Trump initially ordered a pause on IRA funding—what does it mean for solar?
The future of clean energy incentives is unclear.
President Donald Trump was sworn into office on Jan 20, 2025 and got right to work, passing 26 executive orders in his first few weeks. At least three have renewable energy impacts: withdrawing from The Paris Agreement, a temporary halt on offshore wind projects, and the “Unleashing American Energy” order. The last one could impact energy-conscious homeowners, as it called for a pause on funding for the Inflation Reduction Act (IRA) and eliminating the electric vehicle (EV) mandate, among other actions.
The Trump administration's executive orders leave more questions than answers when it comes to energy policy. In the weeks since they were signed, legal challenges have been filed in several states, so there’s a strong possibility these executive orders will be struck down in court. Let’s dive into what the new executive orders could mean and how they might impact your home and wallet.
Key takeaways
If you install solar panels in 2025, you should likely still be able to claim the federal solar tax credit (ITC), but it’s too early to know exactly how the ITC will be impacted.
If you made clean energy upgrades in 2024 that qualified for tax incentives, as of now you should still receive those benefits this year.
Despite these executive orders, President Trump has spoken favorably about solar in the past and many Republican districts have benefited from the IRA in the form of clean energy jobs.
Not necessarily, and not immediately. It’s illegal for a president to refuse to spend funds that Congress has already approved, according to the Conservation Law Foundation. Technically speaking, President Trump has put a 90-day hold on distributing IRA funds. There are a lot of hoops his administration would need to jump through to dismantle the IRA and eliminate the ITC—especially given that many congressional Republicans approve of it.
As of now, if you made clean energy upgrades (installed solar panels, bought an EV, installed a qualifying energy-efficient appliance, etc.) in 2024, you should still receive your incentive when you file your taxes for the 2024 tax year.
If you’re making clean energy upgrades this year, it’s unclear what the executive order may mean for you. A full repeal of all the IRA incentives remains unlikely because, again, it would have to go through Congress, and politicians from both sides of the aisle support many aspects of the existing policy.
There's no way to know for sure just yet, but it's likely that any material change to the ITC would not take effect until 2026. While there’s no guarantee, if you’re planning to install solar panels in 2025, there’s a decent chance that you’ll still be able to claim the ITC.
The good news is that while President Trump’s executive actions directly went after wind energy and electric vehicles, there’s been little to no mention of solar power. While he’s had some negative things to say about solar farms, the president has spoken in favor of rooftop panels.
“I’m a big fan of solar,” Trump said at September’s presidential debate.
The executive order stipulates a pause in the distribution of funding for the IRA, which includes federal incentives for solar. However, it’s unclear what, if any, solar incentives will be impacted as of now. In the executive order, “Declaring a National Energy Emergency,” solar wasn’t defined as an energy resource. Most fossil fuels, oil, gas, and petroleum products were, as well as geothermal heat and hydropower.
In September, Trump vowed to "...rescind all unspent funds under the misnamed Inflation Reduction Act." which may be more posturing than policy. He also repeatedly supported lifting limits on domestic oil and gas production, promising to "drill, baby, drill," which he mentioned again in his inaugural address.
The IRA, signed into law by former President Joe Biden in 2022, created various clean energy incentives for homeowners, including:
Federal residential solar energy credit (aka the investment tax credit, or ITC): A tax credit equal to 30% of your solar panel system and/or battery storage system cost. It's currently set to start phasing out in 2033 and expire in 2035.
Energy Efficient Home Improvement Credit: A tax credit of 30%, up to $2,000, annually toward your federal tax bill if you make certain energy-efficient home upgrades. Heat pumps, heat pump water heaters, air sealing, home energy audits, and electrical upgrades all qualify.
Clean Vehicle Tax Credit (aka the EV tax credit): A tax credit worth up to $7,500 if you purchase a new electric vehicle (must meet income and EV domestic manufacturing criteria to qualify). It also includes a tax credit of up to $4,000 for used EV purchases.
High-Efficiency Electric Home Rebates: Funds for state rebate programs covering specific energy-efficient home upgrades. You need to meet certain income criteria to qualify. (Some funds have already been distributed to states, which will likely remain protected even under President Trump).
Financial incentives for homeowners who install solar panels date back to the Energy Act of 2005, signed into law by then-President George W. Bush. The act created a version of the federal solar energy tax credit.
If you were considering buying an EV to capitalize on a federal tax credit, that ship may have sailed.
The Trump administration’s new order will no longer incentivize people to buy EVs, stating in Section 2 that its goal is “to eliminate the EV mandate” and eliminate “unfair subsidies and other ill-conceived government-imposed market distortions that favor EVs over other technologies…”
The executive order doubles down in Section 7 by specifically calling to remove IRA funds for electric vehicle charging stations, but the language around the “EV mandate” is a little murky. On Monday, Trump said:
“With my actions today, we will end the Green New Deal, and we will revoke the electric vehicle mandate, saving our auto industry and keeping my sacred pledge to our great American autoworkers…In other words, you'll be able to buy the car of your choice.”
To clarify, there’s never been a federal requirement for Americans to drive EVs.Biden-era rules established pollution standards for automakers for new car models between 2027 and 2032. The new cars included “advanced gasoline vehicles" along with other hybrid and electric options.
As of right now, think of everything on a 90-day pause. We’ll be watching closely to see what federal incentive changes are coming to solar and other clean energy upgrades. Again, a full IRA repeal is unlikely given its bipartisan support (read more on that here). And while President Trump wasted no time putting these executive orders out, there’s a long way to go before anything mentioned in these orders becomes law.
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