While the ruling is a win for renewable energy supporters, it comes less than a month before a key deadline to phase out the credits entirely under Republicans’ “Big Beautiful Bill,” so it’s unclear how wide-reaching the decision will be.
Last year’s One Big Beautiful Bill Act phased out tax credits for solar and wind energy, saying projects can only get them if they start construction before July 5, 2026 or are placed in service before 2028.
At issue in the case is the Internal Revenue Service (IRS) definition of starting construction.
D.C. federal Judge Colleen Kollar-Kotelly wrote that since 2013, the IRS has recognized two ways that projects can begin: by starting “physical work of a significant nature” or by incurring costs of five percent or more of a project’s total cost.
The Trump administration’s guidance for the green tax credits only includes the “physical work” pathway and excludes the five percent pathway.
Striking down the Trump guidance, Kollar-Kotelly, a Clinton appointee, wrote that the exclusion of projects that have incurred five percent of their costs was arbitrary and capricious.
But Kollar-Kotelly noted in her ruling that because of the impending July construction deadline, renewable developers still may not have all the information they need to decide whether to invest in wind and solar projects.
“Unfortunately, significant uncertainty will exist no matter how this Court resolves this case and what remedy it awards,” she wrote.
Read more at TheHill.com.
