IRA Credits Remain in Place Despite Mixed Signals

Executive actions and announcements during the first week of Donald Trump’s second term have created uncertainty around federal spending and tax credit programs. These executive actions are not expected to affect tax credits currently available under the law, including statutory energy credits enacted by the Inflation Reduction Act.

Statutory energy credits not likely affected by recent executive actions include tax incentives for clean energy under Sections 48 and 48E, Sections 45 and 45Y, and Section 45X; clean fuel credits under Section 45Z; or advanced manufacturing production credits under Section 45X, along with the dozens of other green energy credits put in place by the IRA. Furthermore, the executive actions will also not affect elective payments for credits under Section 6417 or transfer elections under Section 6418.

Any outright repeal of these tax credits would require Congressional action. A new bill would first need to be initiated by the House of Representatives through the Ways and Means committee. After a new bill is debated and approved by the full House it would go to the Senate, where it could be rewritten by the Finance Committee before presentation to the full Senate. If the House and Senate can reconcile differences between the two versions a compromise of the bill would be sent to both the House and Senate for approval. Finally, the proposed legislation is sent to the president where it could be signed into law or vetoed.

Republicans are currently planning legislation to extend the 2017 Tax Cuts and Jobs Act and have debated including significant cuts--or a wholesale repeal--of IRA provisions to help offset the bill's cost. However, the process for enacting this legislation is complex, and it is expected to take several months, if not all of 2025. Furthermore, there is significant opposition to any IRA repeal.

The Trump administration has also ordered a pause and review of all regulatory projects. To extend the pause, or delay IRA-specific guidance, could affect the availability of some credits. Congress can also force an agency to rescind regulations through the Congressional Review Act. This action would force delays but would not fundamentally change taxpayer entitlement to these credits under existing law. Eide Bailly is closely monitoring the situation and will provide updates on any developments that could affect these credits.