Internal Revenue Service Issues Answers to Section 45Z Questions
Tax Development
On August 21, 2025, the Internal Revenue Service (IRS) issued Fact Sheet 2025-05 to provide answers to frequently asked questions (FAQs) related to a series of green energy incentives from electric vehicles (EVs) and EV infrastructure to the energy-efficiency incentives.
Reminder on Upcoming Termination Dates
The fact sheet details the upcoming expiration dates of several energy credits and deduction provisions as follows:
Code Section | Section Title | Termination Date |
30C | Alternative fuel vehicle refueling property credit | The credit will not be allowed for any property placed in service after June 30, 2026. |
30D | New clean vehicle credit | The credit will not be allowed for any vehicle acquired after September 30, 2025. |
45L | New energy efficient home credit | The credit will not be allowed for any qualified new energy efficient home acquired after June 30, 2026. |
45W | Qualified commercial clean vehicle credit | The credit will not be allowed for any vehicle acquired after September 30, 2025. |
179D | Energy efficient commercial buildings deduction | The deduction will not be allowed with respect to any property for which the construction begins after June 30, 2026. |
Clarification for EV Vehicles
For purposes of clean vehicle credits, a vehicle is considered “acquired” as of the date a written binding contract is entered into and a payment has been made. A payment could be nominal or a vehicle trade-in. Acquisition alone does not satisfy clean vehicle credit requirements. The vehicle must also be placed in service before claiming the tax credit. The placed in-service date can be after September 30, 2025, if the vehicle is under written contract by that date.
Further, an election to transfer clean vehicle credit must be made at the time of the sale. The Energy Credits Online Portal will close to new registrants on September 30, 2025, with limited access for previously registered users.
What Is Missing?
While the FAQs restate the upcoming termination, it failed to address anything related to the energy-efficiency tax incentives like § 179D and § 45L. While they took the time to define “acquire” or “placed-in-service” for the electronic vehicles, they did not address what it meant to begin construction or define “beginning of construction” or “BOC” in this context. The newest IRS Notice 2025-42 defines BOC in the context of §§ 45Y and 48E for solar and wind facilities leveraging the old §§ 45 and 48 energy property BOC standard going back to IRS Notice 2013-29. Major commercial developers still lack any guidance on whether the standard from an energy property will apply to buildings, hoping to safe harbor or obtain BOC before the quickly upcoming July 4, 2026 deadline.
Takeaway
It is important to act quickly to ensure qualification for the clean energy credits expiring shortly. Please move up your projects and purchases as soon as possible. We can assist you in both understanding and meeting the requirements for these valuable credits before they expire.
The material presented in this communication is intended to provide general information only and should solely be seen as broad guidance and not directed to the particular facts or circumstances of any individual who may read this publication. No liability is accepted for acts or omissions taken in reliance upon the content of this piece. Before taking (or not taking) any action, readers should seek professional advice specific to their situation from Ryan, LLC or other tax professionals.
