Senate Passes H.R. 1: Energy Tax Credits and Municipal Bond Protections Remain Intact

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On July 1, 2025, the U.S. Senate passed the One Big Beautiful Bill Act (H.R. 1), preserving key provisions for the energy and public power sectors. Despite earlier drafts proposing changes, the final bill:

  • Maintains elective payment eligibility for energy tax credits.
  • Preserves the tax exclusion for municipal bonds, a win for public power utilities.

Thanks to advocacy from the American Public Power Association (APPA) and allies, a proposed repeal of the domestic content exception for elective payments was dropped.

The bill also:

  • Phases out investment and production tax credits (ITC/PTC) for wind and solar after 2027, but offers relief for projects already underway.
  • Delays enforcement of foreign entity of concern (FEOC) rules that could affect credit eligibility.
  • Raises concerns about PAYGO sequestration, which could impact federal payments unless Congress acts to waive it.

If passed by the House, President Trump has pledged to sign it into law.

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