IRS Says Energy Tax Credits for 2025 Will Remain Despite Effort to End Such Credits

The Internal Revenue Service (IRS) says qualified energy resources that have produced electricity during 2025—including from geothermal energy—are eligible for tax credits provided by the Inflation Reduction Act (IRA) despite the effort by President Donald Trump to immediately end such tax credits.

The IRS made the announcement in a Federal Register notice published May 27, 2025 that is titled, “Credit for Renewable Electricity Production and Publication of Inflation Adjustment Factor and Reference Price for Calendar Year 2025.”

The notice lists the different types of energy producers eligible for such tax credits, as well as providing information on the amount of the tax credit per kilowatt hour for the different types of energy producers.

In addition to geothermal energy, the different types of energy producers eligible for such tax credits for calendar year 2025 include wind, closed-loop biomass, open-loop biomass, solar energy, municipal solid waste, qualified hydropower production, and marine and hydrokinetic renewable energy, the notice says.

The notice also lists the “reference price” for facilities producing electricity during 2025. The “reference price” used by the IRS to determine certain energy tax credits is the annual average price per kilowatt-hour of electricity generated from a qualified energy resource and sold during the previous year within the U.S. The reference price is determined by the Department of the Treasury and impacts the availability of the renewable electricity production credit, which is phased out as the reference price increases.

The reference price for wind has been determined to be 3.1 cents per kilowatt hour for 2025, but the reference price “for facilities producing electricity from closed-loop biomass, open-loop biomass, geothermal energy, solar energy, municipal solid waste, qualified hydropower production, and marine and hydrokinetic renewable energy have not been determined for calendar year 2025,” the notice says.

The IRS issued the announcement that qualified energy resources will be eligible for tax credits for electricity produced in the U.S. during 2025 only days after the House of Representatives narrowly passed the “One, Big, Beautiful Bill Act” (H.R. 1) on May 22, 2025, under which federal tax credits for energy programs that are listed in the IRA would end, including for geothermal energy.

Now moving to the Senate, H.R. 1, which has been designated as a “budget reconciliation bill,” will only need a simple majority to pass that body rather than the 60-votes needed to forego a Senate filibuster because it is a budget reconciliation bill.

Despite the effort to end federal tax credits for energy programs listed in the IRA, the IRS notice says “electricity produced from closed-loop biomass, open-loop biomass, geothermal energy, solar energy, municipal solid waste, qualified hydropower production, and marine and hydrokinetic renewable energy, the phase-out of the credit does not apply to such electricity sold during calendar year 2025.”

Click here to read the Federal Register notice.