Business Energy Credits Expiring in 2025

Business Energy Credits Expiring in 2025 Due to OBBBA – Act Now

While the One Big Beautiful Bill Act (OBBBA) made some tax provisions permanent, it also accelerated the expiration of several high-impact business energy tax credits. These tax credits, aimed at encouraging clean energy investments, are now set to sunset as early as September. So, if your business was considering facility upgrades, solar investments, or green construction initiatives, the time to act is now.

This article focuses on the business energy-related tax credits set to expire in 2025, and the steps to take before they do so. Additional provisions may expire later, but these are the ones that require the most urgent action in order to make use of them.

What Are Business Energy Tax Credits?

Business energy credits work similarly to individual credits, reducing your tax liability dollar-for-dollar for qualifying investments in energy-efficient or renewable infrastructure.

Most of these credits fall under:

• IRC §179D: For energy-efficient commercial building upgrades
• IRC §48 (ITC): For renewable energy investments like solar or wind systems

However, claiming them typically requires installation by qualified contractors and compliance with energy efficiency benchmarks. Additionally, business also must meet the prevailing wage and apprenticeship rules if they wish to take full advantage of the tax credit.

For more information on ITCs, read our Clean Energy Investment Tax Credit Guide. 

Clean Energy Tax Credits Expiring in 2025 Under OBBBA

1. Section 179D – Energy Efficient Commercial Building Deduction

Expires: December 31, 2025
Credit Value: Up to $5.36 per square foot (indexed for inflation)

This deduction rewards businesses that reduce energy usage in:

• • Lighting systems
  • HVAC systems
  • Building envelopes

Eligible buildings must meet specific energy savings thresholds, and projects must be certified by a qualified third party. Government and tax-exempt entities can allocate the deduction to designers and contractors (e.g., architects and engineers).

Designers of public school buildings, nonprofits, and government projects can still claim this, if properly allocated.

2. Section 48 – Investment Tax Credit (ITC) for Businesses

Expires: December 31, 2025
Credit Value: 6% of qualified costs or up to 30% (if wage/apprenticeship requirements are met)

Applies to qualifying energy generation and storage investments, newly installed and used primarily in the United States including:

• • Solar PV systems
  • Geothermal heat pumps
  • Wind turbines
  • Fuel cells
  • Battery storage systems
  • Biogas, waste energy recovery

Bonus credits may apply

In addition to the base ITC, businesses may qualify for “bonus credits” that stack on top of the 30% (wage-compliant) rate if certain conditions are met. These include:

• • Domestic content bonus: If the project uses a certain percentage of U.S.-manufactured materials (such as steel or iron), it may qualify for an additional 10% credit.
  • Energy community bonus: If the project is located in an “energy community”—areas historically reliant on fossil fuel industries or facing job losses from plant closures—it may qualify for another 10%.
  • Low-income bonus: Projects that serve federally defined low-income communities, or that are part of qualified affordable housing developments, may also be eligible for additional credits.

These bonus add-ons are also set to expire or reduce starting in 2025.

3. Section 45W – Commercial Clean Vehicle Credit

Expires: December 31, 2025 (shortened from 2032 by OBBBA)

Credit Value:

• Up to $7,500 for vehicles under 14,000 pounds
• Up to $40,000 for vehicles weighing over 14,000 pounds
• Cannot exceed 30% of the vehicle’s purchase price

Eligibility requirements include that it must be used for business (not resale) and also that the Vehicle must be made by a qualified manufacturer and be either electric or fuel cell powered. While it is a business tax credit, it’s also refundable for tax-exempt entities and may be stackable with other deductions such as Section 179, depending on how the vehicle is used in business operations.

In short, if your company operates a fleet, handles logistics, or is considering sustainable upgrades, this credit could represent a major cost offset. But time is of the essence: qualifying purchases must be made before the end of 2025.

 Act Now – Recommended Steps

These credits were previously extended through 2032 under the Inflation Reduction Act, but the passing of OBBBA dramatically shortened that timeline. This shortens the window for businesses to plan and execute green capital improvements and may increase post-2025 project costs without the offsetting tax benefits.

These credits also require advanced planning, certification requirements, and have added complexity due to Wage/apprenticeship requirements. So if you’re hoping to claim these in 2025 here’s what we recommend in this narrow timeframe:

• • Talk to an advisor ASAP– if you’re not sure whether your business will qualify for a tax credit or how to claim one, it’s best to consult with your advisor as soon as possible. They can also help create a cost-benefit analysis for these projects.
  • Accelerate project timelines: Ensure work is started, and ideally completed, before year-end 2025
  • Confirm certification requirements early (especially for 179D deductions)
  • File allocation forms promptly if working with government/nonprofit partners. Processes and approvals can move slowly, so if the goal is to complete before end of year, don’t drag your feet when completing allocation forms.

Conclusion

The window to capitalize on these business energy incentives is closing fast. With OBBBA accelerating the expiration of both Section 179D and Section 48 credits, the tax benefits tied to clean energy now require proactive planning and dedication. If your business has been considering a green investment, whether it’s a solar installation, HVAC system upgrade, or a commercial retrofit, 2025 may be your last chance to benefit from federal tax credits that could lower your project costs.

The complexity of compliance, particularly around labor requirements and certification, means these aren’t decisions you want to push to Q4. Start the conversation with your tax advisor now to map out what’s feasible, financially smart, and time sensitive. And remember: while these are the most urgent credits expiring in 2025, they aren’t the only ones affected by OBBBA. We’ll continue to monitor and break down these changes in future articles to help you stay ahead.

Need help navigating energy credits or exploring eligibility? Please connect with us online, or reach out to us directly at 1-770-495-9077 or email us at [email protected].

The above article only intends to provide general financial information and is based on open-source facts, it is not designed to provide specific advice or recommendations for any individual. It does not give personalized tax, financial, or other business and professional advice. Before taking any form of action, you should consult a financial professional who understands your particular situation. CKH Group will not be held liable for any harm/errors/claims arising from the articles. Whilst every effort has been taken to ensure the accuracy of the contents, we will not be held accountable for any changes that are beyond our control.