Blue Energy Group and Walker Reid Strategies will be merging. Communications will represent both companies during the transition. Read the official announcement
UPDATES
The 2025 tax law, known as the “One Big Beautiful Bill,” resets the outlook for tax planning across energy, real estate, and construction. Many credits from the Inflation Reduction Act are being phased out sooner than expected. Others now carry more complexity due to sourcing rules, ownership restrictions, and long-term compliance requirements.
For ESCOs, architects, developers, engineers, and CPAs, knowing what is still available and aligning project timelines accordingly has become essential.
ENERGY TAX INCENTIVES
- Section 179D (Energy Efficient Commercial Buildings)
The 179D deduction is available for projects that begin construction by June 30, 2026. Tax-exempt building owners can allocate the benefit to eligible designers. For design teams and ESCOs, this is a time-sensitive opportunity. Even if your firm has low current tax liability, capturing and carrying forward this deduction can preserve long-term value. - Section 48 and 48E (Investment Tax Credit)
Solar and wind projects that begin construction before July 4, 2026, are protected under current ITC rules. Projects starting after that date are subject to phase-out schedules. Energy storage, geothermal, and other technologies continue to qualify, but all must now meet sourcing requirements and avoid foreign entity involvement. - Section 30C (EV Charging Infrastructure)
The credit for refueling and charging equipment ends for projects not placed in service by June 30, 2026. This impacts commercial, residential, and multifamily EV installations. - Direct Pay and Credit Transferability
These tools remain available. Tax-exempt entities can use direct pay to receive IRS reimbursement. Taxable entities can still transfer credits. However, both require strict documentation, proper structuring, and sourcing compliance to remain valid. - Prevailing Wage and Apprenticeship (PWA) Requirements
PWA standards remain in effect under the new law. Projects over 1 megawatt must meet prevailing wage and apprenticeship thresholds and maintain compliance tracking for either five or ten years, depending on the technology. Required documentation includes wage records, apprenticeship enrollment, and contractor verification.
Tracking this in real time is essential. Partnering with Walker Reid or Blue Energy early ensures you and your clients preserve the full value of your tax credits. - Section 45L (New Energy Efficient Home Credit)
This credit offers up to 5,000 dollars per unit for eligible energy-efficient home and multifamily projects. It applies only to homes acquired or leased before July 1, 2026. Developers must confirm ENERGY STAR or Zero Energy Ready Home certification to qualify. - MACRS Depreciation for Energy Property
The five-year accelerated depreciation option ends for energy systems that begin construction after December 31, 2024. This affects cash flow modeling for solar, CHP, and geothermal assets. - Section 45X (Advanced Manufacturing Credit)
The credit remains available for domestic production of clean energy components. However, eligibility now excludes entities with foreign ownership or prohibited sourcing. Wind-related components begin to phase out after 2027.
GENERAL BUSINESS INCENTIVES
- Bonus Depreciation
One hundred percent bonus depreciation is now permanent for qualifying property acquired after January 19, 2025. This continues to be a key strategy for asset-based businesses and energy project developers. - Section 179 Expensing
The limit has been raised to 2.5 million dollars with a phaseout beginning at 4 million. This remains a flexible tool for companies seeking to deduct project assets immediately, especially in non-conforming states. - R&D Expensing (Section 174)
Full expensing resumes in 2025. All companies can pull forward amortized expenses from 2022 through 2024 into the 2025 return. Small taxpayers may also amend prior returns if preferred, though many will likely opt for the cleaner forward adjustment.
OPPORTUNITY ZONES
- New Framework and Structure
Opportunity Zones are now part of a permanent program with decennial zone re-selection. The next cycle begins July 1, 2026. States can only designate 25 percent of eligible census tracts, so early positioning is important. - New Deferral Schedule
All post-2026 investments receive a five-year deferral of gain and a 10 percent basis step-up at the five-year mark. The previous seven-year benchmark no longer applies. - Rural Incentives
Projects in rural OZs receive a 30 percent basis step-up and are subject to a 50 percent substantial improvement requirement for existing buildings, making redevelopment and reuse more attractive. - Zone Qualification Tightened
Contiguous tracts have been eliminated, and the total number of qualifying zones is reduced by roughly 22 percent. These changes improve credibility and focus the program on true low-income communities. - Expanded Reporting Begins in 2027
New data requirements will apply to funds and investors beginning with 2027 tax filings. A revised Form 8996 is expected and will likely require additional project-level and impact-level disclosures.
IMPACT
ESCOs and designers should prioritize identifying and launching 179D-eligible projects immediately. Confirm construction start dates and document allocation agreements well in advance. Even if the firm does not need the deduction today, banking the benefit through carryforward preserves future tax flexibility.
Solar and wind developers have until July 4, 2026, to begin construction under current ITC rules. After that, phaseouts and added sourcing restrictions will apply.
EV infrastructure developers must meet the June 30, 2026, placed-in-service deadline to secure Section 30C credits.
PWA compliance tracking must begin early and continue for up to ten years post-construction. Gaps in records or apprenticeship tracking can disqualify credits entirely.
Opportunity Zone stakeholders should begin planning for the 2027 designation map. Engaging with state leadership and modeling project eligibility under the new structure can give investors and developers a strategic head start.
GUIDANCE
(Provided by David Diaz, Managing Partner at Walker Reid, and Josh Howes, CEO of Blue Energy Group)
- Confirm eligibility for 179D and begin construction by June 30, 2026
Capture deductions where possible and carry forward amounts even if they are not immediately needed. Banking these deductions now can shield future income and maximize long-term benefit.
- Schedule solar and storage projects before July 4, 2026
Ensure all project components, design documentation, and sourcing records meet updated ITC and domestic content requirements.
- Establish real-time tracking for prevailing wage and apprenticeship compliance before construction begins
Document wages, apprenticeship ratios, and subcontractor certifications from day one to preserve credit value.
- Prepare to track PWA obligations for five to ten years, depending on the credit and project type
Build long-term compliance into your systems to avoid credit loss due to noncompliance after the placed-in-service year.
- Begin positioning Opportunity Zone projects now, ahead of the 2027 zone redesignation
Coordinate with state leadership early to secure inclusion in the new OZ map and prepare for expanded reporting standards.
CLOSING THOUGHT AND CALL TO ACTION
The 2025 tax law shortens incentive windows and increases documentation requirements, but it also leaves powerful credits in place for firms that are prepared. From 179D and Section 48 to cost segregation and OZs, opportunities remain if timing and compliance are handled correctly.
Walker Reid and Blue Energy are ready to support you. We help developers, CPAs, and engineering teams track PWA compliance, secure energy credits, and stay ahead of IRS documentation requirements. Whether you are navigating current projects or planning for long-term investment strategies, we can help you protect and optimize the value of your tax incentives.
Let’s review your pipeline and make sure your projects are ready to take full advantage of what is still available.