Does the clean energy tax credit package under the Inflation Reduction Act lapse in 2026?
Executive summary
The clean-energy tax credits created by the Inflation Reduction Act (IRA) do not all simply “lapse in 2026”; instead, a post‑2024 GOP law—the One Big Beautiful Bill Act (OBBBA)—accelerated the phase‑out or tightened eligibility for many IRA credits so that a large subset ends by Dec. 31, 2025 or requires construction or acquisition by mid‑2026, while other major provisions and some bonus incentives remain in place through later dates set by the IRA (including through 2032/2033 for certain residential and investment credits) [1] [2] [3] [4].
1. Why the confusion: two laws, overlapping timelines
The IRA originally extended numerous production and investment tax credits and expanded residential credits with multi‑year horizons—some provisions explicitly tied to 2032 or 2033 for systems or property placed in service (e.g., residential credits) [3] [4]. Congress’s later passage of the One Big Beautiful Bill Act then rescinded or accelerated many of those IRA timelines, creating a patchwork of deadlines (some ending Dec. 31, 2025, some requiring construction starts or acquisition by mid‑2026), which explains why reporting about “expiry in 2025,” “lapse in 2026,” and “still in force through 2032” can all be true about different credits [1] [5] [2].
2. What specifically was accelerated or cut back
OBBBA moved many household and small‑project breaks to much earlier sunsets: for example, several residential and home‑improvement credits and other household incentives that the IRA expanded were made unavailable after December 31, 2025 or for property placed in service after June 30, 2026, depending on the credit [1] [6] [2]. Certain developer and home‑acquisition credits were made available only for homes acquired by June 30, 2026, and other incentives (like credits tied to construction start) now require work to begin by June 30, 2026 to preserve benefits, shifting timelines that the IRA had set later [2] [5] [7].
3. What survives beyond 2026 and how it’s altered
Not all IRA provisions were eliminated: major business‑focused credits, the revamped production and investment tax credit frameworks, and many manufacturing and community bonus structures remain in statute though some eligibility rules and bonus criteria (prevailing wage, domestic content, foreign‑entity restrictions) were tightened or shifted with determinations pegged to taxable years beginning Jan. 1, 2026 [8] [9] [10]. The EPA’s post‑implementation summary still lists many credits available for equipment placed in service through December 31, 2032 (for example, direct pay and transfer options for ITC/PTC replacements), underscoring that some IRA architecture remains intact for projects meeting the updated criteria [3].
4. Political and practical stakes behind the rewrite
The legislative overhaul reflects clear political priorities: proponents framed OBBBA as rolling back costly subsidies and reshaping incentives; defenders of the IRA argue that accelerated sunsets undercut climate and manufacturing goals and inject market uncertainty [10] [8]. Legal and accounting advisers warned that the patchwork of deadlines—some based on placed‑in‑service dates, some on construction starts, and some on acquisition—creates complexity for developers, homeowners, and manufacturers who must now rush projects or reassess finance and tax planning [9] [5].
5. Bottom line — direct answer
No single, blanket “clean energy tax credit package” simply lapses across the board in 2026; rather, OBBBA moved many popular residential and small‑scale credits to expire by Dec. 31, 2025 or to require construction/acquisition by mid‑2026, while larger IRA credits and many program structures continue past 2026 subject to revised eligibility and bonus rules with some elements explicitly lasting into the 2030s [1] [2] [3]. For any specific project or credit, the exact cutoff matters—reporting and agency guidance differ by credit type—so the broad answer is that many credits were accelerated to end around 2025–mid‑2026, but significant IRA tax incentives were not entirely repealed and still exist under new constraints [1] [3] [9].