The Trump administration has issued updated guidance narrowing the eligibility criteria for clean energy tax credits introduced under the Biden administration, requiring developers to begin physical construction on renewable projects by July 6, 2026, in order to qualify.
The changes come as part of the “One Big Beautiful Bill Act” and replace the previous standard, which allowed developers to qualify by incurring at least 5% of a project’s capital costs.
According to the new guidance, eligibility now hinges on the commencement of significant physical work, rather than financial expenditure. “The test focuses on the nature of the work performed, not the amount or the cost,” the Treasury guidance states. It adds: “Provided that physical work performed is of a significant nature, there is no fixed minimum amount of work or monetary or percentage threshold required to satisfy the Physical Work Test.”
The shift in requirements may impact planning timelines and financial structuring for wind and solar developers aiming to secure federal tax benefits.
Industry representatives have raised concerns over the revised timeline. Jason Grumet, CEO of the American Clean Power Association, said the decision could destabilize clean energy development. “The Treasury Department’s decision to accelerate the phase out of clean energy tax credits undermines the integrity of our energy grid and our legislative process,” Grumet said.
The guidance is expected to affect a range of projects currently in development and may prompt a reassessment of investment strategies across the renewable energy sector.
