Senate GOP Bill Revises Energy Credits, SALT Cap, and EV Incentives in Tax Overhaul
Key Insights
The Senate GOP's revised tax bill raises the SALT cap to $40,000 for five years, addressing concerns from high-tax state Republicans.
Hydrogen energy credits gain a two-year extension, pushing the phase-out to 2027, while wind and solar project credits face accelerated deadlines.
Electric vehicle purchase credits will end by September, earlier than previously proposed, impacting consumer and commercial EV adoption.
The bill's deficit impact remains contentious, with traditional scoring methods projecting trillions in added debt, despite GOP's alternative accounting claims.
The Senate GOP's latest tax bill, unveiled ahead of a critical weekend vote, introduces significant revisions to energy credits, state and local tax (SALT) deductions, and electric vehicle (EV) incentives. The legislation, which still awaits final parliamentary approval, aims to reconcile differences between House and Senate versions while addressing political and industry pressures.
Key changes include raising the SALT deduction cap to $40,000 for five years, a move designed to secure support from House Republicans in high-tax states like New York and California. The cap will revert to $10,000 after 2027. Additionally, restrictions on SALT cap workarounds for passthrough businesses were removed, easing concerns among small business owners.
In the energy sector, hydrogen production credits received a two-year reprieve, extending the phase-out deadline to the end of 2027. This adjustment aligns with industry calls for longer-term support to scale hydrogen infrastructure. However, wind and solar projects face accelerated credit deadlines, now requiring projects to be operational by 2027—a shift attributed to political pushback. The bill also eliminates EV purchase credits by September, earlier than initially proposed, raising concerns about slowing EV adoption rates.
Deficit projections remain a flashpoint, with traditional scoring methods estimating trillions in added debt. Republicans have promoted alternative accounting to mitigate these figures, but budget watchdogs dismiss the approach as misleading. The bill's revenue losses could further escalate pending rulings from the Senate parliamentarian on allowable offsets.
Industry reactions have been mixed. Hydrogen advocates welcomed the credit extension, while renewable energy groups criticized the shortened timelines for wind and solar incentives. Automakers and EV proponents expressed disappointment over the abrupt end to purchase credits, which could dampen consumer demand. The bill's final passage hinges on navigating a contentious amendment process and securing House approval by July 4.