The U.S. Treasury Department has issued new guidance tightening eligibility criteria for federal tax credits on wind and solar projects, as part of the current administration’s effort to phase out certain renewable energy subsidies.
The updated rules eliminate the “5% safe harbor” provision, which previously allowed large-scale developers to qualify for credits by investing just 5% of a project’s capital costs. Under the new guidelines, developers must now begin physical construction on-site by 6 July 2026, and complete projects within four years to remain eligible. The safe harbor provision continues to apply only to rooftop and small-scale solar installations.
These changes respond to an executive order issued by the U.S. government in July 2025, directing the Treasury Department to restrict tax credit eligibility unless a substantial portion of a facility is physically built.
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