nation, or
“(bb) has its principal place of business in a covered nation.
“(ii) ADDITIONAL FOREIGN-CONTROLLED ENTITY REQUIREMENTS FOR PUBLICLY TRADED COMPANIES.—In the case of an entity described in clause (i)(I), such entity shall be deemed to be a foreign-controlled entity under subparagraph (C)(v) if such entity is controlled (as determined under subparagraph (G)) by—
“(I) 1 or more specified foreign entities (as determined without regard to subparagraph (B)(v)) that are each required to report their beneficial ownership pursuant to a rule described in clause (iii)(I)(bb), or
“(II) 1 or more foreign-controlled entities (as determined without regard to subparagraph (C)(v)) that are each required to report their beneficial ownership pursuant to a rule described in such clause.
“(iii) ADDITIONAL FOREIGN-INFLUENCED ENTITY REQUIREMENTS FOR PUBLICLY TRADED COMPANIES.—In the case of an entity described in clause (i)(II), such entity shall be deemed to be a foreign-influenced entity under subparagraph (D)(i)(I) if—
“(I) during the taxable year—
“(aa) a specified foreign entity has the authority to appoint a covered officer of such entity,
“(bb) a single specified foreign entity required to report its beneficial ownership under Rule 13d-3 of the Securities and Exchange Act of 1934 (or, in the case of an exchange or market described in clause (i)(I)(cc), an equivalent rule) owns not less than 25 percent of such entity, or
“(cc) 1 or more specified foreign entities that are each required to report their beneficial ownership under Rule 13d-3 of the Securities and Exchange Act of 1934 own, in the aggregate, not less than 40 percent of such entity, or
“(II) such entity has issued debt, as part of an original issuance, in excess of 15 percent of its publicly-traded debt to 1 or more specified foreign entities.
“(F) COVERED OFFICER.—For purposes of this paragraph, the term ‘covered officer’ means, with respect to an entity—
“(i) a member of the board of directors, board of supervisors, or equivalent governing body,
“(ii) an executive-level officer, including the president, chief executive officer, chief operating officer, chief financial officer, general counsel, or senior vice president, or
“(iii) an individual having powers or responsibilities similar to those of officers or members described in clause (i) or (ii).
“(G) DETERMINATION OF CONTROL.—For purposes of subparagraph (C)(v), the term ‘control’ means—
“(i) in the case of a corporation, ownership (by vote or value) of more than 50 percent of the stock in such corporation,
“(ii) in the case of a partnership, ownership of more than 50 percent of the profits interests or capital interests in such partnership, or
“(iii) in any other case, ownership of more than 50 percent of the beneficial interests in the entity.
“(H) DETERMINATION OF OWNERSHIP.—For purposes of this paragraph, section 318(a)(2) shall apply for purposes of determining ownership of stock in a corporation. Similar principles shall apply for purposes of determining ownership of interests in any other entity.
“(I) OTHER DEFINITIONS.—For purposes of this paragraph—
“(i) APPLICABLE CRITICAL MINERAL.—The term ‘applicable critical mineral’ has the same meaning given such term under section 45X(c)(6).
“(ii) COVERED NATION.—The term ‘covered nation’ has the same meaning given such term under section 4872(f)(2) of title 10, United States Code.
“(iii) ELIGIBLE COMPONENT.—The term ‘eligible component’ has the same meaning given such term under section 45X(c)(1).
“(iv) ENERGY STORAGE TECHNOLOGY.—The term ‘energy storage technology’ has the same meaning given such term under section 48E(c)(2).
“(v) QUALIFIED FACILITY.—The term ‘qualified facility’ means—
“(I) a qualified facility, as defined in section 45Y(b)(1), and
“(II) a qualified facility, as defined in section 48E(b)(3).
“(vi) RELATED.—The term ‘related’ shall have the same meaning given such term under sections 267(b) and 707(b).
“(J) BEGINNING OF CONSTRUCTION.—For purposes of applying any provision under this paragraph, the beginning of construction with respect to any property shall be determined pursuant to rules similar to the rules under Internal Revenue Service Notice 2013–29 and Internal Revenue Service Notice 2018-59 (as well as any subsequently issued guidance clarifying, modifying, or updating either such Notice), as in effect on January 1, 2025.
“(K) REGULATIONS AND GUIDANCE.—The Secretary may prescribe such regulations and guidance as may be necessary or appropriate to carry out the provisions of this paragraph, including rules to prevent the circumvention of any rules or restrictions with respect to prohibited foreign entities.
“(52) MATERIAL ASSISTANCE FROM A PROHIBITED FOREIGN ENTITY.—
“(A) IN GENERAL.—The term ‘material assistance from a prohibited foreign entity’ means—
“(i) with respect to any qualified facility or energy storage technology, a material assistance cost ratio which is less than the threshold percentage applicable under subparagraph (B), or
“(ii) with respect to any facility which produces eligible components, a material assistance cost ratio which is less than the threshold percentage applicable under subparagraph (C).
“(B) THRESHOLD PERCENTAGE FOR QUALIFIED FACILITIES AND ENERGY STORAGE TECHNOLOGY.—For purposes of subparagraph (A)(i), the threshold percentage shall be—
“(i) in the case of a qualified facility the construction of which begins—
“(I) during calendar year 2026, 40 percent,
“(II) during calendar year 2027, 45 percent,
“(III) during calendar year 2028, 50 percent,
“(IV) during calendar year 2029, 55 percent, and
“(V) after December 31, 2029, 60 percent, and
“(ii) in the case of energy storage technology the construction of which begins—
“(I) during calendar year 2026, 55 percent,
“(II) during calendar year 2027, 60 percent,
“(III) during calendar year 2028, 65 percent,
“(IV) during calendar year 2029, 70 percent, and
“(V) after December 31, 2029, 75 percent.
“(C) THRESHOLD PERCENTAGE FOR ELIGIBLE COMPONENTS.—
“(i) IN GENERAL.—For purposes of subparagraph (A)(ii), the threshold percentage shall be—
“(I) in the case of any solar energy component (as such term is defined in section 45X(c)(3)(A)) which is sold—
“(aa) during calendar year 2026, 50 percent,
“(bb) during calendar year 2027, 60 percent,
“(cc) during calendar year 2028, 70 percent,
“(dd) during calendar year 2029, 80 percent, and
“(ee) after December 31, 2029, 85 percent,
“(II) in the case of any wind energy component (as such term is defined in section 45X(c)(4)(A)) which is sold—
“(aa) during calendar year 2026, 85 percent, and
“(bb) during calendar year 2027, 90 percent,
“(III) in the case of any inverter described in subparagraphs (B) through (G) of section 45X(c)(2) which is sold—
“(aa) during calendar year 2026, 50 percent,
“(bb) during calendar year 2027, 55 percent,
“(cc) during calendar year 2028, 60 percent,
“(dd) during calendar year 2029, 65 percent, and
“(ee) after December 31, 2029, 70 percent,
“(IV) in the case of any qualifying battery component (as such term is defined in section 45X(c)(5)(A)) which is sold—
“(aa) during calendar year 2026, 60 percent,
“(bb) during calendar year 2027, 65 percent,
“(cc) during calendar year 2028, 70 percent,
“(dd) during calendar year 2029, 80 percent, and
“(ee) after December 31, 2029, 85 percent, and
“(V) subject to clause (ii), in the case of any applicable critical mineral (as such term is defined in section 45X(c)(6)) which is sold—
“(aa) after December 31, 2025, and before January 1, 2030, 0 percent,
“(bb) during calendar year 2030, 25 percent,
“(cc) during calendar year 2031, 30 percent,
“(dd) during calendar year 2032, 40 percent, and
“(ee) after December 31, 2032, 50 percent.
“(ii) ADJUSTED THRESHOLD PERCENTAGE FOR APPLICABLE CRITICAL MINERALS.—Not later than December 31, 2027, the Secretary shall issue threshold percentages for each of the applicable critical minerals described in section 45X(c)(6)), which shall—
“(I) apply in lieu of the threshold percentage determined under clause (i)(V) for each calendar year, and
“(II) equal or exceed the threshold percentage which would otherwise apply with respect to such applicable critical mineral under such clause for such calendar year, taking into account—
“(aa) domestic geographic availability,
“(bb) supply chain constraints,
“(cc) domestic processing capacity needs, and
“(dd) national security concerns.
“(D) MATERIAL ASSISTANCE COST RATIO.—
“(i) QUALIFIED FACILITIES AND ENERGY STORAGE TECHNOLOGY.—For purposes of subparagraph (A)(i), the term ‘material assistance cost ratio’ means the amount (expressed as a percentage) equal to the quotient of—
“(I) an amount equal to—
“(aa) the total direct costs to the taxpayer attributable to all manufactured products (including components) which are incorporated into the qualified facility or energy storage technology upon completion of construction, minus
“(bb) the total direct costs to the taxpayer attributable to all manufactured products (including components) which are—
“(AA) incorporated into the qualified facility or energy storage technology upon completion of construction, and
“(BB) mined, produced, or manufactured by a prohibited foreign entity, divided by
“(II) the amount described in subclause (I)(aa).
“(ii) ELIGIBLE COMPONENTS.—For purposes of subparagraph (A)(ii), the term ‘material assistance cost ratio’ means the amount (expressed as a percentage) equal to the quotient of—
“(I) an amount equal to—
“(aa) with respect to an eligible component, the total direct material costs that are paid or incurred (within the meaning of section 461 and any regulations issued under section 263A) by the taxpayer for production of such eligible component, minus
“(bb) with respect to an eligible component, the total direct material costs that are paid or incurred (within the meaning of section 461 and any regulations issued under section 263A) by the taxpayer for production of such eligible component that are mined, produced, or manufactured by a prohibited foreign entity, divided by
“(II) the amount described in subclause (I)(aa).
“(iii) SAFE HARBOR TABLES.—
“(I) IN GENERAL.—Not later than December 31, 2026, the Secretary shall issue safe harbor tables (and such other guidance as deemed necessary) to—
“(aa) identify the percentage of total direct costs of any manufactured product which is attributable to a prohibited foreign entity,
“(bb) identify the percentage of total direct material costs of any eligible component which is attributable to a prohibited foreign entity, and
“(cc) provide all rules necessary to determine the amount of a taxpayer’s material assistance from a prohibited foreign entity within the meaning of this paragraph.
“(II) SAFE HARBORS PRIOR TO ISSUANCE.—For purposes of this paragraph, prior to the date on which the Secretary issues the safe harbor tables described in subclause (I), and for construction of a qualified facility or energy storage technology which begins on or before the date which is 60 days after the date of issuance of such tables, a taxpayer may—
“(aa) use the tables included in Internal Revenue Service Notice 2025–08 to establish the percentage of the total direct costs of any listed eligible component and any manufactured product, and
“(bb) rely on a certification by the supplier of the manufactured product, eligible component, or constituent element, material, or subcomponent of an eligible component—
“(AA) of the total direct costs or the total direct material costs, as applicable, of such product or component that was not produced or manufactured by a prohibited foreign entity, or
“(BB) that such product or component was not produced or manufactured by a prohibited foreign entity.
“(III) EXCEPTION.—Notwithstanding subclauses (I) and (II)—
“(aa) if the taxpayer knows (or has reason to know) that a manufactured product or eligible component was produced or manufactured by a prohibited foreign entity, the taxpayer shall treat all direct costs with respect to such manufactured product, or all direct material costs with respect to such eligible component, as attributable to a prohibited foreign entity, and
“(bb) if the taxpayer knows (or has reason to know) that the certification referred to in subclause (II)(bb) pertaining to a manufactured product or eligible component is inaccurate, the taxpayer may not rely on such certification.
“(IV) CERTIFICATION REQUIREMENT.—In a manner consistent with Treasury Regulation section 1.45X–4(c)(4)(i) (as in effect on the date of enactment of this paragraph), the certification referred to in subclause (II)(bb) shall—
“(aa) include—
“(AA) the supplier’s employer identification number, or
“(BB) any such similar identification number issued by a foreign government,
“(bb) be signed under penalties of perjury,
“(cc) be retained by the supplier and the taxpayer for a period of not less than 6 years and shall be provided to the Secretary upon request, and
“(dd) be from the supplier from which the taxpayer purchased any manufactured product, eligible component, or constituent elements, materials, or subcomponents of an eligible component, stating—
“(AA) that such property was not produced or manufactured by a prohibited foreign entity and that the supplier does not know (or have reason to know) that any prior supplier in the chain of production of that property is a prohibited foreign entity,
“(BB) for purposes of section 45X, the total direct material costs for each component, constituent element, material, or subcomponent that were not produced or manufactured by a prohibited foreign entity, or
“(CC) for purposes of section 45Y or section 48E, the total direct costs attributable to all manufactured products that were not produced or manufactured by a prohibited foreign entity.
“(iv) EXISTING CONTRACT.—Upon the election of the taxpayer (in such form and manner as the Secretary shall designate), in the case of any manufactured product, eligible component, or constituent element, material, or subcomponent of an eligible component which is—
“(I) acquired by the taxpayer, or manufactured or assembled by or for the taxpayer, pursuant to a binding written contract which was entered into prior to June 16, 2025, and
“(II) (aa) placed into service before January 1, 2030 (or, in the case of an applicable facility, as defined in section 45Y(d)(4)(B), before January 1, 2028) in a facility the construction of which began before August 1, 2025, or
“(bb) in the case of a constituent element, material, or subcomponent, used in a product sold before January 1, 2030,
the cost to the taxpayer with respect to such product, component, element, material, or subcomponent shall not be included for purposes of determining the material assistance cost ratio under this subparagraph.
“(v) ANTI-CIRCUMVENTION RULES.—The Secretary shall prescribe such regulations and guidance as may be necessary or appropriate to prevent circumvention of the rules under this subparagraph, including prevention of—
“(I) any abuse of the exception provided under clause (iv) through the stockpiling of any manufactured product, eligible component, or constituent element, material, or subcomponent of an eligible component during any period prior to the application of the requirements under this paragraph, or
“(II) any evasion with respect to the requirements of this subparagraph where the facts and circumstances demonstrate that the beginning of construction of a qualified facility or energy storage technology has not in fact occurred.
“(E) OTHER DEFINITIONS.—For purposes of this paragraph—
“(i) ELIGIBLE COMPONENT.—The term ‘eligible component’ means—
“(I) any property described in section 45X(c)(1), or
“(II) any component which is identified by the Secretary pursuant to regulations or guidance issued under subparagraph (G).
“(ii) ENERGY STORAGE TECHNOLOGY.—The term ‘energy storage technology’ has the same meaning given such term under section 48E(c)(2).
“(iii) MANUFACTURED PRODUCT.—The term ‘manufactured product’ means—
“(I) a manufactured product which is a component of a qualified facility, as described in section 45Y(g)(11)(B) and any guidance issued thereunder, or
“(II) any product which is identified by the Secretary pursuant to regulations or guidance issued under subparagraph (G).
“(iv) QUALIFIED FACILITY.—The term ‘qualified facility’ means—
“(I) a qualified facility, as defined in section 45Y(b)(1),
“(II) a qualified facility, as defined in section 48E(b)(3), and
“(III) any qualified interconnection property (as defined in section 48E(b)(4)) which is part of the qualified investment with respect to a qualified facility (as described in section 48E(b)(1)).
“(F) DETERMINATION OF OWNERSHIP; BEGINNING OF CONSTRUCTION.—Rules similar to the rules under subparagraphs (H) and (J) of paragraph (51) shall apply for purposes of this paragraph.
“(G) REGULATIONS AND GUIDANCE.—The Secretary may prescribe such regulations and guidance as may be necessary or appropriate to carry out the provisions of this paragraph, including—
“(i) identification of components or products for purposes of clauses (i) and (iii) of subparagraph (E), and
“(ii) for purposes of subparagraph (A)(ii), rules to address facilities which produce more than one eligible component.”.
(d) Denial of credit for certain wind and solar leasing arrangements.—Section 45Y is amended by adding at the end the following new subsection:
“(h) Denial of credit for wind and solar leasing arrangements.—No credit shall be determined under this section with respect to any production of electricity during the taxable year with respect to property described in paragraph (1) or (4) of section 25D(d) (as applied by substituting ‘lessee’ for ‘taxpayer’) if the taxpayer rents or leases such property to a third party during such taxable year.”.
(e) Emissions rates tables.—Section 45Y(b)(2)(C) is amended by adding at the end the following new clause:
“(iii) EXISTING STUDIES.—For purposes of clause (i), in determining greenhouse gas emissions rates for types or categories of facilities for the purpose of determining whether a facility satisfies the requirements under paragraph (1), the Secretary shall consider studies published on or before the date of enactment of this clause which demonstrate a net lifecycle greenhouse gas emissions rate which is not greater than zero using widely accepted lifecycle assessment concepts, such as concepts described in standards developed by the International Organization for Standardization.”.
(f) Nuclear energy communities.—
(1) IN GENERAL.—Section 45(b)(11) is amended—
(A) in subparagraph (B)—
(i) in clause (ii)(II), by striking “or” at the end,
(ii) in clause (iii)(II), by striking the period at the end and inserting “, or”, and
(iii) by adding at the end the following new clause:
“(iv) for purposes of any qualified facility which is an advanced nuclear facility, a metropolitan statistical area which has (or, at any time during the period beginning after December 31, 2009, had) 0.17 percent or greater direct employment related to the advancement of nuclear power, including employment related to—
“(I) an advanced nuclear facility,
“(II) advanced nuclear power research and development,
“(III) nuclear fuel cycle research, development, or production, including mining, enrichment, manufacture, storage, disposal, or recycling of nuclear fuel, and
“(IV) the manufacturing or assembly of components used in an advanced nuclear facility.”, and
(B) by adding at the end the following new subparagraph:
“(C) ADVANCED NUCLEAR FACILITIES.—
“(i) IN GENERAL.—Subject to clause (ii), for purposes of subparagraph (B)(iv), the term ‘advanced nuclear facility’ means any nuclear facility the reactor design for which is approved in the manner described in section 45J(d)(2).
“(ii) SPECIAL RULE.—For purposes of clause (i), a facility shall be deemed to have a reactor design which is approved in the manner described in section 45J(d)(2) if the Nuclear Regulatory Commission has authorized construction and issued a site-specific construction permit or combined license with respect to such facility (without regard to whether the reactor design was approved after December 31, 1993).”.
(2) NONAPPLICATION FOR CLEAN ELECTRICITY INVESTMENT CREDIT.—Section 48E(a)(3)(A)(i) is amended by inserting “, as applied without regard to clause (iv) thereof” after “section 45(b)(11)(B)”.
(g) Conforming amendments.—Section 45Y(b)(1) is amended—
(1) by redesignating subparagraph (D) as subparagraph (E), and
(2) by inserting after subparagraph (C) the following new subparagraph:
“(D) DETERMINATION OF CAPACITY.—For purposes of subparagraph (C), additions of capacity of a facility shall be determined in any reasonable manner, including based on—
“(i) determinations by, or reports to, the Federal Energy Regulatory Commission (including interconnection agreements), the Nuclear Regulatory Commission, or any similar entity, reflecting additions of capacity,
“(ii) determinations or reports reflecting additions of capacity made by an independent professional engineer,
“(iii) reports to, or issued by, regional transmission organizations or independent system operators reflecting additions of capacity, or
“(iv) any other method or manner provided by the Secretary.”.
(h) Prohibition on transfer of credits to specified foreign entities.—Section 6418(g) is amended by adding at the end the following new paragraph:
“(5) PROHIBITION ON TRANSFER OF CREDITS TO SPECIFIED FOREIGN ENTITIES.—With respect to any eligible credit described in clause (iii), (iv), (vi), (vii), (viii), or (xi) of subsection (f)(1)(A), an eligible taxpayer may not elect to transfer any portion of such credit to a taxpayer that is a specified foreign entity (as defined in section 7701(a)(51)(B)).”.
(i) Extension of period of limitations for errors relating to determining of material assistance from a prohibited foreign entity.—Section 6501 is amended—
(1) by redesignating subsection (o) as subsection (p), and
(2) by inserting after subsection (n) the following new subsection:
“(o) Material assistance from a prohibited foreign entity.—In the case of a deficiency attributable to an error with respect to the determination under section 7701(a)(52) for any taxable year, such deficiency may be assessed at any time within 6 years after the return for such year was filed.”.
(j) Imposition of accuracy-related penalties.—
(1) IN GENERAL.—Section 6662 is amended by adding at the end the following new subsection:
“(m) Substantial understatement of income tax due to disallowance of applicable energy credits.—
“(1) IN GENERAL.—In the case of a taxpayer for which there is a disallowance of an applicable energy credit for any taxable year, for purposes of determining whether there is a substantial understatement of income tax for such taxable year, subsection (d)(1) shall be applied—
“(A) in subparagraphs (A) and (B), by substituting ‘1 percent’ for ‘10 percent’ each place it appears, and
“(B) without regard to subparagraph (C).
“(2) DISALLOWANCE OF AN APPLICABLE ENERGY CREDIT.—For purposes of this subsection, the term ‘disallowance of an applicable energy credit’ means the disallowance of a credit under section 45X, 45Y, or 48E by reason of overstating the material assistance cost ratio (as determined under section 7701(a)(52)) with respect to any qualified facility, energy storage technology, or facility which produces eligible components.”.
(2) CONFORMING AMENDMENT.—Section 6417(d)(6) is amended by adding at the end the following new subparagraph:
“(D) DISALLOWANCE OF AN APPLICABLE ENERGY CREDIT.—In the case of an applicable entity which made an election under subsection (a) with respect to an applicable credit for which there is a disallowance described in section 6662(m)(2), subparagraph (A) shall apply with respect to any excessive payment resulting from such disallowance.”.
(k) Penalty for substantial misstatements on certification provided by supplier.—
(1) IN GENERAL.—Part I of subchapter B of chapter 68 is amended by inserting after section 6695A the following new section:
“SEC. 6695B. Penalty for substantial misstatements on certification provided by supplier.
“(a) Imposition of penalty.—If—
“(1) a person—
“(A) provides a certification described in clause (iii)(II)(bb) of section 7701(a)(52)(D) with respect to any manufactured product, eligible component, or constituent element, material, or subcomponent of an eligible component, and
“(B) knows, or reasonably should have known, that the certification would be used in connection with a determination under such section,
“(2) such person knows, or reasonably should have known, that such certification is inaccurate or false with respect to—
“(A) whether such property was produced or manufactured by a prohibited foreign entity, or
“(B) the total direct costs or total direct material costs of such property that was not produced or manufactured by a prohibited foreign entity that were provided on such certification, and
“(3) the inaccuracy or falsity described in paragraph (2) resulted in the disallowance of an applicable energy credit (as defined in section 6662(m)(2)) and an understatement of income tax (within the meaning of section 6662(d)(2)) for the taxable year in an amount which exceeds the lesser of—
“(A) 5 percent of the tax required to be shown on the return for the taxable year, or
“(B) $100,000,
then such person shall pay a penalty in the amount determined under subsection (b).
“(b) Amount of penalty.—The amount of the penalty imposed under subsection (a) on any person with respect to a certification shall be equal to the greater of—
“(1) 10 percent of the amount of the underpayment (as defined in section 6664(a)) solely attributable to the inaccuracy or falsity described in subsection (a)(2), or
“(2) $5,000.
“(c) Exception.—No penalty shall be imposed under subsection (a) if the person establishes to the satisfaction of the Secretary that any inaccuracy or falsity described in subsection (a)(2) is due to a reasonable cause and not willful neglect.
“(d) Definitions.—Any term used in this section which is also used in section 7701(a)(52) shall have the meaning given such term in such section.”.
(2) CLERICAL AMENDMENTS.—
(A) Section 6696 is amended—
(i) in the heading, by striking “and 6695A” and inserting “6695A, and 6695B”,
(ii) in subsections (a), (b), and (e), by striking “and 6695A” each place it appears and inserting “6695A, and 6695B”,
(iii) in subsection (c), by striking “or 6695A” and inserting “6695A, or 6695B”, and
(iv) in subsection (d)—
(I) in paragraph (1), by inserting “(or, in the case of any penalty under section 6695B, 6 years)” after “assessed within 3 years”, and
(II) in paragraph (2), by inserting “(or, in the case of any claim for refund of an overpayment of any penalty assessed under section 6695B, 6 years)” after “filed within 3 years”.
(B) The table of sections for part I of subchapter B of chapter 68 is amended by inserting after item relating to section 6695A the following new item:
“Sec. 6695B. Penalty for substantial misstatements on certification provided by supplier.”.
(l) Effective dates.—
(1) IN GENERAL.—Except as provided in paragraphs (2), (3), and (4), the amendments made by this section shall apply to taxable years beginning after the date of enactment of this Act.
(2) MATERIAL ASSISTANCE FROM PROHIBITED FOREIGN ENTITIES.—The amendments made by subsection (b)(1) shall apply to facilities for which construction begins after December 31, 2025.
(3) PENALTY FOR SUBSTANTIAL MISSTATEMENTS ON CERTIFICATION PROVIDED BY SUPPLIER.—The amendments made by subsection (k) shall apply to certifications provided after December 31, 2025.
(4) TERMINATION FOR WIND AND SOLAR FACILITIES.—The amendments made by subsection (a) shall apply to facilities the construction of which begins after the date which is 12 months after the date of enactment of this Act.
SEC. 70513. Termination and restrictions on clean electricity investment credit.
(a) Termination for wind and solar facilities.—Section 48E(e) is amended—
(1) in paragraph (1), by striking “The amount of” and inserting “Subject to paragraph (4), the amount of”, and
(2) by adding at the end the following new paragraph:
“(4) TERMINATION FOR WIND AND SOLAR FACILITIES.—
“(A) IN GENERAL.—This section shall not apply to any qualified property placed in service by the taxpayer after December 31, 2027, which is part of an applicable facility.
“(B) APPLICABLE FACILITY.—For purposes of this paragraph, the term ‘applicable facility’ means a qualified facility which—
“(i) uses wind to produce electricity (within the meaning of such term as used in section 45(d)(1), as determined without regard to any requirement under such section with respect to the date on which construction of property begins), or
“(ii) uses solar energy to produce electricity (within the meaning of such term as used in section 45(d)(4), as determined without regard to any requirement under such section with respect to the date on which construction of property begins).
“(C) EXCEPTION.—This paragraph shall not apply with respect to any energy storage technology which is placed in service at any applicable facility.”.
(b) Restrictions relating to prohibited foreign entities.—
(1) IN GENERAL.—Section 48E is amended—
(A) in subsection (b)—
(i) by redesignating paragraph (6) as paragraph (7), and
(ii) by inserting after paragraph (5) the following new paragraph:
“(6) MATERIAL ASSISTANCE FROM PROHIBITED FOREIGN ENTITIES.—The terms ‘qualified facility’ and ‘qualified interconnection property’ shall not include any facility or property the construction, reconstruction, or erection of which begins after December 31, 2025, if the construction, reconstruction, or erection of such facility or property includes any material assistance from a prohibited foreign entity (as defined in section 7701(a)(52)).”, and
(B) in subsection (c), by adding at the end the following new paragraph:
“(3) MATERIAL ASSISTANCE FROM PROHIBITED FOREIGN ENTITIES.—The term ‘energy storage technology’ shall not include any property the construction of which begins after December 31, 2025, if the construction of such property includes any material assistance from a prohibited foreign entity (as defined in section 7701(a)(52)).”.
(2) ADDITIONAL RESTRICTIONS.—Section 48E(d) is amended by adding at the end the following new paragraph:
“(6) RESTRICTIONS RELATING TO PROHIBITED FOREIGN ENTITIES.—
“(A) IN GENERAL.—No credit shall be determined under subsection (a) for any taxable year if the taxpayer is—
“(i) a specified foreign entity (as defined in section 7701(a)(51)(B)), or
“(ii) a foreign-influenced entity (as defined in section 7701(a)(51)(D), without regard to clause (i)(II) thereof).
“(B) EFFECTIVE CONTROL.—In the case of a taxpayer for which section 7701(a)(51)(D)(i)(II) is determined to apply for any taxable year, no credit shall be determined under subsection (a) for such taxable year if such determination relates to a qualified facility described in subsection (b)(3) or energy storage technology described in subsection (c)(2).”.
(3) RECAPTURE.—
(A) IN GENERAL.—Section 50(a) is amended—
(i) by redesignating paragraphs (4) through (6) as paragraphs (5) through (7), respectively,
(ii) by inserting after paragraph (3) the following new paragraph:
“(4) PAYMENTS TO PROHIBITED FOREIGN ENTITIES.—
“(A) IN GENERAL.—If there is an applicable payment made by a specified taxpayer before the close of the 10-year period beginning on the date such taxpayer placed in service investment credit property which is eligible for the clean electricity investment credit under section 48E(a), then the tax under this chapter for the taxable year in which such applicable payment occurs shall be increased by 100 percent of the aggregate decrease in the credits allowed under section 38 for all prior taxable years which would have resulted solely from reducing to zero any credit determined under section 46 which is attributable to the clean electricity investment credit under section 48E(a) with respect to such property.
“(B) APPLICABLE PAYMENT.—For purposes of this paragraph, the term ‘applicable payment’ means, with respect to any taxable year, a payment or payments described in section 7701(a)(51)(D)(i)(II).
“(C) SPECIFIED TAXPAYER.—For purposes of this paragraph, the term ‘specified taxpayer’ means any taxpayer who has been allowed a credit under section 48E(a) for any taxable year beginning after the date which is 2 years after the date of enactment of this paragraph.”,
(iii) in paragraph (5), as redesignated by clause (i), by striking “or any applicable transaction to which paragraph (3)(A) applies,” and inserting “any applicable transaction to which paragraph (3)(A) applies, or any applicable payment to which paragraph (4)(A) applies,”, and
(iv) in paragraph (7), as redesignated by clause (i), by striking “or (3)” and inserting “(3), or (4)”.
(B) CONFORMING AMENDMENTS.—
(i) Section 1371(d)(1) is amended by striking “section 50(a)(5)” and inserting “section 50(a)(6)”.
(ii) Section 6418(g)(3) is amended by striking “subsection (a)(5)” each place it appears and inserting “subsection (a)(7)”.
(c) Denial of credit for expenditures for certain wind and solar leasing arrangements.—
(1) IN GENERAL.—Section 48E is amended—
(A) by redesignating subsection (i) as subsection (j), and
(B) by inserting after subsection (h) the following new subsection:
“(i) Denial of credit for expenditures for wind and solar leasing arrangements.—No credit shall be determined under this section for any qualified investment during the taxable year with respect to property described in paragraph (1) or (4) of section 25D(d) (as applied by substituting ‘lessee’ for ‘taxpayer’) if the taxpayer rents or leases such property to a third party during such taxable year.”.
(2) CONFORMING RULES.—Section 50 is amended by adding at the end the following new subsection:
“(e) Rules for geothermal heat pumps.—For purposes of this section and section 168, the ownership of energy property described in section 48(a)(3)(A)(vii) shall be determined without regard to whether such property is readily usable by a person other than the lessee or service recipient.”.
(d) Domestic content rules.—Subparagraph (B) of section 48E(a)(3) is amended to read as follows:
“(B) DOMESTIC CONTENT.—Rules similar to the rules of section 48(a)(12) shall apply, except that, for purposes of subparagraph (B) of such section and the application of rules similar to the rules of section 45(b)(9)(B), the adjusted percentage (as determined under section 45(b)(9)(C)) shall be determined as follows:
“(i) In the case of any qualified investment with respect to any qualified facility or energy storage technology the construction of which begins before June 16, 2025, 40 percent (or, in the case of a qualified facility which is an offshore wind facility, 20 percent).
“(ii) In the case of any qualified investment with respect to any qualified facility or energy storage technology the construction of which begins on or after June 16, 2025, and before January 1, 2026, 45 percent (or, in the case of a qualified facility which is an offshore wind facility, 27.5 percent).
“(iii) In the case of any qualified investment with respect to any qualified facility or energy storage technology the construction of which begins during calendar year 2026, 50 percent (or, in the case of a qualified facility which is an offshore wind facility, 35 percent).
“(iv) In the case of any qualified investment with respect to any qualified facility or energy storage technology the construction of which begins after December 31, 2026, 55 percent.”.
(e) Elimination of energy credit for certain energy property.—Section 48(a)(2) is amended—
(1) in subparagraph (A)(ii), by striking “2 percent” and inserting “0 percent”, and
(2) by adding at the end the following new subparagraph:
“(C) NONAPPLICATION OF INCREASES TO ENERGY PERCENTAGE.—For purposes of energy property described in subparagraph (A)(ii), the energy percentage applicable to such property pursuant to such subparagraph shall not be increased or otherwise adjusted by any provision of this section.”.
(f) Application of clean electricity investment credit to qualified fuel cell property.—Section 48E, as amended by subsection (c), is amended—
(1) by redesignating subsection (j) as subsection (k), and
(2) by inserting after subsection (i) the following new subsection:
“(j) Application to qualified fuel cell property.—For purposes of this section, in the case of any qualified fuel cell property (as defined in section 48(c)(1), as applied without regard to subparagraph (E) thereof)—
“(1) subsection (b)(3)(A) shall be applied without regard to clause (iii) thereof,
“(2) for purposes of subsection (a)(1), the applicable percentage shall be 30 percent and such percentage shall not be increased or otherwise adjusted by any other provision of this section, and
“(3) subsection (g) shall not apply.”.
(g) Effective dates.—
(1) IN GENERAL.—Except as provided in paragraphs (2), (3), (4), and (5), the amendments made by this section shall apply to taxable years beginning after the date of enactment of this Act.
(2) DOMESTIC CONTENT RULES.—The amendment made by subsection (d) shall apply on or after June 16, 2025.
(3) ELIMINATION OF ENERGY CREDIT FOR CERTAIN ENERGY PROPERTY.—The amendments made by subsection (e) shall apply to property the construction of which begins on or after June 16, 2025.
(4) APPLICATION OF CLEAN ELECTRICITY INVESTMENT CREDIT TO QUALIFIED FUEL CELL PROPERTY.—The amendments made by subsection (f) shall apply to property the construction of which begins after December 31, 2025.
(5) TERMINATION FOR WIND AND SOLAR FACILITIES.—The amendments made by subsection (a) shall apply to facilities the construction of which begins after the date which is 12 months after the date of enactment of this Act.
SEC. 70514. Phase-out and restrictions on advanced manufacturing production credit.
(a) Modification of provision relating to sale of integrated components.—Paragraph (4) of section 45X(d) is amended to read as follows:
“(4) SALE OF INTEGRATED COMPONENTS.—
“(A) IN GENERAL.—For purposes of this section, a person shall be treated as having sold an eligible component to an unrelated person if—
“(i) such component (referred to in this paragraph as the ‘primary component’) is integrated, incorporated, or assembled into another eligible component (referred to in this paragraph as the ‘secondary component’) produced within the same manufacturing facility as the primary component, and
“(ii) the secondary component is sold to an unrelated person.
“(B) ADDITIONAL REQUIREMENTS.—Subparagraph (A) shall only apply with respect to a secondary component for which not less than 65 percent of the total direct material costs which are paid or incurred (within the meaning of section 461 and any regulations issued under section 263A) by the taxpayer to produce such secondary component are attributable to primary components which are mined, produced, or manufactured in the United States.”.
(b) Phase out and termination.—Section 45X(b)(3) is amended—
(1) in the heading, by inserting “and termination” after “Phase out”,
(2) in subparagraph (A), in the matter preceding clause (i), by striking “subparagraph (C)” and inserting “subparagraphs (C) and (D)”, and
(3) by striking subparagraph (C) and inserting the following:
“(C) PHASE OUT FOR APPLICABLE CRITICAL MINERALS OTHER THAN METALLURGICAL COAL.—
“(i) IN GENERAL.—In the case of any applicable critical mineral (other than metallurgical coal) produced after December 31, 2030, the amount determined under this subsection with respect to such mineral shall be equal to the product of—
“(I) the amount determined under paragraph (1) with respect to such mineral, as determined without regard to this subparagraph, multiplied by
“(II) the phase out percentage under clause (ii).
“(ii) PHASE OUT PERCENTAGE FOR APPLICABLE CRITICAL MINERALS OTHER THAN METALLURGICAL COAL.—The phase out percentage under this clause is equal to—
“(I) in the case of any applicable critical mineral produced during calendar year 2031, 75 percent,
“(II) in the case of any applicable critical mineral produced during calendar year 2032, 50 percent,
“(III) in the case of any applicable critical mineral produced during calendar year 2033, 25 percent, and
“(IV) in the case of any applicable critical mineral produced after December 31, 2033, 0 percent.
“(D) TERMINATION FOR WIND ENERGY COMPONENTS.—This section shall not apply to any wind energy component produced and sold after December 31, 2027.
“(E) TERMINATION FOR METALLURGICAL COAL.—This section shall not apply to any metallurgical coal produced after December 31, 2029.”.
(c) Restrictions relating to prohibited foreign entities.—Section 45X is amended—
(1) in subsection (c)(1), by adding at the end the following new subparagraph:
“(C) MATERIAL ASSISTANCE FROM PROHIBITED FOREIGN ENTITIES.—In the case of taxable years beginning after the date of enactment of this subparagraph, the term ‘eligible component’ shall not include any property which includes any material assistance from a prohibited foreign entity (as defined in section 7701(a)(52), as applied by substituting ‘used in a product sold before January 1, 2027’ for ‘used in a product sold before January 1, 2030’ in subparagraph (D)(iv)(II)(bb) thereof).”, and
(2) in subsection (d), as amended by subsection (a) of this section, by adding at the end the following new paragraph:
“(4) RESTRICTIONS RELATING TO PROHIBITED FOREIGN ENTITIES.—
“(A) IN GENERAL.—No credit shall be determined under subsection (a) for any taxable year if the taxpayer is—
“(i) a specified foreign entity (as defined in section 7701(a)(51)(B)), or
“(ii) a foreign-influenced entity (as defined in section 7701(a)(51)(D), without regard to clause (i)(II) thereof).
“(B) EFFECTIVE CONTROL.—In the case of a taxpayer for which section 7701(a)(51)(D)(i)(II) is determined to apply for any taxable year, no credit shall be determined under subsection (a) for such taxable year if such determination relates to an eligible component described in subsection (c)(1).”.
(d) Modification of definition of battery module.—Section 45X(c)(5)(B)(iii) is amended—
(1) in subclause (I)(bb), by striking “and” at the end,
(2) in subclause (II), by striking the period at the end and inserting “, and”, and
(3) by adding at the end the following new subclause:
“(III) which is comprised of all other essential equipment needed for battery functionality, such as current collector assemblies and voltage sense harnesses, or any other essential energy collection equipment.”.
(e) Inclusion of metallurgical coal as an applicable critical mineral for purposes of the advanced manufacturing production credit.—
(1) IN GENERAL.—Section 45X(c)(6) is amended—
(A) by redesignating subparagraphs (R) through (Z) as subparagraphs (S) through (AA), respectively, and
(B) by inserting after subparagraph (Q) the following new subparagraph:
“(R) METALLURGICAL COAL.—Metallurgical coal which is suitable for use in the production of steel (within the meaning of the notice published by the Department of Energy entitled ‘Critical Material List; Addition of Metallurgical Coal Used for Steelmaking’ (90 Fed. Reg. 22711 (May 29, 2025))), regardless of whether such production occurs inside or outside of the United States.”.
(2) CREDIT AMOUNT.—Section 45X(b)(1)(M) is amended by inserting “(2.5 percent in the case of metallurgical coal)” after “10 percent”.
(f) Effective dates.—
(1) IN GENERAL.—Except as provided in paragraph (2), the amendments made by this section shall apply to taxable years beginning after the date of enactment of this Act.
(2) MODIFICATION OF PROVISION RELATING TO SALE OF INTEGRATED COMPONENTS.—The amendment made by subsection (a) shall apply to components sold during taxable years beginning after December 31, 2026.
SEC. 70515. Restriction on the extension of advanced energy project credit program.
(a) In general.—Section 48C(e)(3)(C) is amended by striking “shall be increased” and inserting “shall not be increased”.
(b) Effective date.—The amendment made by this section shall take effect on the date of enactment of this Act.
SUBCHAPTER B—ENHANCEMENT OF AMERICA-FIRST ENERGY POLICY
SEC. 70521. Extension and modification of clean fuel production credit.
(a) Prohibition on foreign feedstocks.—
(1) IN GENERAL.—Section 45Z(f)(1)(A) is amended—
(A) in clause (i)(II)(bb), by striking “and” at the end,
(B) in clause (ii), by striking the period at the end and inserting “, and”, and
(C) by adding at the end the following new clause:
“(iii) such fuel is exclusively derived from a feedstock which was produced or grown in the United States, Mexico, or Canada.”.
(2) EFFECTIVE DATE.—The amendments made by this subsection shall apply to transportation fuel produced after December 31, 2025.
(b) Prohibition on negative emission rates.—
(1) IN GENERAL.—Section 45Z(b)(1) is amended—
(A) by striking subparagraph (C) and inserting the following:
“(C) ROUNDING OF EMISSIONS RATE.—The Secretary may round the emissions rates under subparagraph (B) to the nearest multiple of 5 kilograms of CO2e per mmBTU.”, and
(B) by adding at the end the following new subparagraph:
“(E) PROHIBITION ON NEGATIVE EMISSION RATES.—For purposes of this section, the emissions rate for a transportation fuel may not be less than zero.”.
(2) EFFECTIVE DATE.—The amendments made by this subsection shall apply to emissions rates published for transportation fuel produced after December 31, 2025.
(c) Determination of emissions rate.—
(1) IN GENERAL.—Section 45Z(b)(1)(B) is amended by adding at the end the following new clauses:
“(iv) EXCLUSION OF INDIRECT LAND USE CHANGES.—Notwithstanding clauses (i), (ii), and (iii), the emissions rate shall be adjusted as necessary to exclude any emissions attributed to indirect land use change. Any such adjustment shall be based on regulations or methodologies determined by the Secretary.
“(v) ANIMAL MANURES.—With respect to any transportation fuel which is derived from animal manure, the Secretary—
“(I) shall provide a distinct emissions rate with respect to such fuel based on the specific animal manure feedstock, which may include dairy manure, swine manure, poultry manure, or any other sources as are determined appropriate by the Secretary, and
“(II) notwithstanding subparagraph (E), may provide an emissions rate that is less than zero.”.
(2) CONFORMING AMENDMENT.—Section 45Z(b)(1)(B)(i) is amended by striking “clauses (ii) and (iii)” and inserting “clauses (ii), (iii), (iv), and (v)”.
(3) EFFECTIVE DATE.—The amendments made by this subsection shall apply to emissions rates published for transportation fuel produced after December 31, 2025.
(d) Extension of clean fuel production credit.—Section 45Z(g) is amended by striking “December 31, 2027” and inserting “December 31, 2029”.
(e) Preventing double credit.—Section 45Z(d)(5) is amended—
(1) in subparagraph (A)—
(A) in clause (ii), by striking “and” at the end,
(B) in clause (iii), by striking the period at the end and inserting “, and”, and
(C) by adding at the end the following new clause:
“(iv) is not produced from a fuel for which a credit under this section is allowable.”, and
(2) by adding at the end the following new subparagraph:
“(C) REGULATIONS AND GUIDANCE.—The Secretary shall issue such regulations or other guidance as the Secretary determines necessary to carry out the purposes of subparagraph (A)(iv).”.
(f) Sales to unrelated persons.—Section 45Z(f)(3) is amended by adding at the end the following: “The Secretary may prescribe additional related person rules similar to the rule described in the preceding sentence for entities which are not described in such sentence, including rules for related persons with respect to which the taxpayer has reason to believe will sell fuel to an unrelated person in a manner described in subsection (a)(4).”.
(g) Treatment of sustainable aviation fuel.—
(1) COORDINATION OF CREDITS.—
(A) IN GENERAL.—Section 6426(k) is amended by adding at the end the following new paragraph:
“(4) COORDINATION OF CREDITS.—With respect to any gallon of sustainable aviation fuel in a qualified mixture, this subsection shall not apply to any such gallon for which a credit under section 45Z is allowable (as determined without regard to subsection (a)(1)(A) of such section).”.
(B) EFFECTIVE DATE.—The amendment made by this paragraph shall apply to—
(i) fuel sold or used on or after the date of the enactment of this Act, and
(ii) fuel sold or used before the date of enactment of this Act, but only to the extent that claims for the credit under section 6426(k) of the Internal Revenue Code of 1986 with respect to such sale or use have not been paid or allowed as of such date.
(2) ELIMINATION OF SPECIAL RATE.—
(A) IN GENERAL.—Paragraph (3) of section 45Z(a) is amended to read as follows:
“(3) DEFINITION OF SUSTAINABLE AVIATION FUEL.—For purposes of this section, the term ‘sustainable aviation fuel’ means liquid fuel, the portion of which is not kerosene, which is sold for use in an aircraft and which—
“(A) meets the requirements of—
“(i) ASTM International Standard D7566, or
“(ii) the Fischer Tropsch provisions of ASTM International Standard D1655, Annex A1, and
“(B) is not derived from palm fatty acid distillates or petroleum.”.
(B) CONFORMING AMENDMENT.—Section 45Z(c)(1) is amended by striking “, the $1.00 amount in subsection (a)(2)(B), the 35 cent amount in subsection (a)(3)(A)(i), and the $1.75 amount in subsection (a)(3)(A)(ii)” and inserting “and the $1.00 amount in subsection (a)(2)(B)”.
(C) EFFECTIVE DATE.—The amendments made by this paragraph shall apply to fuel produced after December 31, 2025.
(h) Sustainable aviation fuel credit.—Section 6426(k), as amended by the preceding provisions of this Act, is amended by adding at the end the following new paragraph:
“(5) TERMINATION.—This subsection shall not apply to any sale or use for any period after September 30, 2025.”.
(i) Registration of producers of fuel eligible for clean fuel production credit.—
(1) IN GENERAL.—Section 13704(b)(5) of Public Law 117–169 is amended by striking “after ‘section 6426(k)(3)),’” and inserting “after ‘section 40B),’”.
(2) EFFECTIVE DATE.—The amendment made by this subsection shall apply to transportation fuel produced after December 31, 2024.
(j) Extension and modification of small agri-biodiesel producer credit.—
(1) IN GENERAL.—Section 40A is amended—
(A) in subsection (b)(4)—
(i) in subparagraph (A), by striking “10 cents” and inserting “20 cents”,
(ii) in subparagraph (B), by inserting “in a manner which complies with the requirements under section 45Z(f)(1)(A)(iii)” after “produced by an eligible small agri-biodiesel producer”, and
(iii) by adding at the end the following new subparagraph:
“(D) COORDINATION WITH CLEAN FUEL PRODUCTION CREDIT.—The credit determined under this paragraph with respect to any gallon of fuel shall be in addition to any credit determined under section 45Z with respect to such gallon of fuel.”, and
(B) in subsection (g), by inserting “(or, in the case of the small agri-biodiesel producer credit, any sale or use after December 31, 2026)” after “December 31, 2024”.
(2) TRANSFER OF CREDIT.—Section 6418(f)(1)(A) is amended by adding at the end the following new clause:
“(xii) So much of the biodiesel fuels credit determined under section 40A which consists of the small agri-biodiesel producer credit determined under subsection (b)(4) of such section.”.
(3) EFFECTIVE DATE.—The amendments made by this subsection shall apply to fuel sold or used after June 30, 2025.
(k) Restrictions relating to prohibited foreign entities.—
(1) IN GENERAL.—Section 45Z(f) is amended by adding at the end the following new paragraph:
“(8) RESTRICTIONS RELATING TO PROHIBITED FOREIGN ENTITIES.—
“(A) IN GENERAL.—No credit shall be determined under subsection (a) for any taxable year beginning after the date of enactment of this paragraph if the taxpayer is a specified foreign entity (as defined in section 7701(a)(51)(B)).
“(B) OTHER PROHIBITED FOREIGN ENTITIES.—No credit shall be determined under subsection (a) for any taxable year beginning after the date which is 2 years after the date of enactment of this paragraph if the taxpayer is a foreign-influenced entity (as defined in section 7701(a)(51)(D), without regard to clause (i)(II) thereof).”.
(2) EFFECTIVE DATE.—The amendment made by this subsection shall apply to taxable years beginning after the date of enactment of this Act.
SEC. 70522. Restrictions on carbon oxide sequestration credit.
(a) Restrictions relating to prohibited foreign entities.—Section 45Q(f) is amended by adding at the end the following new paragraph:
“(10) RESTRICTIONS RELATING TO PROHIBITED FOREIGN ENTITIES.—No credit shall be determined under subsection (a) for any taxable year beginning after the date of enactment of this paragraph if the taxpayer is—
“(A) a specified foreign entity (as defined in section 7701(a)(51)(B)), or
“(B) a foreign-influenced entity (as defined in section 7701(a)(51)(D), determined without regard to clause (i)(II) thereof).”.
(b) Parity for different uses and utilizations of qualified carbon oxide.—Section 45Q is amended—
(1) in subsection (a)—
(A) in paragraph (2)(B)(ii), by adding “and” at the end,
(B) in paragraph (3), by striking subparagraph (B) and inserting the following:
“(B) (i) disposed of by the taxpayer in secure geological storage and not used by the taxpayer as described in clause (ii) or (iii),
“(ii) used by the taxpayer as a tertiary injectant in a qualified enhanced oil or natural gas recovery project and disposed of by the taxpayer in secure geological storage, or
“(iii) utilized by the taxpayer in a manner described in subsection (f)(5).”, and
(C) by striking paragraph (4),
(2) in subsection (b)—
(A) in paragraph (1)—
(i) by striking subparagraph (A) and inserting the following:
“(A) IN GENERAL.—Except as provided in subparagraph (B) or (C), the applicable dollar amount shall be an amount equal to—
“(i) for any taxable year beginning in a calendar year after 2024 and before 2027, $17, and
“(ii) for any taxable year beginning in a calendar year after 2026, an amount equal to the product of $17 and the inflation adjustment factor for such calendar year determined under section 43(b)(3)(B) for such calendar year, determined by substituting ‘2025’ for ‘1990’.”, and
(ii) in subparagraph (B), by striking “shall be applied” and all that follows through the period and inserting “shall be applied by substituting ‘$36’ for ‘$17’ each place it appears.”,
(B) in paragraph (2)(B), by striking “paragraphs (3)(A) and (4)(A)” and inserting “paragraph (3)(A)”, and
(C) in paragraph (3), by striking “the dollar amounts applicable under paragraph (3) or (4)” and inserting “the dollar amount applicable under paragraph (3)”,
(3) in subsection (f)—
(A) in paragraph (5)(B)(i), by striking “(4)(B)(ii)” and inserting “(3)(B)(iii)”, and
(B) in paragraph (9), by striking “paragraphs (3) and (4) of subsection (a)” and inserting “subsection (a)(3)”, and
(4) in subsection (h)(3)(A)(ii), by striking “paragraph (3)(A) or (4)(A) of subsection (a)” and inserting “subsection (a)(3)(A)”.
(c) Conforming amendment.—Section 6417(d)(3)(C)(i)(II)(bb) is amended by striking “paragraph (3)(A) or (4)(A) of section 45Q(a)” and inserting “section 45Q(a)(3)(A)”.
(d) Effective dates.—
(1) RESTRICTIONS RELATING TO PROHIBITED FOREIGN ENTITIES.—The amendment made by subsection (a) shall apply to taxable years beginning after the date of enactment of this Act.
(2) PARITY FOR DIFFERENT USES AND UTILIZATIONS OF QUALIFIED CARBON OXIDE.—The amendments made subsections (b) and (c) shall apply to facilities or equipment placed in service after the date of enactment of this Act.
SEC. 70523. Intangible drilling and development costs taken into account for purposes of computing adjusted financial statement income.
(a) In general.—Section 56A(c)(13) is amended—
(1) by striking subparagraph (A) and inserting the following:
“(A) reduced by—
“(i) depreciation deductions allowed under section 167 with respect to property to which section 168 applies to the extent of the amount allowed as deductions in computing taxable income for the year, and
“(ii) any deduction allowed for expenses under section 263(c) (including any deduction for such expenses under section 59(e) or 291(b)(2)) with respect to property described therein to the extent of the amount allowed as deductions in computing taxable income for the year, and”, and
(2) by striking subparagraph (B)(i) and inserting the following:
“(i) to disregard any amount of—
“(I) depreciation expense that is taken into account on the taxpayer’s applicable financial statement with respect to such property, and
“(II) depletion expense that is taken into account on the taxpayer’s applicable financial statement with respect to the intangible drilling and development costs of such property, and”.
(b) Effective date.—The amendments made by this section shall apply to taxable years beginning after December 31, 2025.
SEC. 70524. Income from hydrogen storage, carbon capture, advanced nuclear, hydropower, and geothermal energy added to qualifying income of certain publicly traded partnerships.
(a) In general.—Section 7704(d)(1)(E) is amended—
(1) by striking “income and gains derived from the exploration” and inserting the following: “income and gains derived from—
“(i) the exploration”.
(2) by inserting “or” before “industrial source”, and
(3) by striking “or the transportation or storage” and all that follows and inserting the following:
“(ii) the transportation or storage of—
“(I) any fuel described in subsection (b), (c), (d), (e), or (k) of section 6426, or any alcohol fuel defined in section 6426(b)(4)(A) or any biodiesel fuel as defined in section 40A(d)(1) or sustainable aviation fuel as defined in section 40B(d)(1), or
“(II) liquified hydrogen or compressed hydrogen,
“(iii) in the case of a qualified facility (as defined in section 45Q(d), without regard to any date by which construction of the facility or equipment is required to begin) not less than 50 percent of the total carbon oxide production of which is qualified carbon oxide (as defined in section 45Q(c))—
“(I) the generation, availability for such generation, or storage of electric power at such facility, or
“(II) the capture of carbon dioxide by such facility,
“(iv) the production of electricity from any advanced nuclear facility (as defined in section 45J(d)(2)),
“(v) the production of electricity or thermal energy exclusively using a qualified energy resource described in subparagraph (D) or (H) of section 45(c)(1), or
“(vi) the operation of energy property described in clause (iii) or (vii) of section 48(a)(3)(A) (determined without regard to any requirement under such section with respect to the date on which construction of property begins).”.
(b) Effective date.—The amendments made by this section shall apply to taxable years beginning after December 31, 2025.
SEC. 70525. Allow for payments to certain individuals who dye fuel.
(a) In general.—Subchapter B of chapter 65, as amended by the preceding provisions of this Act, is amended by adding at the end the following new section:
“SEC. 6435. Dyed fuel.
“(a) In general.—If a person establishes to the satisfaction of the Secretary that such person meets the requirements of subsection (b) with respect to diesel fuel or kerosene, then the Secretary shall pay to such person an amount (without interest) equal to the tax described in subsection (b)(2)(A) with respect to such diesel fuel or kerosene.
“(b) Requirements.—
“(1) IN GENERAL.—A person meets the requirements of this subsection with respect to diesel fuel or kerosene if such person removes from a terminal eligible indelibly dyed diesel fuel or kerosene.
“(2) ELIGIBLE INDELIBLY DYED DIESEL FUEL OR KEROSENE DEFINED.—The term ‘eligible indelibly dyed diesel fuel or kerosene’ means diesel fuel or kerosene—
“(A) with respect to which a tax under section 4081 was previously paid (and not credited or refunded), and
“(B) which is exempt from taxation under section 4082(a).
“(c) Cross reference.—For civil penalty for excessive claims under this section, see section 6675.”.
(b) Conforming amendments.—
(1) Section 6206 is amended—
(A) by striking “or 6427” each place it appears and inserting “6427, or 6435”, and
(B) by striking “6420 and 6421” and inserting “6420, 6421, and 6435”.
(2) Section 6430 is amended—
(A) by striking “or” at the end of paragraph (2), by striking the period at the end of paragraph (3) and inserting “, or”, and by adding at the end the following new paragraph:
“(4) which are removed as eligible indelibly dyed diesel fuel or kerosene under section 6435.”.
(3) Section 6675 is amended—
(A) in subsection (a), by striking “or 6427 (relating to fuels not used for taxable purposes)” and inserting “6427 (relating to fuels not used for taxable purposes), or 6435 (relating to eligible indelibly dyed fuel)”, and
(B) in subsection (b)(1), by striking “6421, or 6427,” and inserting “6421, 6427, or 6435,”.
(4) The table of sections for subchapter B of chapter 65, as amended by the preceding provisions of this Act, is amended by adding at the end the following new item:
“Sec. 6435. Dyed fuel.”.
(c) Effective date.—The amendments made by this section shall apply to eligible indelibly dyed diesel fuel or kerosene removed on or after the date that is 180 days after the date of the enactment of this section.
SUBCHAPTER C—OTHER REFORMS
SEC. 70531. Modifications to de minimis entry privilege for commercial shipments.
(a) Civil penalty.—
(1) ADDITIONAL PENALTY IMPOSED.—Section 321 of the Tariff Act of 1930 (19 U.S.C. 1321) is amended by adding at the end the following new subsection:
“(c) Any person who enters, introduces, facilitates, or attempts to introduce an article into the United States using the privilege of this section, the importation of which violates any other provision of United States customs law, shall be assessed, in addition to any other penalty permitted by law, a civil penalty of up to $5,000 for the first violation and up to $10,000 for each subsequent violation.”.
(2) EFFECTIVE DATE.—The amendment made by paragraph (1) shall take effect 30 days after the date of the enactment of this Act.
(b) Repeal of commercial shipment exception.—
(1) REPEAL.—Section 321(a)(2) of such Act (19 U.S.C. 1321(a)(2)) is amended by striking “of this Act, or” and all that follows through “subdivision (2); and” and inserting “of this Act; and”.
(2) CONFORMING REPEAL.—Subsection (c) of such section 321, as added by subsection (a) of this section, is repealed.
(3) EFFECTIVE DATE.—The amendments made by this subsection shall take effect on July 1, 2027.