NEW ORLEANS – The Senate Finance Committee draft budget reconciliation text, unveiled on June 16, reflects the Republican-led effort to extend certain 2017 Tax Cuts and Jobs Act (TCJA) provisions, adjust and remove clean energy incentives, and reform business tax treatment.
The draft includes proposals to phase out clean energy credits and reforms business taxation changes that will impact the energy, infrastructure, and investment sectors.
Negative Impact on Residential Solar Programs
The Senate draft eliminates the residential clean energy tax credit entirely, taking effect 180 days after the bill is enacted. It covers solar panels, residential batteries, heat‑pump installations, and other qualified clean-energy improvements. Solar leasing arrangements will also no longer be eligible for the investment tax credit.
Energy‑efficiency credits for things like insulation and HVAC systems, as well as credits for EV purchases, are also terminated within 180 days of enactment.
These proposed changes would effectively remove federal tax support for most residential rooftop solar systems and their typical financing models.
“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. If this bill passes as is, we cannot ensure an affordable, reliable and secure energy system,” said Abigail Ross Hopper, President & CEO of the national Solar Energy Industries Association.
“The result will be stalled growth, job losses, and higher electricity prices for families and small businesses across the country,” said Jeff Cramer, CEO of Coalition for Community Solar Access based in Denver, CO.
However, developers of large-scale projects can continue selling their tax credits to third parties, preserving a key financing tool for commercial and utility-scale clean energy installations.
A new restriction disqualifies any project that receives material support from “foreign entities of concern” such Chinese companies from claiming clean energy credits if construction begins after Dec 31 this year.
Negative Impact on Wind Energy Initiatives
The Senate draft retains wind production and investment tax credits only for projects that start construction by Dec. 31.
Projects that begin in 2026 get 60% of the credit and for those starting in 2027, only 20% tax credit. Any wind projects in production in 2028 or thereafter would receive no tax credit assistance.
This destabilizes any long-term planning of clean wind energy projects and goes against Louisiana’s all-of-the-above approach to energy sources and threatens existing projects such as those held by Diamond Offshore Wind and Cajun Wind, large-scale commercial wind developments off the coast of Cameron and Terrebonne/Lafourche Parishes respectively.
“For wind and solar, changes projects are likely not to go to construction until ’27 or ’28, so this effectively kills those projects,” said Harry Godfrey, Advanced Energy United based in Washington, D.C.
Clean Energy Advocates Oppose
Clean energy advocates warn the phased-out tax credits will decimate industry clean energy investments in wind and solar programs.
Sen. Ron Wyden (D-OR) says the bill would eliminate approximately 90% of incentives compared to current law. “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,” said Wyden.
Business Tax Reform
On the business tax side, the draft extends 100% bonus depreciation permanently, allowing companies to immediately deduct the full cost of qualifying capital assets.
It also allows companies to continue using EBITDA instead of EBIT for calculating interest expense deduction caps. This means companies can count depreciation and amortization when calculating how much interest they can deduct on their taxes which is especially helpful for industries that spend large amounts on equipment or infrastructure.
Business owners using pass-through entities (in which profits are taxed on the owners' personal tax returns) will only be able to deduct either $40,000 or half of their PTET payment—whichever is more. These changes could reduce benefits for small business owners and require more careful tax planning.
The draft makes the 20% Qualified Business Income (QBI) deduction permanent and expands income thresholds for phase-outs which means only higher-earning service professionals will qualify, hurting lower-income businesses.
State and local tax (SALT) deduction caps remain in place at $10,000, with no expansion included. The draft also includes stricter rules on business SALT (BSALT) and passthrough SALT (CSALT) deductions, particularly limiting attempts to capitalize on SALT through partnerships. This means the draft keeps the $10,000 limit on deducting state and local taxes and adds tougher rules to stop businesses and partnerships from using workarounds to deduct more.
“I have been clear since Day One: sufficiently lifting the SALT Cap to deliver tax fairness to New Yorkers has been my top priority,” said Rep. Mike Lawler (R‑NY). “If the Senate reduces the SALT number, I will vote NO, and the bill will fail in the House.”
Wealthy, Fossil Fuel-Aligned Benefits
Overall, the Senate draft favors capital-intensive industries, fossil fuel-aligned businesses, and traditional infrastructure by retaining depreciation and interest deductions, while dialing back federal support for renewables like wind and solar.
Clean energy developers face a compressed timeline to claim credits, tighter restrictions on foreign partnerships, and fewer options for consumer-facing models like solar leasing. Meanwhile, businesses will see enhanced deductions and permanent expensing that encourage investment and expansion. The Senate aims to finalize its version before the July 4 recess.
