The Tax Authority issued 2025-42 on Friday 15 August, in response to an executive order issued on July 7 to direct the Minister of Treasury on charges of ending the electrical production credits and investment tax under Articles 45Y and 48E of the internal revenue law of wind and ringing birds. ” Variety 2025-42 makes “a five percent safe port submitted under [previous] The Tax Authority notifications are not available “for the purpose of determining the start of construction. 2025-42 notification applies until September 2, 2025. However, the safe port remains by five percent available for these projects with a capacity of 1.5 megawatts or less.
As a result, the physical work test is the only means by which the construction date can be created in order to qualify for investment credit in Section 48E and production credit in Section 45Y under the Act of Inflation for the year 2022 (“” IRA “). Accordingly, only when “physical work is of great nature” (with regard to section 48E investment credit) or large energy production (in the case of production tax credits under Article 45Y), construction will be considered. In addition to the removal of the safe port by five percent, the 2025-42 notice indicates that the Tax Authority will take a more aggressive position in examining whether the projects have fulfilled the beginning of the time schedules for the construction needed to qualify to obtain credits under the 45y and 48E section after postponing them through the implementation of major laws. OBBA has cut section 45E and 45Y credit eligibility for projects that begin to build after July 4, 2026 or put in service after 2027 (“the deadline for service”).
These final dates were replaced by the timetable for the original orientation of the year 2032 or when greenhouse emissions in the United States decreased to specific levels set by the Irish Republican Army. According to the new rules developed by OBBA, credits are not allowed to be allowed under Articles 45Y and 48E for solar facilities or winds placed in the service after the date of the service. However, the deadline that was put in the service applies only to projects that begin to build after July 4, 2026, or 12 months after the age of OBBA. It is not necessary to put the projects that started construction before the deadline for the service in the service before the deadline for the service, but it must fulfill the requirements of continuous progress from the beginning of the date of construction to the date of the real estate status in the service.
While removing the safe port by five percent is a major change, the requirements of physical work test remain effectively changing. The construction will be considered to have started when the physical work of a large nature begins, provided that there is no break in a “continuous program for construction” (“continuity requirements”).
For the purposes of continuity requirements, there is still delay due to issues such as weather, natural disasters, lack of width, employment, or permit. In addition, a four-year safe port is available to meet continuity requirements under the 2025-20 notice, which is solar energy facilities or winds placed in service within four years of construction start to meet continuity requirements.
It is worth noting that a five percent safe port is still available for facilities with a “low -out solar facility”. For the notification purposes 2025-42, the “low-out-out solar facility” is any solar facility with “the maximum of the net resulting no more than 1.5 megawatts[s]“Which is measured at the facility level. As a result, the surface developers, parking cover or other smaller systems can be able to benefit from a five percent safe port or a physical work test, giving them much greater flexibility than large facilities developers.
More directives on the restrictions imposed under OBBA are expected to give incentives to clean energy projects with relations with entities or individuals who have trade relations with foreign governments that the United States government considers opponents, including China, Russia, North Korea, Iran (foreign entities of importance, or FEOC). The executive order was ordered on July 7 to direct the Treasury to issue instructions by August 18 to implement the improved FEOC restrictions.
If you have any questions about the application or OBBA application on your commercial or personal status, please contact the Wells Hall, MAURICE HOLLWAY, Tim Wagner, Amanda Wilson, Martin Gitlin, Jim Retdon, Seth Proctor, Alexis Rallis, or any other member of the Nelson Mulings Group Environmental energy and energy.