A new House Republican draft bill aims to roll back major provisions of the landmark Inflation Reduction Act, including electric vehicle tax credits and clean energy incentives, potentially disrupting billions in private investment and jobs across the U.S.
Republican leaders on the House Ways and Means Committee have unveiled a draft bill seeking to undo core elements of the 2022 Inflation Reduction Act (IRA), a law credited with sparking a surge in U.S. clean energy investment and job creation. The proposed legislation targets popular measures such as electric vehicle (EV) tax credits, clean energy production incentives, and advanced manufacturing support.
Under the “expected” column: Electric vehicle tax credits and the ability to transfer tax credits for clean energy production from one organization to another.
The EV tax credit gives consumers up to a $7,500 tax credit on the purchase of an EV; the bill proposes ending the credit in 2026 and reinstating a cap of 200,000 vehicles per manufacturer. Several companies, including Tesla, GM, and Toyota, hit that cap years ago.
The transferability clause has spurred an entirely new market, with over $30 billion worth of deals happening in 2024 alone. The provision allows companies and other organizations to take advantage of IRA tax credits even if they have no tax liability. A church, for example, can install solar panels and sell the tax credits to companies that can make use of the incentives.
Since its passage, the IRA has driven over $275 billion in private investments in renewable energy, battery storage, carbon capture, and electric vehicles. Despite this economic momentum, the House GOP plan would end EV tax credits by 2026 and reinstate a cap of 200,000 vehicles per manufacturer — a ceiling already surpassed by automakers like Tesla, GM, and Toyota.
Under the “unexpected” column, the bill also seeks to eliminate tax credits for nuclear energy production, a sector traditionally favored by Republican lawmakers. Additionally, it would reduce incentives for carbon capture technologies, a tool backed by large oil companies, and strip tax-exempt status from environmental groups deemed to have “supported terrorist organizations.”
However, incentives for sustainable aviation fuels and bonus credits for clean energy producers appear to be spared, at least in this draft. Importantly, the bill does not propose clawing back funds already spent under the IRA, but it would accelerate deadlines for qualifying large projects.
While the bill marks a significant policy shift, none of this is set in stone. The reconciliation process, which allows budget-related legislation to advance with a simple majority, faces hurdles as repealing the IRA could contradict its revenue-raising requirements. Furthermore, bipartisan support may falter as many Republican districts have directly benefited from the IRA’s investments.
Lobbyists, clean energy advocates, and business groups are gearing up for a tough legislative battle, signaling a contentious fight ahead as the future of U.S. climate and industrial policy hangs in the balance.
