The House on May 22 passed H.R. 1, the One Big Beautiful Act of 2025, budget reconciliation legislation that would extend $5.4 trillion worth of expiring tax cuts from the Tax Cuts and Jobs Act of 2017, including business tax provisions.
Another roughly $300 billion would provide for priorities President Trump identified during his presidential campaign, such as no taxes on tips, no taxes on overtime, and no taxes on car loan interest.
These revenue losses would be offset in part by continuing to limit the deductibility of state and local taxes and also with an accelerated repeal of energy tax credits.
On the largely party-line vote, just Reps. Tom Massie (R-KY) and Warren Davidson (R-OH) joined Democrats in voting against the measure. Rep. Andy Harris (R-MD) voted present and Reps. Andrew Garbarino (R-NY) and David Schweikert (R-AZ) did not vote. No Democrats voted in favor of the measure.
The bill leaves intact the ability to claim energy tax credits via elective payment and does not alter the tax treatment of municipal bond interest. Both are APPA’s top tax legislative priorities for the 119th Congress.
The tax title of the bill was released last Monday and approved by the House Committee on Ways and Means last Wednesday. The House Budget Committee incorporated the tax title into the broader reconciliation bill and passed it Sunday night. Then, the House Committee on Rules deliberated for nearly 24 hours yesterday as Republican leaders hammered out a final agreement which cleared the way for this morning’s vote.
The measure next heads to the Senate which is expected to substantially modify the bill’s tax title.
Last minute changes to the bill further accelerate the repeal of certain energy tax credits, but also increase a cap on the deductibility of state and local taxes.
These changes are embodied in a “manager’s amendment” to the bill approved by the House Committee on Rules late last night. The text of the manager’s amendment can be found here.
The text of the bill, now numbered H.R. 1, and a Rules Committee print which made further “technical” changes to the bill can be found here.
The initial draft of the reconciliation bill would generally have begun phasing out energy tax credits for projects placed in service after 2028.
Under the manager’s amendment approved by the Rules Committee and incorporated into the bill approved by the House this morning, the section 45Y production tax credit and section 48E investment tax credit would simply be repealed for projects placed in service after 2028. Additionally, no credit would be available for any project construction of which begins more than 60 days after the date of enactment.
An exception to this accelerated repeal would apply to advanced nuclear facilities. Under the manager’s amendment, for an advanced nuclear facility, no PTC or ITC would be allowed for a facility construction of which begins after 2028. Additionally, under the manager’s amendment, the reconciliation bill’s phaseout of the section 45U existing nuclear tax credit is replaced instead with a sunset of the credit for taxable years beginning after 2031.
Additionally, under the manager’s amendment, provisions intended to prohibit energy tax credits for projects connected to foreign entities of concern (FEOC) would take effect on January 1, 2026, rather than one year after the date of enactment.
The FEOC requirements relate to project owners, suppliers, contractors, lenders, and other service providers, and to project materials that are produced, sold, or predominantly manufactured by an FEOC.
APPA said it continues to review the FEOC requirements, which appear extremely challenging from a compliance standpoint, and could be modified in the Senate.
The manager’s amendment included no other changes to the underlying bill of particular concern to public power.
