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US Senate Drops Excise Tax on Wind and Solar in Reconciliation Bill; Full ITC/PTC Preserved for 12-Month Window

The United States Senate has approved a revised budget reconciliation bill that removes a proposed excise tax on wind and solar projects, originally set to impact new projects receiving assistance from prohibited foreign entities. The earlier version proposed a 50% tax on solar and 30% on wind installations commissioned after December 31, 2027, but this clause has been eliminated.

Material assistance restrictions, however, will still apply to projects starting construction after December 31, 2025. Importantly, utility-scale wind and solar projects that break ground within 12 months of the bill’s enactment will remain eligible for full federal incentives—namely the Section 48E Investment Tax Credit (ITC) and Section 45Y Production Tax Credit (PTC). Projects starting after this grace period must be commissioned by 2027 to qualify.

The bill also introduces a gradual phase-out of manufacturing credits: critical mineral credits will reduce from 75% in 2031 to zero by 2034, and credits for wind components will end after 2027.

The legislation narrowly passed the Senate by a 51–50 vote, with Vice President J.D. Vance casting the tie-breaking vote. It now returns to the House of Representatives. If passed without amendments, it will go to President Donald Trump for final approval.