Although the bill takes a more aggressive approach for phasing out most demand-side credits (30D, 25E, and 45W) – the Senate bill is slightly laxer when it comes to 45X, especially for critical minerals. While current law exempts the critical minerals credit from any phase-out, both the House and Senate propose ending it, with the bill proposing a later sunset through 2033 (as opposed to the House’s termination date of 2031). Further, the House bill, a special rule for the 30D credit would apply only in 2026, allowing vehicles from automakers that have not yet reached the 200,000-vehicle cap to remain eligible. This provision is not included in the Senate bill. Challenges for foreign entities rules remain, as discussed below.
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Proposed annual EV and hybrid registration fees from the House don’t appear in the Senate version – but they may not be dead
The House’s proposed annual registration fees – $250 for electric vehicles and $100 for hybrids – drew attention, with GOP lawmakers defending them as necessary for road network funding. But the Senate bill does not include the fees. House Representatives are publicly stating their intent to push back on this as the package makes its way through the process. According to reporting by E&E News, if the fees aren’t in the final Senate text, House Transportation and Infrastructure Chair Sam Graves (R-Mo) “will attempt to put them back into the budget reconciliation legislation if the House gets the chance to make more changes.”
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Complex foreign entity rules will make manufacturing much harder
Both the House and Senate budget reconciliation bills take a tougher stance on foreign entities of concern (FEOC), with provisions that could significantly affect clean energy manufacturing tax credits like 45X. Experts warn that the proposed rules are too complex and may jeopardize the viability of these incentives, and therefore domestic manufacturing.
The NYU Tax Law Center noted that “as drafted, the rules are exceedingly wide in scope and also unclear in their application – especially with respect to the PTC, the ITC, and the section 45X advanced manufacturing credit. As a result, project developers (including solar, wind, nuclear, geothermal, hydropower, and energy storage) and U.S. manufacturers would find it extremely difficult to determine whether they comply, which could effectively strip away access to these key incentives.”
What’s next? The budget reconciliation process is currently ongoing in the Senate. During “vote-a-rama,” Senators can offer unlimited amendments to the legislation and, with many expected from Democrats especially, this process could drag on. There are some early indications that Republicans may offer some also – see reporting about Lisa Murkowski (AK) today. Still, lawmakers aim to move the bill through the Senate and back to the House for final passage by this Friday, July 4th, 2025 before sending it to President Trump’s desk. Atlas will continue following this process as it plays out.
