The One Big Beautiful Bill Act, signed into law on July 4, 2025, by President Donald Trump, delivers sweeping changes to the U.S. tax code, with major implications for businesses — particularly regarding solar and wind tax credits, opportunity zones, and the New Markets Tax Credit (NMTC) program.
While the nearly 900-page bill makes permanent certain tax benefits institutional investors, real estate developers, and others with capital gains have been able to reap over the past several years, it also phases out other benefits within the next two years.
We expect deal activity to increase in the coming months as solar and wind tax credits, opportunity zones, and New Markets Tax Credits all remain available — for the time being. Now is the time for investors, developers, and others to act, particularly in the wind and solar space as tax credits will disappear, as we detail below.
Wind and Solar Tax Credits
Under the Inflation Reduction Act, developers of wind and solar projects had a long runway — through 2032 — to participate and qualify for investment tax credits. The One Big Beautiful Bill Act significantly alters this timeline.
The bill terminates tax credits for wind and solar energy projects placed in service after December 31, 2027, unless construction on the project began one year from the bill’s signing — July 4, 2026. The White House issued an executive order on July 7 for the U.S. Department of Treasury to issue guidance within 45 days to "strictly enforce" the termination of the clean electricity production and investment tax credits under sections 45Y and 48E of the Internal Revenue Code for wind and solar facilities. The executive order specifically notes that such guidance should ensure that the "beginning of construction" rules are not circumvented.
Because of the bill’s modifications, we expect there to be a rush by developers and others to start projects and engage with contractors to meet the construction criteria and qualify for the tax credits.
The bill also eliminates another attractive incentive for developers of wind and solar projects. It removes accelerated depreciation, which is the deductions taxpayers can take by reducing the cost basis of a solar or wind facility until it hits zero, offsetting the taxpayers' income.
Opportunity Zones
The federal Opportunity Zone program is almost a decade old, and until earlier this month, faced a looming deadline to sunset at the end of 2026.
Trump’s tax bill permanently extends the program, which had first been created as part of the 2017 Tax Cuts and Jobs Act to allow taxpayers with capital gains to benefit under the Qualified Opportunity Zone (QOZ) program. The program has provided investors a tax incentive by deferring capital gains tax on realized amounts from a sale of property for five years, to the extent the capital gains are invested in a Qualified Opportunity Fund (QOF). The QOF in turn invests in businesses or property within a low-income community designated as a QOZ, helping to spur investment in economically distressed communities.
Under the bill signed this month, taxpayers that invest in a QOF and hold the investment for five years will see 10% of their capital gains eliminated. Taxpayers that invest in a Qualified Rural Opportunity Fund and hold the investment for five years will see 30% of their capital gains eliminated. This will be an important distinction because the rural census tracts will come with greater incentives, which is a new benefit compared to the 2017 act. In either case, taxpayers that hold the investment for 10 years will have no capital gain on further appreciation in the value of the investment following the end of the five-year deferral period.
It is expected that the program will continue to be a major incentive to attract investment into low-income and rural communities. In the coming weeks and months, investors can expect to see governors in each state designate new opportunity zones in low-income communities, with a portion of those designated as rural.
The bill also creates new reporting requirements for QOFs.
New Markets Tax Credit Program
Like opportunity zones, the One Big Beautiful Bill Act permanently extends the New Markets Tax Credit program. The program, which allows qualifying businesses, both for-profit and nonprofit, to finance or reimburse eligible expenditures on a highly subsidized basis, was set to expire at the end of this year.
Instead, the bill extends an annual $5 billion federal allocation permanently. Otherwise, this program saw no significant changes.
For more information, please contact us or your regular Parker Poe contact. Click here to subscribe to our latest alerts and insights.