Senate Finance Committee Releases Budget Reconciliation Draft Text

On June 16, 2025, the Senate Committee on Finance released proposed revisions to IRA tax credits as part of the budget reconciliation process. The Committee proposed to eliminate section 25E, 30C, 30D and 45W clean vehicle credits, section 25C and 45L energy efficiency home credits, section 25D residential clean energy credits, section 179D energy efficient building deductions and section 45V clean hydrogen production credits. The Committee proposed to phase out section 45Y clean energy production credits, section 48E clean electricity investment credits and section 45X manufacturing production credits, with substantial restrictions for energy projects funded by covered foreign entities. The Committee also proposed to amend the section 45Z clean fuel production credit by extending availability to 2031, restricting credit for foreign feedstocks, removing consideration of indirect land use in greenhouse gas emissions calculations and phasing out the Inflation Reduction Act’s sustainable aviation fuel credit. The Committee proposed to restrict foreign entities’ access to section 45Q carbon oxide sequestration credits. The proposal will be subject to further congressional negotiations.