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Repeals a wide range of federal tax incentives for clean energy, clean fuels, clean vehicles, energy-efficiency improvements, certain manufacturing credits, carbon capture, and related tax provisions. Most repeals and conforming code changes take effect for production, placement-in-service, acquisitions, or expenditures occurring after December 31, 2025 (some conforming changes effective January 1, 2026). The law removes or amends many existing credits and deductions used by utilities, fuel producers, manufacturers, vehicle buyers, homeowners, and businesses — replacing those tax incentives with a statutory code that no longer recognizes them and updating cross-references across the Internal Revenue Code to conform to those repeals.
Strikes section 30D from subpart B of part IV of subchapter A (removes the Internal Revenue Code provision codifying the Clean Vehicle Credit and its table entry).
Amends 23 U.S.C. 166(b)(5)(A)(ii) by inserting text after an existing element (exact inserted text not specified in this section).
Strikes subparagraph (D) from section 30B(d)(3).
Strikes paragraph (30) from section 38(b).
Strikes paragraph (37) from section 1016(a).
Strikes subparagraph (T) from section 6213(g)(2).
Strikes the specified text from subsection (m) of section 6501 (exact text to be struck is not provided in this section).
Revises 26 U.S.C. §87 to remove references to the sustainable aviation fuel credit and to state that gross income includes the amount of the alcohol fuel credit determined under section 40(a).
Strikes 26 U.S.C. §40B (the sustainable aviation fuel credit) from subpart D of part IV and removes the corresponding item from the table of sections.
Amends 26 U.S.C. §38(b) by striking paragraph (35).
And 65 more affected sections...
Strike section 45 from Subpart D of part IV of subchapter A and strike the item relating to section 45 in the table of sections for that subpart.
Amend Section 38: in subsection (b), strike paragraph (8); and in subsection (c)(4)(B), strike clauses (iv) and (v).
Amend Section 45J: (A) in subsection (c)(2)(A)(i), by inserting after ,; (B) in subsection (c)(2)(B), by inserting after , and; (C) in subsection (f), by inserting after .
Amend Section 45K(g)(2) by striking subparagraph (E).
Amend Section 55(c)(1) by striking . (text as shown in section).
Who is affected and how:
Owners/operators of electric generating facilities and project developers: Loss of production and investment credits will raise after‑tax costs for new renewable and qualifying low‑carbon generation projects. Developers who planned projects relying on these incentives may face reduced returns, altered financing packages, or postponed projects.
Fuel producers and refiners (biofuels, sustainable aviation fuel, renewable diesel, alcohol fuels): Removal of fuel credits reduces price support and tax benefits that many producers use to compete with fossil fuels; this may reduce production incentives and affect refinery/renewable fuel investment decisions.
Manufacturers and advanced energy project sponsors: Repeal of manufacturing and qualifying advanced energy project credits reduces targeted tax support for domestic clean‑tech manufacturing and component production, affecting capital investment and potentially supply‑chain decisions.
Automakers, commercial vehicle buyers, and EV ecosystem: Removal of vehicle credits (new and previously owned) and commercial clean vehicle credits can reduce consumer demand incentives for electric vehicles and affect automakers’ product planning and pricing strategies. Removal of refueling property credits affects investment in EV charging and alternative‑fuel infrastructure by raising net installation costs.
Homeowners and commercial building owners: Repeal of residential clean energy and home improvement credits and the commercial energy deduction increases upfront costs for rooftop solar, heat pumps, energy efficiency retrofits, and energy‑saving commercial upgrades, likely reducing retrofit activity.
Contractors, installers, and clean energy workforce: Reduced demand for installations (solar, charging stations, efficiency retrofits) and manufacturing could lead to slower hiring or job losses in construction, installation, and related supply‑chain roles.
Federal tax administration and revenue: The IRS will cease administering these credits after the effective dates; federal revenue is likely to increase relative to current law projections, though estimates depend on behavioral responses and changed investment patterns.
Timing impacts: Because most repeals apply to activity after Dec 31, 2025, projects, purchases, or placements-in-service completed before that date should remain eligible under prior law; entities planning near‑term projects will weigh deadlines and potential “rush” behaviors ahead of the deadline.
Overall, the legislation removes fiscal incentives designed to accelerate deployment of low‑carbon technologies and energy efficiency. That is likely to slow some private investment in these areas, raise effective costs for clean technologies, and shift market signals for utilities, manufacturers, fuel producers, vehicle buyers, and homeowners. The effects will vary across regions and industries depending on local markets, alternative incentives (state or local), and preexisting contracts or incentive commitments.
Read twice and referred to the Committee on Finance.
Introduced May 13, 2025 by Mike Lee · Last progress May 13, 2025
Energy Freedom Act
Expand sections to see detailed analysis
Read twice and referred to the Committee on Finance.
Introduced in Senate