The U.S. budget reconciliation bill spared some tax incentives for solar and wind plants and carbon capture projects, but the rules have changed dramatically and a new executive order published July 7 will make it harder to qualify for credits.

The new spending law enacted July 4, a.k.a. One Big Beautiful Bill Act, retains existing production and investment tax incentives for solar and wind projects but only if construction begins by July 2026 and the facility is in service by the end of 2027. That’s eight years earlier than what was allowed under the Inflation Reduction Act. 

The law also tightens restrictions against using materials acquired from certain “foreign entities of concern,” particularly China. It requires projects to increase the proportion of equipment and technology that isn’t tied to those countries, starting in January 2026 and ramping quickly over the next four years. 

The tougher domestic content requirements (also called “material assistance”) apply across all of the revised incentives and vary depending on the type of technology. “The question isn’t who this will affect, it’s who will this not affect,” said Astrika Adams, an environmental attorney with law firm Beveridge and Diamond. “We are looking at a very different marketplace here.” 

President Donald Trump’s related mandate, “Ending Market Distorting Subsidies for Unreliable, Foreign Controlled Energy Sources,” aims to make qualification even tougher for solar and wind developers. It was written to appease hardline House Republicans unhappy with Senate rewrites that spared some tougher cuts for solar and wind projects. 

Expect more rule changes

The executive order requires the U.S. Treasury to issue guidance by late August to “build upon and strengthen the repeal of, and modifications to, wind, solar and other ‘green’ energy tax credits.” It also asks the Department of the Interior to review policies for putting energy projects on federal land to make sure they don’t provide “preferential treatment” to wind and solar installations.

The net effect: It will become more complicated for developers to claim incentives, as Trump has promised. “It’s a signal to the solar and wind project developers that there likely will be more bad news,” said Adams. “There will be a higher burden that they will have to overcome.”

Corporations investing in renewable procurement and carbon removal projects have been bracing for these changes for months, and are already looking for ways to keep them alive with far less federal funding. “The market is still strong and valid,” Adams said. “There are still viable pathways out there for some of these projects.”

A real positive: The final bill preserves a provision that allows project developers to transfer or sell credits, which i