What's in H.R. 1 and Why it Could Matter for Your Next Energy Project

As the federal government works through a high-stakes budget season, a bill known as the One Big Beautiful Bill Act, or H.R. 1 — recently passed by the U.S. House of Representatives — has put future energy incentives in the spotlight. While the bill’s path to becoming law remains uncertain, it includes significant proposed changes to key clean energy tax credits that could impact how Minnesota businesses plan and finance building upgrades. 

This post outlines the current legislative landscape, major provisions in H.R. 1 related to energy tax credits, and what commercial property stakeholders should monitor as Congress moves forward. 

What is H.R. 1 and Where Does it Stand?

The One Big Beautiful Bill Act (H.R. 1) is a sweeping legislative package that reduces or increases spending for various federal programs, increases the statutory debt limit, and more. Notably, it includes significant changes to federal energy tax credits and has drawn attention for its efforts to scale back or revise provisions established under the Inflation Reduction Act. 

After narrowly passing the House by a one-vote margin, the bill now moves to the Senate. While several senators have indicated they won’t support H.R. 1 in its current form, negotiations are ongoing. If the Senate amends the bill, it must return to the House for further approval — or proceed to a conference committee to reconcile differences between the chambers. 

Adding urgency to the timeline is the federal debt ceiling. The U.S. reached its borrowing limit in January 2025, and the Treasury is allowed to use “extraordinary measures” to prevent a default. However, those measures are projected to run out by mid-August 2025, creating pressure for lawmakers to reach an agreement before the summer recess that typically occurs in August. 

What's at Stake for Energy Tax Credits?

The bill proposes several revisions to federal energy credits established under the Inflation Reduction Act (IRA). While some credits remain largely intact, others face more immediate or restrictive timelines for eligibility. Here's a high-level summary of key provisions relevant to commercial energy projects: 

EV Charging

• Repealed after Dec. 31, 2025, and projects must be placed in service by then

• What this would mean: Complete all EV charging projects before the deadline to receive credit

Clean Hydrogen

• Repealed after Dec. 31, 2025, and projects must be placed in service by then

• What this would mean: Given the scope and cost of such projects, new projects are not likely to receive credit

Advanced Manufacturing

Advanced Manufacturing credits subsidize the U.S. production of solar, wind, and battery components; inverters; and critical minerals. 

• Phases out at the end of 2031, but wind manufacturing phases out by end of 2027 

• Adds Foreign Entity of Concern (FEOC) restrictions 

• Limits 6418 transfers

• What this would mean: Potential to lose credit eligibility if any project component comes from a FEOC and limits the ability for credits to be sold via transfer

Carbon Sequestration

• Adds FEOC restrictions 

• What this would mean: Potential to lose credit eligibility if any project component comes from a FEOC

Ground / H20 Source Heat

• Phases out after Dec. 31, 2032, and projects must be placed in service  

• To be eligible for Investment Tax Credit transfers, projects must begin construction within two years of bill enactment 

• Adds FEOC restrictions 

• What this would mean: Finish projects by end of 2032, begin construction of new projects within two years of bill passage to access ITC, potential to lose credit eligibility if any project component comes from a FEOC

Clean Electricity ITC

• Projects must begin construction within 60 days of bill enactment 

• Projects must be placed in service by Dec. 31, 2028 

• Adds FEOC restrictions

• What this would mean: To qualify for these credits, projects must begin within 60 days of bill enactment and be completed by the end of 2028 

Nuclear Power Zero Emissions & Clean Fuels Production

• Both extended to 2031

• Adds FEOC restrictions

• What this would mean: Longer runway to qualify for credits, but tighter restrictions on materials used

Residential HVAC Efficiency

• Energy Efficient Home Improvement Credit, Residential Clean Energy Credit, and credits for energy-efficient new builds all phase out by Dec. 31 2025

• More information on these cuts are available here.

These proposed changes are not yet law, but given the complexity of the reconciliation process, it’s important for stakeholders to stay informed. 

The Senate has signaled it may revise HR 1, and final legislation could look very different. However, timelines are tight, and many energy advocates are encouraging outreach and education — particularly to Senate offices — as lawmakers shape what could be the next chapter of U.S. energy tax policy.