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The "One Big Beautiful Bill Act" (P.L. No. 119-21, OBBBA) eliminated the IRC Section 45Y and 48E credits for wind and solar projects placed in service after December 31, 2027, except for projects for which construction begins within 12 months of July 4, 2025.
Following the legislation's enactment, President Trump issued an Executive Order on July 7, 2025, in which the Department of Treasury was directed, within 45 days of the OBBBA's enactment, to issue guidance to assure policies around the "beginning of construction" are not circumvented and to restrict the use of broad safe harbors unless a "substantial portion of a subject facility has been built."
Previously, to establish the beginning of construction, taxpayers could demonstrate that construction has begun by either: (1) starting "physical work of a significant nature" (the physical work test) or (2) paying or incurring 5% or more of the total cost of the facility (the 5% safe harbor test). In addition, taxpayers had to demonstrate either continuous construction or continuous efforts (the continuity requirement).