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Trump Enacts Budget Reducing Renewable Incentives and Directs Stricter Tax Credit Limits

The move follows executive orders that instruct Treasury to tighten wind and solar credit eligibility with stricter construction thresholds.

A wind farm is shown in Movave, California, U.S., November 8, 2019.  REUTERS/Mike Blake/ File Photo
U.S. President Donald Trump holds up his signed spending and tax cut legislation surrounded by members of Congress, at the White House, in Washington, July 4, 2025 (AP photo by Julia Demaree Nikhinson).
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Overview

  • On July 7, Congress passed and President Trump signed a budget bill that rolls back key clean energy measures from the 2022 Inflation Reduction Act.
  • The legislation cuts investments in solar and wind power, battery manufacturing, power grid upgrades and electric vehicle subsidies.
  • It mandates auctions for oil and gas development on federal lands, lowers operating fees for fossil fuel companies, grants extra tax breaks to oil and gas producers and subsidizes metallurgical coal.
  • The bill ends wind and solar tax credits unless projects begin producing electricity by 2028 or start construction within the next year.
  • Following enactment, Trump ordered the Treasury Department to restrict broad safe harbors for green tax credits and directed Interior to eliminate policies that favor renewable projects.