Federal Policy Impacts on Housing and Energy Efficiency
Recently Congress has passed a large spending bill using reconciliation. This package puts into law many of the priorities of the current administration, including removal of many of the clean energy programs and investments in the Inflation Reduction Act (IRA). This summary highlights impacts specifically to the housing industry.
Federal Affordable Housing Policy
Included in the bill is an expansion of the 9% Low Income Housing Tax Credit (LIHTC), which includes a permanent 12% LIHTC allocation increase beginning in 2026 and lowers the bond financing threshold test from 50% to 25% for 4% bond transactions. Growth in LIHTC is a strong signal for continued affordable housing development.
https://www.housingfinance.com/policy-legislation/house-passes-sweeping-bill-with-lihtc-provisions
Clean Energy Program Rollbacks
The bill has an entire section titled “Termination of Green New Deal Subsidies,” which rolls back nearly all major clean energy funding and investments in the clean energy space. Some impacts:
Energy Efficient Homes Tax Credit (45L)
Amended expiration date as follows:
45L shall not apply to any qualified new energy efficient homes acquired after June 30, 2026.
The program had previously been available until 2033, incentivizing Energy Star and DOE Zero Energy Ready units, and will now expire mid-next year based on date of completion.
Active Project Impacts: Projects with acquisition dates (date of turnover from GC to owner) prior to June 30, 2026 can still claim the credit. SCI can continue to provide program certificates at project completion to submit for their 45L tax credits.
New Projects: Anything in design or earlier will no longer be complete within the time frame and should not rely on the 45L tax credit.
Residential Clean Energy Credit (25D)
The Residential Clean Energy Credit provides a 30% tax credit for residential solar, wind, geothermal, and battery storage technology for single-family residential. The program termination date has been updated to read:
The credit allowed under this section shall not apply with respect to any expenditures made after December 31, 2025.
This credit previously was available for all installations prior to 2034, with a scaling down in 2034–2035. This means any homeowner seeking tax credits must pay for systems in 2025, which could lead to a drastic change to the residential solar market for the next decade. Solar is still set to be the cheapest form of energy, but homeowners may not be as incentivized to install systems.
Investment Tax Credit (48E and 45Y)
These credits are for clean energy investments including solar, wind, geothermal, energy storage, etc., and are used for multifamily housing projects. There are new termination dates for solar and wind specifically.
Section 48E (Clean Electricity Investment Credit)
These credits shall not apply to any wind and solar facility placed in service after December 31, 2027. However, projects where beginning of construction occurs prior to July 4, 2026 are eligible for the credits even if placed in service after December 31, 2027.
There are also new restrictions around foreign content, with an increase in the percentage of domestic content required to claim the credits from 40%–55% depending on the date of beginning of construction. Additionally, as part of concessions to adopt this legislation, the executive branch will seek to strictly enforce the termination clauses and has already issued an executive order to make wind and solar development more difficult. Any restrictions on start of construction, using materials from foreign entities, and placed-in-service date should be monitored for updates:
https://www.whitehouse.gov/presidential-actions/2025/07/ending-market-distorting-subsidies-forunreliable-foreign%e2%80%91controlled-energy-sources
According to many sources, these credits are still available for other technologies that are not wind and solar, including geothermal until 2032, phasing down until 2036. However, they should be tracked for the inclusion of materials from foreign entities.
Federal Grant/Rebate Programs: HEAR, HER, GGRF
The IRA included many rebate/grant programs for low-carbon equipment. Most impacts are still unknown as state agencies roll out these programs:
• Greenhouse Gas Reduction Fund (GGRF) – Seems to be fully repealed and rescinds funds.
• Home Efficiency Rebate (HER) and Home Electrification Appliance Rebates (HEAR) – Potentially still available but are implemented through existing state agency programs.
• Energy Efficient Home Improvement Credit (25C) – Terminates for anything placed in service after December 31, 2025.
EPA Energy Star and DOE Government Agency Impacts
Reporting earlier this year indicated several programs may be terminated or lose funding, including EPA Energy Star, DOE Zero Energy Ready Homes, EPA Indoor AirPLUS, and EPA Energy Star Portfolio Manager Benchmarking. All programs currently remain available, and while we have no current updates on these programs, we will continue to monitor any program changes.
We will monitor any actions and update accordingly. Any questions or discussion, feel free to reach out!
info@greenrater.com | @scigreenrater